Water services: investing in and paying from 2027 - Analysis of Consultation Responses

3. Consultation on the Principles of Charging

Scottish Water operations, including service maintenance and improvement, are mostly financed by customer charges. The remainder of funding is lent by the Scottish Government.

As part of the process for the Strategic Review of Charges, the economic regulator WICS determines the charge cap needed for the cost effective delivery of the Ministerial Objectives. This charge cap is in reference to the Consumer Prices Index (CPI) and sets out the relative rate by which individual water charges can be increased within the regulatory period set. Annual charges can be set by Scottish Water within that limit. Ministers, as part of that process, are required to issue their Principles of Charging, which states their policy on charge implementation and distribution amongst customers.

Overall Principles of Charging

The consultation paper outlined the proposal to extend the current Principles of Charging largely unchanged into the next regulatory period, covering 2027 to 2033. The core Principles for Charging are to:

• Be stable.
• Cover the full costs of providing services to customers.
• Be harmonised across Scotland – i.e. charges are not to vary for similar services to similar people.
• Be cost-reflective – i.e. the charge for water services is limited to the cost of providing the services.
• Be fair, equitable and affordable charges.

For households, charges are currently set based on Council Tax bands (as of April 2015) and collected with Council Tax by local authorities. For non-households, charges are based on meters, where possible. However, the consultation paper notes that the household Council Tax band charging approach has remained largely the same since 1992. The Scottish Government is also consulting on the future of Council Tax, investigating reforms which would change the basis on which the current approach to household water charging relies.

Question 5a: To what extent do you agree or disagree that the charging approach set out in the draft Principles of Charging remains appropriate for the next 6 year regulatory period 2027-2033?

Question 5b: Please explain your answer to question 5a.

Respondent type	n=	% Strongly agree	% Agree	% Neither agree nor disagree	% Disagree	% Strongly disagree	% No answer
All respondents	58	5	28	28	12	7	21
All answering	46	7	35	35	15	9	-
Individuals	20	10	40	30	15	5	-
Organisations:	26	4	31	38	15	12	-
- Community organisation	11	9	27	18	27	18	-
- Special interest group	7	0	29	71	0	0	-
- Third sector	1	0	0	0	0	100	-
- Water regulator and other public bodies	2	0	0	100	0	0	-
- Licensed provider	2	0	50	50	0	0	-
- Other water sector	2	0	50	0	50	0	-
- Local authority	1	0	100	0	0	0	-

Two fifths (42%) of those answering Q5a agreed to some extent that the charging approach set out in the draft Principles of Charging remains appropriate for the next 6 year regulatory period of 2027 to 2033; 7% strongly agreed, and 35% agreed. Of the remainder, 35% were neutral, 15% disagreed, and 9% strongly disagreed.

A range of views was recorded by individuals and organisations that answered. Half (50%) of individuals agreed, 30% were neutral, and 20% disagreed. Organisations were less supportive, with 35% agreeing, 38% neutral and 27% disagreeing. Community organisations were more likely to disagree than agree (45% compared to 36%, respectively), while most of the other organisations that responded selected ‘agree’ or ‘neither’.

Two thirds of respondents left a comment at Q5b. The most prevalent themes were support for the proposed charging approach, comments on the continued use of Council Tax bands to determine charges, and the affordability of charges. A range of wider considerations were also noted by respondents.

Support for the proposed charging approach

Several respondents expressed broad agreement with the charging approach set out in the draft Principles of Charging for the next 6 year regulatory period of 2027 to 2033. The principles were felt to be appropriate, reasonable, and straightforward. Comments were also made that this approach provides stability, transparency, fairness, and that it continues to provide support for vulnerable people. While some respondents simply expressed agreement, others detailed reasons for their agreement, as outlined below.

