§ Mr. Freud
asked the Secretary of State for the Environment (1) what will be the cost to local authorities of implementing the House of Lords' decision regarding the Daymond case; and if he will make a statement;
(2) what action he proposes to take as a result of the House of Lords' decision concerning the Daymond appeal relating to sewerage charges.
§ Mr. John Silkin
The direct effect of the House of Lords' judgment is to declare illegal all charges for sewerage and sewage disposal levied during 1974–75 and the current year on properties which are not connected to the public sewers.
This is the result of faulty drafting of the Water Act 1973. It is quite clear from their statements in this House and elsewhere that the Conservative Government intended the Act to allow such charges to be made on all properties, whether connected or not, during a transitional period.
Whatever the original intention, however, it is right that those who have paid illegal charges should have them refunded. This is a big and complex task. Calculation of refunds will be complicated by the need to take account of the 50 per cent. relief granted to unconnected domestic properties this year, by the special domestic rating relief which we gave in 1974–75 to help those whose combined bill for rates and water and sewerage charges in the first year of reorganisation would otherwise have risen by an unacceptable amount, and by the fact that the general services charge covers other items besides sewerage and sewage disposal. Considerable work will also be involved in identifying all the properties, other than domestic ones, which are unconnected. Arrangements are, therefore, being made with local authorities for refunds to be made by way of rebates from next year's rates 741W demand. It would not be practicable for refunds to be made before then.
The water authorities estimate that the total cost of refunds will be something over £60 million. Given their statutory obligation to break even, they will have to recover this cost from higher charges to the rest of their consumers—the great majority—whose property is connected to the sewers. These connected consumers would, of course, have faced higher charges in the past two years if the unconnected properties had not been charged.
After giving careful consideration to the views of the National Water Council and the local authority associations that the Exchequer should meet the cost of refunds, the Government have concluded, that it would not be right to impose a new burden on public expenditure in this way. No part of the costs of refunds will fall on local authorities.
I am advised that legislation will be necessary to empower the water authorities to make refunds. The Government propose to introduce the necessary legislation with a view to having it on the statute book by the end of March. We intend to take the opportunity, in that legislation, to remove the doubt which the House of Lords' judgment raises about the water authorities' power to charge for those services, such as pollution control, which are undertaken for the benefit of the community at large and have no identifiable users.