The purpose of the Exemption Scheme is to support small-medium sized third sector organisations by exempting them from meeting the cost of water and sewerage services.
The Scottish Government is currently consulting on a new exemption scheme for third sector organisations. After this consultation, details of the new scheme will be announced in the summer, with changes coming into effect in 2015. The total amount of relief available through the scheme will remain at the current level (£4 million pounds). This means that although some organisations will get relief for the first time, others may lose their exemption.
Removing the historic exemption
The main change being proposed is to the historical exemption. Under the current scheme, organisations are only eligible if they have been receiving the exemption since 1999. Because eligibility has not been retested the historical exemption has led to organisations which now have considerably greater income than the threshold continuing to receive exemption. The new scheme will remove that historical exemption which will make the scheme fairer by opening it up to organisations that were formed after 1999. However, it will also mean organisations whose income has increased will have to pay water charges for the first time.
The main eligibility criteria being proposed for the new scheme
- The scheme is open to all third sector organisations
- The organisation must have a gross annual income of less than £75,000
- The organisation must not be a retail outlet or occupied by a Local Authority
- The organisation must not possess a permanent alcohol license, except under an occasional permission
Additional questions raised by the consultation
1. Should the scheme be an exemption or discount scheme?
A reduction or graded scheme could introduce differing levels of reduction based on an organisations income. Although this would mean reducing the threshold for exemption it could mean additional organisations with income above £75,000 receiving at least some reduction.
2. Should the scheme by open to all third sector organisations or just charities?
Restricting the scheme to charities would be simpler to administrate and therefore less costly. However, it would mean that third sector organisations who do not want to or cannot be charities would be ineligible.
3. What transitional arrangements are in place?
It has been proposed that organisations losing exemption are given a two year notice period from 2014 before being required to pay in 2016. Is this sufficient or could alternative transitional arrangements be made?
4. Future Review
The exact number of organisations who might be eligible for the new scheme is unknown, so the figures used to determine the threshold are based on assumptions. The regulatory period is six years so a review in the interim has been suggested to ensure the scheme is benefiting as many organisations as possible.
5. Definition of third sector
The consultation defines a third sector body as:
- Is set up to have a positive community purpose;
- Is volunteer-led;
- Is not principally set up to distribute profit to shareholders; and
- Is not run by or affiliated to a political party or government body
This definition of a third sector seems open to interpretation, does it describe and define well enough what a third sector organisation is?
The closing date for responses is Friday 14 February 2014.
The full consultation document is available on the Scottish Government website. SCVO will be submitting a response, but it is important that as many organisations as possible also submit their views.
If you would like to discuss the consultation further or contribute your views please contact SCVO Policy Officer, Felix Spittal – 01463 251 724.