“…the current charging system has operated relatively satisfactorily, to retain this system would seem appropriate.” - The Institution of Civil Engineers, Scotland

“We support the Government’s proposal to carry forward the current charging principles and agree that a more fundamental long‑term review is preferable to further interim adjustments. Additional piecemeal changes now risk adding complexity, creating inconsistencies, and making it harder to assess whether the framework is delivering fairness, transparency and long‑term effectiveness.” - Business Stream

“The existing Principles of Charging have generally provided stability, affordability, and transparency for customers, and it is reasonable to retain them for the 2027–2033 regulatory period. The current approach benefits from being well understood, administratively straightforward, and aligned with Scotland’s publicly owned water model.” - Individual

Concerns about the continued use of Council Tax bands

Several respondents expressed the view that the current system of using the Council Tax system to determine and collect charges is not fit for purpose and unfair, and highlighted their support for the ongoing wider review of Council Tax in Scotland. While one respondent commented that using the Council Tax system for collecting water charges is a simple and low-cost approach, a range of challenges with the system were raised by other respondents. Perceived unfairness in customer charging was suggested to be due to charging being based on council tax band as opposed to water usage, including smaller households paying the same as larger households. Specifically, one respondent noted that water charges for 2027 to 2033 are based on Council Tax bandings from April 2015, as opposed to 2017, when ratio changes in banding occurred. The need for the current review of Council Tax to also adequately consider charges for water services was highlighted.

Using the Council Tax system for charging was also felt to be detrimental to water reduction efforts, as it is based on property valuation rather than water usage in households. The Poverty and Inequality Commission highlighted water poverty and impacts on low-income families as a result of the current Council Tax method of charging. Another respondent suggested exploring alternative methods of billing, such as direct billing, or providing more information in current Council Tax bills on water charges to increase transparency for customers.

“The Commission also notes that the system of charging can be viewed as being regressive. Band H households pay a multiple of 2.45 compared to Band D households (compared to a multiple of 2 for Council Tax). As a result, Fraser of Allander analysis in 2018 found that households in the bottom decile spend the highest proportion of their income on water charges (around 5.5%) of all deciles, even with reductions and exemptions applied.” - Poverty and Inequality Commission

“Charging by [Council Tax] Band…is increasingly being seen as unfair by customers who see themselves paying the same amount as much larger households in the same CT Band or, as prices rise, are becoming more aware of the extent of the cross subsidy inherent in the system…carries no incentive to reinforce the policy aim of reducing water consumption; (People have great pride in the water we have in Scotland but the perception is of an infinite supply and it is not valued as a scarce resource to be conserved. At around 180 litres per head per day consumption is significantly higher than in England (c140) and in for example Denmark where it is around 50.” - Scottish Water Independent Customer Group

Affordability of charges

In addition to the above comments regarding the fairness of using Council Tax banding as the basis for charges, some respondents made other comments regarding affordability for customers. Questions of fairness and concern for households facing increasing financial pressures in the current economic climate were both noted by respondents. A range of singular points were raised, including:

• Any charging approach should continue to emphasise and focus on customer affordability.
• To take a system-wide approach to affordability for all, rather than just affordability through targeted schemes.
• Increase public awareness and education on water and why customers should pay for this service and relevant improvements.
• Consider differences in inflationary impact on water charges by household.
• A suggestion that charges should reflect yearly costs, rather than Scottish Water being allowed to bank increases in charges for future years of investment.

“It will be important that any charging approach adopted by Scottish Water and overseen by Water Industry Commission for Scotland continues to place strong emphasis on fairness, affordability, and transparency for customers. That said, there is growing financial pressure on many households and community organisations. Any increases in charges should therefore be carefully balanced and clearly communicated, with a strong focus on demonstrating value for money and ensuring that customers understand how investment decisions benefit both current and future generations.” - Getting Better Together Ltd

Wider considerations

Some respondents used this question to advocate for exemptions or changes to charity exemptions from charges for water. Respondents wanted the charging approach to consider voluntary and community organisations that work within tight margins and that have limited ability to take on more fixed costs. Suggestions included changing income thresholds for charity exemptions and reviewing income eligibility assessments for charities. This is explored in detail under the dedicated Q7.

Consideration of charges in relation to climate change and ongoing sustainability was highlighted by some respondents. As mentioned above, efforts towards water reduction, preventing pollution, and increased environmental sustainability were felt to be hindered by charging being based on Council Tax banding as opposed to usage. One respondent suggested there could be a more explicit link to Part 2 principles of the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021, which could lead to greater emphasis on the ‘polluter pays’ principle and the preventative principle and lead to an improvement in environmental standards. Another suggested the Principles of Charging should better support long-term environmental sustainability and biodiversity.

