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The Draft Private Water Supplies (Scotland) Regulations 2005 and Proposals for a Private Water Supplies Grant Scheme: A Consultation

Chapter 4. Policy proposals for a Private Water Supplies Grant Scheme

1. In A Partnership for a Better Scotland, the Executive gave a commitment to develop "a scheme to assist the users of water supplies not connected to the public system to bring those supplies up to modern standards and to ensure that rural consumers are not disadvantaged."

2. Those modern standards are set out in the draft Private Water Supplies (Scotland) Regulations 2005 ("the draft Regulations"). Implementing these will help ensure that those who rely on private water supplies have a water supply fit for human consumption, with the minimum risk of danger to public health. For many users, this will mean investing in new equipment, and we propose a Grant Scheme to provide financial assistance to help meet the costs of upgrading supplies.

3. Policy proposals for the grant scheme are set out below, which, subject to the outcome of this consultation, will form the basis of a further set of Regulations, the Grant Regulations, which would define the Grant Scheme in law. The Executive intends to bring Grant Regulations into force alongside the draft Regulations to ensure that financial assistance is available at the same time as the new requirements under the PWS Regulations apply.

The objectives of the Grant Scheme are to:

• Improve public health by bringing private water supplies up to acceptable modern standards of wholesomeness by ensuring, in so far as is possible, compliance with European Council Directive 98/83/EC on the quality of water intended for human consumption;
• Minimise the financial impact of the Private Water Supplies (Scotland) Regulations 2005 on individuals and businesses, by providing financial assistance to the consumers and users of private water supplies; and
• Ensure, through the effective targeting of public funds, that private water supply consumers, typically from rural areas, are not disadvantaged.

Consultation point 10: Are these the right objectives for the proposed Grant Scheme? If not, what objectives would you support?

4. Private water supplies are presently regulated by local authorities under the Private Water Supplies (Scotland) Regulations 1992, and local authorities' role is continued under the new draft PWS Regulations. It is appropriate, and will help ensure effective links between this responsibility and provision of financial assistance, that the Grant Scheme should also be administered by local authorities. For this purpose section 47 of the Local Government in Scotland Act 2003 gave local authorities a power to provide financial assistance in relation to private water supplies, and gave Scottish Ministers powers to make Regulations governing such assistance. When the Grant Regulations are made they will place a duty on local authorities to consider and determine applications for grants for the purpose of enabling the applicant to improve their private water supply or to provide themselves with an alternative private water supply. Section 47 also provides powers for Ministers to prescribe in the Grant Regulations the detail of how the Grant Scheme should operate in practice.

5. It is intended that there will be a direct link between the Grant Scheme and the draft Regulations, with the Grant Scheme providing 'eligible persons' with financial assistance for works in connection with the draft Regulations. The work would have to have been identified as being required in order that a private water supply might comply with the Regulations' requirements and to improve the quality of water intended for human consumption.

6. The primary purpose of the draft Regulations is to secure improvement in public health. The Grant Scheme supports that aim and will help ensure that the consumers most affected are not disadvantaged. Typical consumers may be the household who depend on a private water supply for all their consumption, and the Grant Scheme will offer assistance to these consumers. However, a wholesome water supply is also essential for most businesses. Many of the most vulnerable consumers of private water supplies are transient visitors to businesses in rural areas, for example businesses within the tourist and hospitality sectors. We therefore propose that grants should be available to both individuals and businesses.

7. We propose that eligibility for the Grant Scheme should not require means testing of applicants, given the overriding public health benefit of assisting consumers in meeting the new requirements contained in the draft Regulations. Means testing has been shown to dissuade potential applicants who would otherwise meet eligibility criteria from applying for a discretionary grant, and this would undermine our primary aim of improving public health and ensuring rural consumers are not disadvantaged.

Consultation point 11: Do you agree that the proposed Grant Scheme should be: (a) available to both individuals and businesses; and (b) non-means tested?

