Department for Regional Development consultation on proposals for new water legislation.

Transcription

1 Elizabeth House 116 Holywood Road Belfast BT4 1NY Eddie Dobbin Water Policy Division Department for Regional Development Room 122 Clarence Court Adelaide Street Belfast BT2 8GB 29 August 2014 Dear Eddie Department for Regional Development consultation on proposals for new water legislation. Consumer Council reference: PD20010/1879 The Consumer Council welcomes the opportunity to respond to the Department for Regional Development s (the Department) consultation. 1. Subsidising Household Charges Proposal 1 - Extend the power to pay subsidy to NI Water for a period of one year to 31 March 2017 and take an enabling power in the proposed Water Bill to make subordinate legislation to extend the subsidy-paying power further if necessary. The Consumer Council supports the proposal to extend the subsidy to meet the Programme for Government commitment and the proposal for an enabling power to make subordinate legislation.

2 Our support for subordinate legislation to extend the subsidy is provided on the basis that such subordinate legislation is only used to extend the current subsidy arrangements and that any considered changes or future proposals on the governance structure, funding arrangements and business model of NI Water will be subject to open discussion, full Regional Development Committee and NI Assembly scrutiny and full public consultation. 2. Strategic Directions to NI Water Industry Proposal 2 - Replace the Social and Environmental Guidance with Strategic Social and Environmental Directions. The Consumer Council does not support this proposal. Eight out of ten consumers currently trust Regulators (The Utility Regulator, The Drinking Water Inspectorate and the Environment Agency) to represent them in the area of water and sewerage services 1. We would be concerned that mandatory Directions could interfere or be perceived to interfere or fetter the independence of the Utility Regulator and risk undermining consumers confidence in the regulatory system. We question the need for and timing of the proposed shift to mandatory Directions given Ministerial Guidance has been adhered to in delivering the NI Executive s priorities to date; we have agreed Ministerial Social and Environmental Guidance for the period; and, as a decision on domestic charges will be taken by the incoming NI Executive, potentially lowering the level of public funding and reducing the risk the Department currently views as unacceptable, it is possible that a reversal of alterations may be required. We would also have concerns that mandatory Directions could place a conflict on the primacy of legislative duty on the Utility Regulator. 1 Consumer views on a long term water strategy for Northern Ireland. Research by the Consumer Council May

3 3. Water Resource Management and Drought Planning Proposal 3 - Require NI Water to produce a single Water Resource Management and Drought Plan rather than two separate plans. The Consumer Council supports this proposal. A single consolidated plan covering a six-year period would reduce the costs passed through to the consumer created by having two plans and support the NI Executive s commitment to reduce the burden of regulation while protecting consumers. 4. Private Sewerage Systems Proposal Make sewer adoption agreements a pre-requisite of connection to the public sewerage system. The Consumer Council supports this proposal, in principle. The scale of the existing problem with unadopted, poorly constructed private sewers underlines the need for steps to be taken to prevent this problem getting worse 2. Adoption agreements as a pre-requisite of connection to the public sewerage system for all new residential properties will give consumers confidence that homes have been built with sewers up to standard and that the developer is confident in the standard of sewerage infrastructure built to serve the development. It will also provide assurance that the future maintenance of the sewers will be provided by NI Water, and help maintain the integrity of the public sewer system. We understand that this proposal will place an additional burden on the property developer. While not wanting to damage the recovery evident in the construction industry 3 we believe that the assurance provided to potential home buyers through these agreements makes this a requirement that can benefit the property market and is one a confident construction industry will see the benefit in. 2 NI Water estimates there are c2,800 instances of private sewers connected to the public system which have not been adopted. The estimated cost of bringing these up to standard is between 41M and 100M. 3 Federation of Master Builders State of Trade survey July 2014.

4 We would seek further detail on the proposal including the standards required, the methods of testing, the timing of adoption and the release of surety bonds. We see sewer adoption agreements being of benefit to all new housing and would request that the proposal is amended to remove the exclusion of developments under five houses. We would request further information to explain the rationale for excluding developments under five houses and an estimate of the number of home owners who will be affected by this exclusion. Proposal Make sewer adoption a pre-requisite of private streets adoption. The Consumer Council supports this proposal in principle. The proposal would provide the same levels of assurance to buyers of properties not connected to the public sewerage system as to those that are. While the proposal will place an additional burden on the developer and create an administrative requirement we agree with the Department that this is reasonable given the protection it will provide to householders and buyers. We would seek further detail on the proposal including the standards required, the methods of testing, the timing of adoption and the release of surety bonds. As per proposal 4.1 we see sewer adoption agreements being of benefit to all new housing and would request that the proposal is amended to remove the exclusion of developments under five houses. We would request further information to explain the rationale for excluding developments under five houses and an estimate of the number of home owners who will be affected by this exclusion. In our evidence to the Regional Development Committee s inquiry into unadopted roads we called for a responsibility to be placed on the property vendor to provide information on the status of the sewers to the buyer 4. The proposed adoption agreements will remove this need 4 Consumer Council evidence to the Regional Development Committee 2 May 2012, paragraphs 186, 187 and 192.