The need for greater transparency in charges, to ensure they deliver value for money in long-term infrastructure improvements, was advocated by a few respondents. Suggestions included this being done through measurable asset improvements being made clear to customers, and strengthening accountability for these asset improvements to be made.

“Rising charges must be clearly and directly linked to efficient, necessary investment that improves long-term service reliability and reduces future costs. Customers should not be asked to fund repeated short-term maintenance or policy-driven enhancements that do not materially improve core water and wastewater services.” - Individual

A few respondents suggested using meter readings to more accurately measure water usage and improve fairness in charging, rather than continuing to use the Council Tax charging system. However, it was noted that this could be costly to implement.

Other concerns and considerations in relation to the charging approach were made by one or two respondents, including, from most to least mentioned:

• Calls to review charges for property draining in multi-occupancy buildings that are non-domestic.
• The potential to incentivise rainwater harvesting.
• Set in place higher charges for bigger businesses.
• A comment expressing support for a review of default retail tariffs and a suggestion to consider in relation to water charges.
• A call to provide clarification on Scottish Water lending ‘at the lowest practicable level’ with concerns for lending impacts on charges.

Affordability Support for Customers

Support measures for water charges mirror those for Council Tax and currently include:

• A 25% Single Person Discount.
• Up to 35% Water Charges Reduction Scheme (WCRS) for those receiving Council Tax Reduction for reasons including low incomes.
• A 50% discount for homes that are vacant for less than a year, and for homes belonging to student nurses, long-term hospitalised, prisoners etc.
• A 100% exemption for disregarded households occupied by students or those with severe disabilities.

These support measures mean that 52% of Scottish households receive some form of support with their water charges, to the cost of £254 million to Scottish Water’s revenue per year – which must be recouped from other customers instead. Limitations with these approaches were raised in the consultation paper, such as they do not perfectly target the households in water poverty. Those households receiving 100% Council Tax Reduction and therefore with no Council Tax liability, are still liable for at least 65% of the water charges, which reflects the provision of a service rather than a tax.

Considerations following a report by Consumer Scotland regarding affordability measure designs were also noted in the consultation paper, with a proposal for 2027 to 2033 to not have further ‘incremental changes to the affordability measures in the Principles of Charging’.

Question 6a: To what extent do you agree or disagree that continuing to provide households with support for charges at the current level over the next regulatory period 2027-2033 will minimise the charge increases for all households?

Question 6b: Please explain your answer to question 6a.

Respondent type	n=	% Strongly agree	% Agree	% Neither agree nor disagree	% Disagree	% Strongly disagree	% No answer
All respondents	58	3	28	41	5	0	22
All answering	45	4	36	53	7	0	-
Individuals	20	5	30	55	10	0	-
Organisations:	25	4	40	52	4	0	-
- Community organisation	11	9	45	45	0	0	-
- Special interest group	6	0	50	33	17	0	-
- Third sector	1	0	0	100	0	0	-
- Water regulator and other public bodies	2	0	0	100	0	0	-
- Licensed provider	2	0	0	100	0	0	-
- Other water sector	2	0	50	50	0	0	-
- Local authority	1	0	100	0	0	0	-

Those answering Q6a were most likely to express a neutral view, with just over half (53%) selecting ‘neither’, compared to 40% that agreed and 7% that disagreed. A similar pattern of results was recorded by both individuals and organisations, with 55% and 52%, respectively, selecting ‘neither’, and 35% and 44%, respectively, agreeing. Only two organisations held different views, with one community organisation strongly agreeing and one special interest group disagreeing.

Half of all respondents commented on Q6b. The most common themes were agreement with the proposed charging approach, suggested improvements, and the need for greater support for those facing financial hardship.

Support for the continuation of affordability measures

The most prevalent theme, raised by several respondents, was agreement that there should be no further incremental changes to affordability measures. In particular, respondents emphasised the importance of supporting low-income and vulnerable households, noting the existing and increasing cost-of-living pressures. Respondents also suggested that keeping the affordability measures as they are will minimise charge increases across all households. The current use of percentage discounts as opposed to fixed sums was felt by one respondent to be simple to administer and to allow for charge increases.