How the Grant Scheme would operate

8. Private water supplies vary in size from those that serve only one household to those that serve hundreds of individuals. In some cases, private water supply consumers own the land their water supply is located upon. However, in most cases, consumers do not own the land upon which the source is located, nor do they own or control the catchment area for the supply. The draft Regulations recognise this complexity by placing responsibility for securing the wholesomeness of a private water supply on the "relevant person", as defined under those Regulations and also make provision for individual consumers of private water supplies to have powers to take forward separate solutions in certain circumstances. We propose that the application of the Grant Scheme should be as wide as possible to reflect the different possible scenarios by requiring applications from individual consumers, but facilitate these being made collectively, for example, through payment towards a joint solution.

9. This will ensure that where a private water supply serves more than one premises but the consumers involved cannot agree on the works required to improve their supply, either with each other or with the owner of the land upon which the supply is located, this disagreement does not prevent any one consumer from making an application for a grant towards a solution for their own premises. Similarly, where several consumers agree to implement joint improvement works to their private water supply, each would be able to apply for a grant.

10. To promote the most effective improvements being made to private water supplies, and to ensure the effective targeting of public funds, we would propose to accompany the Grant Scheme with guidance to local authorities on identifying the most appropriate economic solution.

11. This would mean that for a particular private water supply, the local authority would work with its consumers to identify different technical solutions which were available, and to promote the most effective in public health and economic terms. This process will be based on the risk assessment required under regulation 25 of the draft Regulations. For example, if the risk assessment identified that the supply was most at risk from grazing animals and that a fence and ditch system would provide an increased level of protection, then this would be the preferred solution promoted by the local authority. If the person who owned and controlled this area refused permission for this, the next appropriate economic solution would be pursued, for example fitting an ultra-violet (UV) filter to the supply before it reached any premises. And if that step also proved impossible, because again permission to locate the filter unit was not forthcoming, or because all stakeholders did not agree to the treatment, a further solution of fitting individual UV filters in the premises of consumer who did want them would be pursued.

12. This approach will help ensure that the assistance available through the Grant Scheme will go as far as possible. It is flexible, both supporting multiple solutions, that are often more cost effective than individual ones, but also more costly than a single consumer could pursue alone, and supporting individual solutions where agreement between stakeholders cannot be reached.

Consultation point 12: Do you agree to the proposed flexible, risk assessment based method of identifying the most effective solution and that consideration of grant applications should be based on this? If not, then what approach would you support?

Eligibility criteria

13. We propose that applicants for grants must be consumers of water from a private supply within Scotland, where that supply is the main or sole supply of water for human consumption to their household or business. In addition applicants would be required to meet one of three eligibility criteria. They should be subject to:

• An authorisation of a temporary departure under regulation 6 of the draft Regulations;
• A completed risk assessment, carried out in accordance with regulation 25 of the draft Regulations, which has identified a potential health risk associated with the supply; or
• An improvement notice in respect of their private water supply under section 76G of the Water (Scotland) Act 1980.

14. Using these criteria will help ensure that grants under the Grant Scheme are awarded for work that is necessary to improve public health.

15. The criteria do not cover ongoing maintenance or testing of the supply, which the Executive does not propose should be eligible for a grant. These costs, where they occur, must be met by the consumer, in the same way that those connected to the public water supply meet the equivalent costs through their water charges.

16. The proposed eligibility criteria are intended to ensure that the Grant Scheme, which has limited funds allocated to it, would assist the widest range of consumers to bring their supplies up to modern standards.

Consultation point 13: Do you agree that grant applications should have to meet one of the 3 proposed eligibility criteria?

Consultation point 14: Do you agree that grants should be available for: (a) capital improvements to private water supplies; and (b) that local authorities must agree the work is necessary?

If not, what other work do you believe should be eligible for a grant and why?

How to apply for a Grant and what will be awarded

17. Applications for a grant would be made by individual private water supply consumers, by completing an application form available from their local authority.

18. The Executive proposes to make certain provision regarding application forms in the Grant Regulations, and to provide a model application form for local authorities in the guidance which is to accompany the Grant Regulations. However, the exact format of the application form would be left to individual local authorities to determine, in order that they may take into account their particular requirements.

