Experian has said that £500million in unpaid bills is accumulated each year by private tenants. The Walker Review confirms says that from every household's water bill, £11 covers others' debts each year.
The review proposes increased metering to conserve water, but also says that customers should be allowed to escape liability for water used. Unlike other utilities, water companies are not allowed to cut off or limit supply and that makes debt collection harder.
This problem has escalated following the government's decision to pay housing benefit to social housing tenants rather that the landlords, who would normally pay the bills.
While there is not a complete lack of sympathy for the water companies – as landlords often have unpaid debt themselves – passing on the debts of others is simply unfair. Added to that, a report by KPMG earlier this year showed water firms were “pouring £1 million down the drain every day” through supply chain inefficiencies.1
In their response to the Walker Review published today, the landlords set out alternative solutions to this problem.
There could be a significant improvement in debt levels if water companies stopped issuing bills to ‘the occupier', and instead worked with landlords to identify when tenancies started and finished. However, the water companies must help themselves by making it easy for landlords to give such notice, and then by promptly acting on the information received.
The water companies are asking the government to consider introducing a similar law to one concerning council tax, which would allow local authorities to pass council tax bills to landlords in situations where the tenant cannot be identified.
Ian Fletcher, BPF director of policy, said: “If the government decides to pursue the passing on of a private debt to an innocent third party we will fight it tooth and nail because it is wholly inequitable. Landlords are neither the consumers of the water being provided, nor the unpaid debt collectors for the nation's water companies. It seems incredible that we are even discussing passing debts from what are very well resourced companies on to what are predominantly small businesses. The policy being suggested in any case simply does not stack up. On the one hand government is urging water conservation through the use of greater water metering, on the other hand this policy would allow tenants to run the taps all night, safe in the knowledge their landlord could face the bill.”
Richard Jones, legal counsel for the RLA, said: “A serious principle is at stake here. Nowhere else in this country is someone compulsorily made responsible for paying for goods or services supplied to another. The water industry is guilty of special pleading by large profitable corporations. Small landlords already have enough problems in collecting money which is due to them. If it is not paid they have to pass it on to the other tenants through higher rents. Landlords should not be expected to underwrite monopolistic water companies in the way which is proposed. Aligning water charges which are charges for a service with council tax is wholly inappropriate and will create many more problems than it solves. It would mean a massive retraining programme for water companies accounts/collection staff and a lot of extra work for them. We are wholly opposed to proposals to make landlords liable.”