“We agree that continuing household support for water charges at the current level over 2027–2033 will help minimise charge increases for all households. From our perspective as a community-led local charity, this matters because water is a non-negotiable household cost. When bills rise, the impact shows up quickly in people’s ability to cope — and in the demand local services see for crisis help, advice and support.” - Beith Trust

“We agree that the current level of affordability support is appropriate and strikes a reasonable balance between targeting support at the most vulnerable whilst avoiding an undue burden on other customers’ bills.” - Scottish Water

Suggested improvements

Support was noted for existing efforts to increase affordability for vulnerable and low-income households, and for the consideration of affordability and fairness for other households. However, a range of improvements to current affordability measures and discounts were suggested by several respondents. These included means-testing, generally having fair charges and bigger businesses paying more and households paying a minimum.

Comments relating to adequate targeting of those needing discounts were also made. This included calls for a review of charges to ensure that vulnerable and low-income households are being protected, and to improve access to affordability measures through improved ease of application processes, and one respondent called for continued transparency about the cost, impact and take-up of affordability measures.

“We would only note that while we agree it is essential the most vulnerable in society are protected, it is equally important to ensure that the cost‑recovery element of the mechanism is progressive and, where possible, means‑tested so that middle‑income households who are not eligible for support but still face real financial pressure are not disproportionately burdened.” - Business Stream

“While we note that Scottish Ministers are proposing maintaining current discounts, we thought it would be useful to provide updated costs of increasing the maximum discount further to 50% based on data reported by Scottish Water in its annual return 2024-25 submission to WICS. We estimate that such an increase would likely cost in the regions of £30-£40m per year during 2027-33. This would increase the overall charge cap by approximately 0.5% to 0.6% per year over the 2027-33 regulatory period.” – Water Industry Commission for Scotland (WICS)

The need for greater support for those facing financial hardship

A few respondents provided detailed responses highlighting their concern that there is not sufficient support for low-income, vulnerable households and those facing financial difficulties, which is contributing to water poverty. Comments made include:

• Getting Better Together Ltd stated that the proposal does not adequately reflect current household financial pressures. They suggested strengthening affordability measures and reviewing the affordability framework to determine whether financial hardship is increasing and supporting equitable access to water.
• The Poverty and Inequality Commission similarly noted there is insufficient support for low-income households for water charges. They suggested increasing the WCRS discount for those with a full council tax reduction to 100%. They also noted that some people facing financial challenges may not meet support eligibility criteria. To address this, they suggested that support schemes could be by application, through the Scottish Welfare Fund, and that there could be more targeted support provided based on improved water poverty data.
• Consumer Scotland proposed that the Water Charges Reduction Scheme should be increased each year to offset increases in bills to minimise water poverty. They also made alternative suggestions to increase Scottish Government lending to Scottish Water, and to reduce investments, were noted.
• UNISON Scotland noted that the continuation of household affordability support should not be used as a justification for customer charge increases above inflation.

Other comments

Two respondents commented on supporting affordability through taking a long-term, value-for-money approach to making necessary investments in infrastructure and increasing climate resilience. Other singular comments at this question included:

• A suggestion for purpose-built student accommodation to pay for their consumption.
• Disagreement with the term ‘water poverty’.
• A suggestion that the funds available for support measures should be temporarily reduced so they can be redirected to address infrastructure needs in the short term.

Support for charities

The Principles of Charging sets out the water and sewerage exemption scheme for community amateur sports clubs and charities. This scheme provides charge reductions where their verified annual income supplied to the charity regulator Office of the Scottish Charity Regulator (OSCR) is less than £200,000 (resulting in a 100% reduction) or £300,000 (resulting in a 50% reduction). This approach aims to create a balance between charities requiring support, unfair competition with comparable sized small businesses (e.g. cafes), and the cost implications for non-household customers.

The scheme criteria are proposed to remain the same, as the consultation paper states, due to the intended populations of the exemptions being supported without significant distortions to the market. This is based on income thresholds having remained steady, the low cost of the scheme, justification of the exclusion of charities and clubs operating commercial activities, the necessity of the annual verification of eligibility, and administrative efficiencies from the approach taken.

Question 7a: To what extent do you agree or disagree that the current eligibility criteria for the charity exemption scheme remain appropriate?

Question 7b: Please explain your answer to question 7a.