19. The Executive proposes to delegate to local authorities, together with the administration of the grant scheme, decisions on whether to award grants under the Grant Regulations. The Grant Regulations would both make detailed provision as to the procedure to be followed by local authorities, in line with the principles set out here, and require local authorities to satisfy themselves that an applicant is eligible for a grant before coming to a decision on an application.

20. We propose to make detailed provisions, either in the Grant Regulations or in the accompanying guidance, to ensure local authorities have flexibility to award grants in instalments or in full, and for that payment to be made to the applicant or to another nominated party.

21. As set out above (see paragraph 7), the Executive proposes that grants should not be means tested. Instead, to ensure that funds make the maximum contribution to public health across all consumers of private water supplies, and to ensure that they are used effectively towards solutions that offer good value for money, it is proposed that grants are available up to a set maximum award, set at a level which would meet the average costs a consumer implementing an individual solution might require, and which the Executive can afford to offer to all users of private water supplies. In the first place, the Executive proposes that this maximum should be set at £650.

22. This figure has been reached after considering the conclusions and recommendations set out in the independent Economic Assessment carried out for the Executive regarding the costs of implementing the draft Regulations, to allow wide assistance to be offered to everyone affected by those Regulations. This Economic Assessment contributed to the partial Regulatory Impact Assessment which is published as part of this consultation. The maximum grant figure would be open to periodic review, both in line with progress in supporting consumers as the draft Regulations are implemented, and to take into account changes in costs or technology.

23. For most private water supplies it is expected that this level of grant would be sufficient to make the improvements necessary to improve the quality of water supplied for human consumption, in line with the requirements of the draft Regulations. However, it is recognised that private water supplies vary widely and there will be cases where the supply requires work which exceeds this limit. In such cases it will be the responsibility of the applicant to provide the outstanding funds required.

24. The Executive's proposals for the Grant Scheme are designed to ensure that all consumers who depend on private water supplies are eligible for a grant of up to £650, on the grounds that that is the fairest way of targeting assistance in meeting the new PWS Regulations. However, the Executive recognises that there will be some users who have very limited means, for whom even a modest financial contribution would be difficult. We therefore seek views on providing local authorities with a limited discretion under the Grant Regulations to make additional grants available in exceptional circumstances. Such provision might be subject to additional audit, to ensure that it was applied equitably by different local authorities.

Consultation point 15: Do you agree that the format of application forms should be left to individual local authorities?

Consultation point 16: Do you agree that decisions on awarding grants, as defined in the Grant Scheme Regulations, should be delegated to local authorities?

Consultation point 17: Do you agree that grants should be available up to a maximum level of £650?

If not, what alternative arrangement would you support?

Consultation point 18: Should local authorities be given a limited discretion to offer increased grants in exceptional circumstances?

Who is not eligible for the Grant Scheme?

25. To ensure that the Grant Scheme is targeted to make the maximum contribution to public health and does not duplicate existing statutory provision, the Executive proposes to exclude applications for grants under the Grant Regulations in the following circumstances:

(a) An applicant who is awarded a grant under the Grant Regulations would be excluded from receiving a further grant under those Regulations for five years, except where a further risk assessment confirms a continuing risk to health, in which case a grant would be available up to the difference between the grant limit and the original award.

(b) Applications where all or part of the required improvements are eligible for a housing improvement or repairs grant under the schemes administered by local authorities and this has not been refused.

(c) Applications in respect of any premises which is due to be demolished, or which is uninhabited or is the subject of renovation to bring those premises up to tolerable standards.

(d) Applications in respect of new houses (section 63(1) of the Water (Scotland) Act 1980 requires any person erecting or causing to be erected a building to make adequate provision for a water supply to the building for domestic purposes).

(e) Applications in respect of improvement work which has already started, or where a contract for such works has been entered into, except where there are exceptional circumstances which required the works to be commenced before applying for a grant.

(f) Applications in respect of any premises owned by a public body (including local authorities, the Scottish Executive and other Government departments).

Consultation point 19: Do you agree with the above exclusions? Should any other type of application be excluded?

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