5 for new build residential property as formal guarantees will be provided that the sewerage system will be or has been adopted. A need for disclosure remains for existing properties as per the Committee s recommendation to adapt the property certificate (see also proposal 6.4a). Proposal Review the current level of sewer bonds (at 40 per cent / 50 per cent of the estimated construction costs). The Consumer Council supports the need for sewer bonds to be set at an appropriate level. This level should be reflective of the need to provide safe high standard sewerage services to consumers in their homes, the needs of NI Water, the budgetary requirements of Government funding and the Government desire to help to continue to regenerate the construction industry. The Consumer Council does not have the expertise to propose a percentage figure. Figures provided by the Department indicate that the majority of sewer adoption agreements do not encounter any problems but that as the bond level is reduced the likelihood of it being insufficient increases. We agree with the Department that it is not appropriate for the costs or the risk of costs to be passed to the consumer through a bond level that is set too low. The rationale used to agree a percentage figure should be explained in detail and be available to the public. The review of the level of the bond should include a review of the process of calling in the bond and bond release. 5. Surface Water Drainage and New Connections Proposal Prohibit new surface water connections to the combined sewer system for non-residential development. The Consumer Council supports this proposal. The contribution that retaining rain water on-site and reducing the volume entering the combined system can make to reducing flood risk is understood by consumers. In seeking ways to prevent flooding more

6 sustainable, less expensive methods of managing rain water above ground are supported by three quarters of consumers 5, and over two thirds (67 per cent) of consumers and 57 per cent of businesses support specifically limiting new buildings from draining rain water to the sewerage system 6. Proposal Encourage sustainable drainage systems in new residential development by restricting surface water connections to the combined sewerage system. The Consumer Council supports this proposal. Looking at how new housing developments are planned and managed and the development of sustainable drainage systems (SuDS) is a justified area for further action given its cumulative impact on flooding and flood risk and is supported by consumers. Reviewing proposed building developments to avoid flooding is seen as being important by the majority of consumers (93 per cent) and businesses (78 per cent) 7. We recognise that considerably more work is required on this proposal such as options if SuDS are not viable, providing guidelines on planning, construction, maintenance, discharge licensing etc. Consumers often comment on the importance of good planning, the effect of development and residential areas and the reduction of green areas such as lawns contributing to drainage issues and increasing the likelihood of flooding 8. With support in and around 60 per cent 9, consumers see the benefits of options such as ponds, agreed flood points and bogs or marshland but had questions around the long term management of non-private or community SuDS schemes in housing developments. These include health and safety, effective maintenance and public liability that we do not believe have been effectively addressed in the Consultation Document (for example paragraph 6.16). 5 Ibid. 6 Consumer Council research August Consumer views on a long term water strategy for Northern Ireland. Research by the Consumer Council May Ibid. Also Consumer Council research paper on flood protection and insurance April 2013; Consumer Council research August Consumer Council research August 2014.

7 Proposal Incentivise the use of Sustainable Drainage Systems through the Reasonable Cost Allowance. The Consumer Council supports this proposal but our support must be viewed in conjunction with the points raised under proposal Maintaining and Replacing Private Supply Pipes Proposal Introduce an information programme to educate the public about the risks of lead supply pipes. The Consumer Council supports this proposal. It supports one of the Consumer Council s core aims of informing and empowering consumers. An information campaign on the risks of lead is supported by 85 per cent of consumers 10. Eight out of ten consumers agree that drinking water quality can be affected by lead and that long term health risks can be associated with lead supply pipes. However, the need for an education programme is clear as: Only 37 per cent of consumers think the home owner is responsible for the supply pipe; Half of consumers are unsure if their supply pipes contain lead; Only six per cent of consumers know how to check for lead; and Only seven per cent know how to reduce the risks of lead. 11 An education campaign must be sensitive to raising public health concerns and should be implemented as a package in conjunction with the help provided to consumers through proposals 6.2 and 6.3. Proposal Enable NI Water to replace private supply pipes with the owner s consent. The Consumer Council supports this proposal. Eighty nine per cent of consumers supported this proposal with no cost being passed to the property owner. The level of support fell to 60 per 10 Consumer Council research August Consumer Council research August 2014.

8 cent when the proposal was for replacement with a pre-determined fee to be paid by the property owner. Similar levels of support were evident if the reason was the replacement of lead supply pipes or to address leakage 12. While further work is needed to establish if the work could be delivered for free or what level the pre-determined fee would be it is clear that the approach of NI Water undertaking the work with consent enjoys consumers support. Proposal Incentivise property owners to remove lead supply pipes by providing some financial support. The Consumer Council supports this proposal. A level of financial support is necessary if we look at consumers propensity to pay towards the replacement of lead private supply pipes. We told consumers that the average cost to replace lead private supply pipes is 500 per property. We then asked if they lived in a property with a lead supply pipe would they be willing to pay the costs of replacement. Figure 1. Propensity to pay towards the replacement of lead private supply pipes (%) 12 Consumer Council research August 2014.