Respondent type	n=	% Strongly agree	% Agree	% Neither agree nor disagree	% Disagree	% Strongly disagree	% No answer
All respondents	58	14	19	24	17	16	10
All answering	52	15	21	27	19	17	-
Individuals	21	14	19	24	33	10	-
Organisations:	31	16	23	29	10	23	-
- Community organisation	13	15	15	15	15	38	-
- Special interest group	5	0	40	60	0	0	-
- Third sector	6	33	17	0	17	33	-
- Water regulator and other public bodies	2	0	0	100	0	0	-
- Licensed provider	2	0	50	50	0	0	-
- Other water sector	2	50	0	50	0	0	-
- Local authority	1	0	100	0	0	0	-

There was no consensus on whether the current eligibility criteria for the charity exemption scheme remain appropriate. Among those answering, 36% agreed (15% strongly agreed and 21% agreed), 27% were neutral, and 36% disagreed (19% disagreed and 17% strongly disagreed). Views among individuals were similarly split, with 33% agreeing, 24% neutral and 43% disagreeing.

A similar pattern was also evident among all organisations that answered, as 39% agreed, 29% were neutral, and 33% disagreed. While community organisations held mixed views, they were more likely to disagree (53%) than agree (30%), and 15% of this group were neutral. However, almost all other organisations that answered either agreed or were neutral, with the exception of three third sector organisations that disagreed.

Three quarters of all respondents left a response to open-text Q7b. The most common themes were support for the charity exemption scheme, disagreement with the eligibility criteria and administration of the scheme, and the importance of the scheme for supporting the financial sustainability of charities.

Support for the charity exemption scheme

Several respondents agreed with the charity exemption scheme, stating that it is reasonable, fair, appropriate, proportionate, and supportive of charities, their work, and their financial position. While there was support in principle for the scheme to be in place, not all respondents agreed with the specific eligibility criteria (see below). One organisation highlighted that around 78% of charities in Scotland are eligible for and benefit from support through the scheme, expressing support for keeping current charity exemptions. Scottish Water suggested that the current eligibility criteria reduces the cost of and improves the ease of administering the scheme.

“It is appropriate that genuine charities and not‑for‑profit organisations can access exemptions or reductions, given their social value and limited ability to raise income.” – Individual

“We agree that the current eligibility criteria for the charity exemption scheme is appropriate, and it is our position that the charity exemption scheme is an important function of the charging structure to retain.” - UNISON Scotland

Issues with, and changes to, the charity exemption scheme eligibility criteria

A range of disagreements with the eligibility criteria of the charity exemption scheme were detailed by respondents. Most commonly, several respondents disagreed with the income thresholds for reductions or exemptions in water charges. These respondents, who were largely third sector or community organisations (i.e. the types of organisations who could be eligible for the scheme), detailed the current financial pressures faced by charities, including inflationary pressures, and expressed the view that charities whose income might be above the income thresholds are potentially still in need of exemptions. They highlighted that the income generated by these organisations funds important work to support communities and deliver services, and as such, they felt it was unfair that they were penalised because their income was above a certain level. Given this, there was a view that the income thresholds may disadvantage some organisations. One respondent suggested that income thresholds are outdated and do not account for inflationary cost increases for charities, and called for inflationary adjustment and backpay to 2016.

“The proposed thresholds, £200,000 annual income for 100% exemption and £300,000 for 50% exemption, mean that organisations with higher reported incomes receive no support at all, despite often facing the same financial pressures as smaller organisations.” - Getting Better Together Ltd

Suggestions for adjustments to thresholds so more charities can access the exemption were made. Several respondents suggested using rates that differ according to the size, type and establishment of charities, as opposed to the current income thresholds and eligibility criteria. A key suggestion was for a scaled or smoothed approach for eligibility, as opposed to firm income cutoffs, such as by averaging income over several years.

Specific suggestions for income rates for exemption eligibility were made by some respondents. There were calls for complete exemptions for:

• Charities with incomes under one million pounds.
• All charities and third sector organisations.
• Charities with an income under £500k, and a 50% exemption for those under £800k.
• All recycling social enterprises and charities, and charity shops.