9 A minority would be willing to pay all the costs with around half being willing to pay some. The thirty per cent unwilling to pay the costs were asked why this was the case. The most common reason was that it is too costly (55 per cent), it should not be the homeowner s responsibility (51 per cent) and it is too much hassle (15 per cent). Proposal 6.3 aims to overcome the difficulties of it being too costly by providing some Government financial support. To understand the required level of Government support we asked consumers if they would be willing to pay differing levels of the average 500. Figure 2. Willingness to pay the costs of replacement (by property tenure) (% cumulative) Figure 2 shows willingness to pay different percentages of the overall costs by housing tenure. For example, for all property tenures 95 per cent of respondents (excluding the five per cent not sure ) would be willing to pay nothing i.e. Government pays 100 per cent of the cost. This declines to 65 per cent who would be willing to pay up to 25 per cent of the costs, 44 per cent who would be willing to pay half, 24 per cent willing to pay 75 per cent and 14 per cent willing to pay all.

10 The steady decline in willingness to pay across all housing tenures as the proposed proportion paid by Government falls indicates that a significant level of financial support for each property will be required to stimulate private lead supply pipe replacement. This is particularly clear if we look at the differences between consumers in owned/mortgaged properties and those in rental properties (both private and public). A similar trend is evident when we look at respondents willingness to pay by socio-economic group. Figure 3. Willingness to pay the costs of replacement (by SEG) (% cumulative) The findings indicate that to achieve an overall policy aim of removing private lead supply pipes a level of financial support from Government will be required at or near 100 per cent of the costs of replacement, particularly to support consumers in rental property or lower SEG groups.

11 Proposal Promote lead supply pipe replacement through the house purchase/rental market by: 6.4a Requiring anyone selling or letting a property to declare whether lead is present in the external supply pipes. The Consumer Council supports this proposal under one of our core aims of informing and empowering consumers. A requirement to disclose the presence of lead pipes is supported by 83 per cent of consumers 13. When looking at the levels of support for this proposal consumers raised questions on how to find out if lead was present not only in the external supply pipe but also the property s internal plumbing. Progression of this proposal will require plans for the provision of an easy and affordable method of testing for lead (potentially as part of an education programme under proposal 6.1). In our evidence to the Regional Development Committee s inquiry into unadopted roads we requested that the seller s property information pack should contain information on the status of the sewerage system. A similar approach to inform of the presence of lead pipes, supported by lead pipe replacement schemes for the vendor (proposal 6.3), will enable an informed and negotiated purchase, help remove any buyer beware difficulties and drive lead supply pipe removal. 6.4b Requiring anyone selling or letting a property to replace any external lead private supply pipes. The Consumer Council does not support this proposal. While 59 per cent of consumers do 14 we would have concerns that this may risk inhibiting or delaying the sale or letting of property by placing a more substantive barrier in the way of property transactions. Of the 41 per cent of consumers who did not think homeowners should have to replace lead pipes upon selling/letting the main reason given was that it should be the buyer s responsibility and should be included in the property survey. The Consumer Council agrees that a strong regime of disclosure developed under proposal 6.4a will provide a level of 13 Consumer Council research August Consumer Council research August 2014.

12 information/protection to the consumer whereby the more restrictive measures proposed under 6.4b would not be required. Proposal Strengthen NI Water s powers to enter commercial property in order to address leakage from burst pipes in relation to critical issues. The Consumer Council supports this proposal provided there are clear definitions of what is a critical issue and robust measures are in place to manage the decision making process before the power would be used. The decision making process should be transparent and available for public scrutiny. This may be through the outstanding Code of Practice with respect to work on private land Summary We recognise that some proposals are not without risk, may attract some criticism and will place additional burdens and responsibilities on different organisations and on consumers. Aside from proposals 2 and 6.4b the Consumer Council views the overall package of proposals as a set of progressive measures designed to tackle or prevent issues causing detriment to consumers. A significant amount of further work is required to develop the detail of many of the proposals contained within the consultation. As noted throughout the above response the Consumer Council is agreeing to the principle of the proposal; this should not be taken for unconditional agreement in the absence of the required level of detail or as the proposals are developed. The Consumer Council looks forward to the completion and publication of Regulatory Impact Assessments for all policy options and would ask that Department share these as they become available. The Consumer Council remains committed to work with all stakeholders in the development of legislative and policy proposals for the benefit of consumers. 15 Article 244 The Water and Sewerage Services (Northern Ireland) Order 2006.

13 If you wish to discuss the above in more detail, please contact Graham Smith, Interim Head of Water Yours sincerely Graham Smith Interim Head of Water