Suggestions for expanded or reduced exemptions included:

• Extending the 50% discount to charities that operate charity shops under the £300k threshold.
• Increasing thresholds to £500k or for the exemption scheme to be available to all charities.

Other singular suggestions included using a means-tested approach, that charities should be able to request a disregard of their income for a period of one year should their income mean they are no longer eligible for a reduction, and increasing support for climate-related organisations.

Another key challenge highlighted by several respondents was how the income used to determine eligibility is defined. In particular, respondents raised concerns about the income that they generate through retail and trading activities. It was noted that this is counted as income for exemption eligibility, but it is typically reinvested into services for communities. This point was made mostly by a mix of community organisations, third sector organisations and special interest groups. Suggestions for how to address this included reconsidering how income eligibility is assessed, such as by only including unrestricted income or revenue, and by including charity shops, charity cafes, and charities with alcohol licences in any exemptions.

“We’re often expected (and encouraged) to be more sustainable by combining grant income with earned income — room hire, events, training, café-style offers — and reinvesting any surplus into community benefit. But the current scheme rules exclude charities that operate a full-time retail outlet or a café open regularly to generate income. Moreover, for many community hubs, those activities aren’t “profit-making” in the usual sense; they’re part of keeping a community building open and accessible.” – Beith Trust

“…for those charities operating a "profit making" activity such as a communities cafe, any profits from these still must legally be reinvested back into the charity - so any money taken out of that profit is effectively money taken away from a charity. Furthermore, at the thresholds proposed, most of these charities will be being led primarily by volunteers, not paid staff. Government should not be putting financial barriers in the way for those giving up their own time for the betterment of society. These exemptions could easily be offset by fee increases for larger corporations, with more substantial profits which could better absorb fees than SMEs or charities, and whose objectives are very rarely as prosocial as most charities/social enterprises.” - Fallin Community Voice

A few respondents raised a similar issue, suggesting there should be a greater distinction between charities and organisations with commercial interests within the exemption scheme. This included calls to provide greater clarity on how commercial and charitable activities are determined. Other singular comments included:

• It is unfair that charges for charities are based on rateable values of property as opposed to water usage.
• A concern that there is no exemption for residential premises that are managed and operated by charities.
• Support for eligibility for exemptions to be reassessed annually.
• A call to increase exemptions to charities so they can continue to support communities in need.
• One anonymous third sector organisation left a detailed response calling on the Scottish Government to consider specific challenges with their premises.

Supporting the sustainability of charities

Some respondents highlighted the importance of charities in making a positive impact on communities and the contributions they make towards tackling climate change. These respondents stressed the importance of measures to support the sustainability of charities and noted potential negative impacts if increased running costs result in charity closures.

Suggested considerations for process improvements were made by some respondents. Increasing clarity on eligibility assessment and providing clearer guidance specifically on income generation were called for. Reducing the administrative burden of reapplication processes, having periodic reviews of eligibility criteria, increasing transparency in the costs of the exemption scheme, and ensuring customer affordability were also raised.

Other comments

While comments in response to this question typically considered how the charity exemption scheme could be improved or expanded, a few respondents expressed alternative views. One respondent commented that charity exemptions could lead to higher costs for households and businesses. Two respondents suggested reducing the exemption levels, to 50% or 60% for the £200K threshold and 33% or 30% for the £300K threshold.

Two respondents commented more broadly regarding households they felt should pay less for water charges. This included those who are single, working and living alone, claiming benefits. One respondent felt that a per-person charge would be fairer, given that the water supply is a service being used by all.

Review of future charging policy

A range of significant changes are anticipated over the 2027 to 2033 regulatory period. These include:

• A potential Council Tax reform, with changes impacting on water charges.
• The water deficit in the public water supply system increasing.
• Cost of living challenges continuing and further efforts to tackle systemic poverty.
• Water industry reforms in England.
• Changes in public attitude in relation to sewage, water use, and flooding in relation to climate change.

The policy for household charging has fundamentally remained unchanged since 1992, by charging through Council Tax bands, in order to support affordability for low-income households and apply exemptions. With potential changes to the Council Tax policy, which could impact water charges, the Scottish Government is considering reviewing water charging policy and affordability measures for the medium term (i.e. post 2033) over the upcoming regulatory period of 2027 to 2033.

Question 8a: To what extent do you agree or disagree that a fundamental review of charging policy is needed, to ensure it meets emerging policy needs and to inform the approach for the next regulatory period starting in 2033?

Question 8b: Please explain your answer to question 8a.

Respondent type	n=	% Strongly agree	% Agree	% Neither agree nor disagree	% Disagree	% Strongly disagree	% No answer
All respondents	58	29	34	7	5	3	21
All answering	46	37	43	9	7	4	-
Individuals	20	45	40	5	5	5	-
Organisations:	26	31	46	12	8	4	-
- Community organisation	10	30	50	0	10	10	-
- Special interest group	7	29	43	14	14	0	-
- Third sector	2	50	50	0	0	0	-
- Water regulator and other public bodies	2	50	50	0	0	0	-
- Licensed provider	2	0	0	100	0	0	-
- Other water sector	2	50	50	0	0	0	-
- Local authority	1	0	100	0	0	0	-

There was broad agreement among those answering Q8a that a fundamental review of charging policy is needed, to ensure it meets emerging policy needs and to inform the approach for the next regulatory period starting in 2033. Among those answering, four fifths (80%) agreed to some extent; 37% strongly agreed, and 43% agreed. Of the remaining respondents, 9% were neutral, and 11% disagreed.

Among individuals, 85% of those answering agreed to some extent, with 45% strongly agreeing. Agreement was also high among organisations (77% in total, 31% strongly agree), and among different types of organisations, ranging from 72% of special interest groups and 80% of community organisations agreeing to some extent, to 100% of other organisation types. The only type of organisation not expressing broad agreement was the licensed providers; the two organisations that answered both selected ‘neither’.

Almost two thirds of all respondents provided a response to open-text Q8b. The most commonly mentioned themes were support for a review of charging policy to ensure affordability and fairness, and agreement with the need for a review.

Support for a review to ensure fairness and affordability

Several respondents expressed support for a review of charging policy, specifically calling for this to take place to ensure fairness and affordability for customers. Most commonly mentioned was the process of charging through the Council Tax band system. Respondents often reiterated the same concerns as noted in other questions, particularly Q5b, questioning the fairness of charging based on banding rather than usage, and calling for charges for water services to be separated from Council Tax. It was thought that, with potential upcoming reforms to Council Tax, a review of charging in relation to water and wastewater could be required to ensure charges are affordable and reflective of costs to maintain the water system.

Several respondents emphasised the need for affordability and effectively targeted support for vulnerable households to be central to a review and future charges. Current financial pressures facing households, including the high cost of living, were cited, as was the potential for the current system to expose vulnerable households to debt, as a result of a lack of understanding of charges. Ensuring that there is value for money in customer charges, charges are as low as possible, customers understand their charges, and that there is transparency in decision-making relating to charges were all suggested as ways to improve charging policy. A review of the effectiveness of efforts to support those most in need was also felt to be beneficial.

“As water charges are billed alongside Council Tax by local authorities, they are subject to the same stringent debt recovery practices. This potentially exposes vulnerable households on the lowest incomes and in receipt of full council tax reduction to debt recovery practices such as benefit deductions. Council Tax debt – and therefore water debt - can be enforced quickly and punitively, with less consideration for individual circumstances than with consumer debt.” - Poverty and Inequality Commission

“…many households receiving full Council Tax Reduction remain unaware that they remain liable for 65% of their water and sewerage charges. A lack of clarity in the communication of this liability can lead to some consumers to disregard billing reminders and fall into avoidable debt. In developing a future charging and billing model, the Scottish Government should consider whether its approach to water poverty is aligned with its wider affordability strategies” - Consumer Scotland

A few respondents made a range of suggestions around affordability and fairness. Increasing charges for non-domestic businesses and those who use large amounts of water, and that charges should be set for each individual person who uses water services, were each suggested by one or two respondents. Calls for ongoing transparency in charges, streamlining processes for charges for non-households, and reviewing the processes and effectiveness of Scottish Water were made by one respondent each. One respondent noted a concern that a review could result in cost increases without clear benefits to customers

General support for a review of the charging policy

In addition to the respondents who supported a review to ensure affordability, several other respondents expressed more general support for a fundamental review of charging policy to ensure it meets emerging policy needs, and to inform the approach for the next regulatory period starting in 2033. It was suggested that a review would be important to ensure the charging policy is fit for purpose, that there is transparency in charges, and that emerging pressures are being addressed. In particular, the need for a review to consider climate-change related impacts on water services, Council Tax reform, ageing assets and infrastructure maintenance needs, and affordability were all noted. Respondents also felt that a review could support public confidence and efforts towards equity, including addressing water poverty in Scotland. Two respondents suggested that the review should begin now. Two respondents offered to collaborate and contribute to the review and relevant policies.

“I agree that a fundamental review of charging policy during 2027–33 is needed. The water sector faces emerging pressures (climate change, water scarcity risk, ageing assets and increased surface-water volumes) and charging policy should support resilience, demand management and good environmental outcomes.” – Individual

“We agree that a review of household charging policy is needed to reflect emerging policy needs. We also recognise that any charging approach will involve trade-offs between different policy objectives. While current arrangements are not perfect, they minimise billing and collection costs through shared services with Local Authorities and provide significant affordability support.” – Scottish Water

“The context in which water services operate is changing significantly. Issues such as climate change, water scarcity, infrastructure investment needs, and potential reforms to Council Tax mean that the current charging structure may not remain the most effective or equitable model in the longer term.” - Getting Better Together Ltd

It should be noted that while there was support for a review from several respondents, a few respondents commented that the current system is working well.

Review charity exemptions

Some respondents, all of whom were community or third sector organisations, highlighted the potential for the review to consider further charity exemptions, such as those explored in Q7b. Calls for full charity exemptions were made, including for charity shops, cafes, charities with alcohol licences, and recycling-based charities. Organisations requested the review examine the current charity exemptions in place, and whether changes need to be made. The current system was thought to be restrictive and challenging due to cliff-edges in eligibility by income. As in Q7b, tight margins faced by charities, along with the benefits provided by charities towards environmental sustainability, were also highlighted.

“…the review should consider how water charging policy can support fairness, affordability, and sustainability, while recognising the wider social value delivered by community organisations that provide services, spaces, and support within local communities.” - Getting Better Together Ltd

Balance the need for climate resilience and asset improvement

Consideration of climate change pressures within the review was urged by some respondents. This included considering how the charging policy will support water use efficiency and behaviour change, meeting Scottish Government climate-related targets, and incentivising the harvesting of rainwater.

“The next decade will bring increased climate pressures, tighter environmental standards and rising infrastructure demands. A fundamental review should examine how charging policy can: Support environmental performance and catchment resilience; Encourage efficient water use; Ensure long-term affordability and equity; Align with Scotland’s biodiversity and climate targets. Charging policy must evolve to reflect these strategic challenges rather than simply extend the existing framework.” - Scottish Environment LINK

Some respondents emphasised the need for a review to ensure that the charging approach ensures there is a long-term approach to planning for water and wastewater infrastructure management, in combination with considerations for affordability and climate resilience. Other points, each raised by an individual respondent, included the removal of lead pipes from water mains, changing to segregated sewers for runoff from surface water from mixed sewers, and improved surface water management.

Base charges on usage and potential for metering

Calls for greater consideration of charges being based on usage of water, as opposed to Council Tax, company income or rateable values, were suggested by some respondents. The use of household metering to implement this was suggested, though challenges with the cost of implementation of metering were noted by one respondent. One organisation suggested the use of demand management to reduce water usage, to consider existing water efficiency measures, and to consider regulatory frameworks to support this.

“To support saving water and education of water use in Scotland, a meter can be installed to bill and monitor household behaviour and usage. But this should absolutely not be done in the way gas and electric meters operate where households can self disconnect. A form of smart meter device to evidence to households their water consumption can help to educate and value water resources, in the same way communities have become more aware of saving energy linked to monitoring of smart meters.” – Individual

“Metering was suggested by many respondents to the 2023 consultation and could be used to provide a cheaper tranche of water, with higher costs to household using more, but the political difficulties would be immense. There would also be huge start-up costs in installing meters as well as ongoing maintenance. Whilst there are pilots underway, any move to metering would need extensive preparatory work. However different alternatives need to be explored in detail in order to raise awareness, and justify either a change or the status quo.” - Individual