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Debt Advice Handbook 14th edition

Water charges
Water companies charge for water, sewerage and environmental services on the basis of either a meter or the old rating system, which was abolished as the basis of a local tax in April 1990 in England and Wales. Under the rating system, every dwelling was given a rateable value. Each year, water companies set a ’rate in the pound’, which converts this rateable value into an annual charge. For example, a rate of 20p in the pound converts a rateable value of £300 to an amount of water rates payable of £60.
If a water meter is installed, a client pays for the actual amount of water used. Charges are per cubic metre at a rate set by the water company. A standing charge is also payable. There may also be installation and inspection charges. Separate charges are levied for sewerage and environmental services. These charges are based either on the rateable value of the property or on the amount of water used as recorded by the meter.
The legal position
Water charges are payable under the Water Industry Act 1991. Water companies may use county court action to recover arrears, as they cannot disconnect domestic properties on the ground of non-payment. Water companies may waive charges if there is an ongoing supply in accordance with their charging scheme, but tend to only do so if the property is empty, including if the occupier is in hospital or residential care.
Special features
Bills for unmetered water charges are sent out in April and payment is due in advance, unless the client takes advantage of one of the payment options offered by all the water companies. For example, payment can be made in eight to 10 instalments or weekly/monthly in cases of financial hardship. If the client defaults, the water company can take action to recover the outstanding balance for the remainder of the year.
Many of the companies’ charges schemes allow them to apportion the bill if a client includes her/his water charges in a bankruptcy or a debt relief order. The company then sends a new bill to the client for the remainder of the current year. This practice should be challenged, as it clearly conflicts with the definitions of ’bankruptcy’ and ’qualifying debt’ in the Insolvency Act.
It is important to check that the bill refers to a property in which the client actually lives, or lived, and that the dates of occupation and name(s) shown on the bill are correct. The occupier of the property is the person liable to pay the bill. If there is more than one occupier, each is jointly and severally liable.1In Wales, a landlord is required to provide information to the water company about her/his tenant(s) (the occupiers). If the landlord fails to do so, the landlord is jointly and severally liable for the water charges with the tenant: s144C Water Industry Act 1991.
If there is a meter, bills are issued every three or six months based on meter readings carried out by the company’s staff or the client. If this is not possible, an estimated bill is issued. Bills should be checked and queried if they seem too high as there may be a hidden leak or the meter may be faulty.
Since 30 June 1999, water companies cannot disconnect for arrears of domestic water charges and this is therefore a non-priority debt (see Chapter 9), but the realistic cost of current water charges must be in the financial statement to avoid ongoing enforcement action.2s1 and Sch 1 Water Industry Act 1999
Ofwat guidelines, Dealing with household customers in debt (available at ofwat.gov.uk/publication/dealing-with-customers-in-debt-guidelines-2), sets out the following principles, which companies should include in their own codes of practice.
    Companies should be proactive in attempting to contact clients who fall into debt as early as possible and at all stages of the debt management process.
    Companies should provide clients with a reasonable range of payment frequencies and methods. The entire range of options should be properly and widely advertised to ensure that clients can select the arrangement that best suits their circumstances.
    Paperwork sent to clients should be written in plain language and in a courteous and non-threatening style, but should clearly set out the action the company will take if the client fails to make a payment or contact the company, along with the possible consequences for the client.
    When agreeing payment arrangements, the client’s circumstances (including her/his ability to pay) should be taken into account wherever possible. Although payment arrangements should aim to recover the current year’s charges as well as a payment towards the arrears, the guidelines recognise that the company may need to take a long-term view of the period over which the client can clear her/his debt and should accept any realistic offer of payment made by the client or a debt adviser on her/his behalf.
    Clients whose accounts have been passed to collectors should receive the same treatment as if the account had remained with the water company and the potential consequences should be no more severe than if the service were provided by the water company – ie, the collector should comply with its own industry codes of practice as well as the water company’s code of practice. Although the guidelines recognise that this may not be possible if the debt is sold (which should only be done if all other debt recovery methods have been attempted), they seem to assume that such clients will be ’won’t pays’ and so not entitled to the same level of ’service’.
    Some water companies use local authorities or housing associations as billing agents to bill and collect water charges from their tenants. The guidelines state that affected clients should be made aware of which organisation they are the customer and the implications of this compared with clients who are billed directly. If the water charges are collected as part of the rent, the guidelines state that where eviction for non-payment of rent (including unpaid water charges) is a possibility, alternative solutions should be found. However, it is possible that such provisions in a tenancy agreement could be challenged under the Unfair Terms in Consumer Contracts Regulations 1999. In this situation, obtain specialist housing advice.
Advisers should be aware that there is a vulnerable groups scheme (known as the WaterSure scheme) available for clients on low incomes with water meters, which caps their charges. See ofwat.gov.uk/households/customer-assistance/watersure. Many water companies have set up trust funds to assist clients with paying arrears of water charges. Check your local company’s website for details of any scheme operating in the area.3In addition, Adviser 105 contains a series of articles on dealing with water debt. See also, J Guy, ‘Maximising Income: using utility trust funds’, Quarterly Account 4, IMA.
Auriga publishes a leaflet summarising the schemes or services water (and energy) companies can provide to help customers, available at aurigaservices.co.uk or from Auriga Services, Emmanuel Court, 12–14 Mill Street, Sutton Coldfield B72 1TJ, tel: 0121 321 1324.
 
1     In Wales, a landlord is required to provide information to the water company about her/his tenant(s) (the occupiers). If the landlord fails to do so, the landlord is jointly and severally liable for the water charges with the tenant: s144C Water Industry Act 1991. »
2     s1 and Sch 1 Water Industry Act 1999 »
3     In addition, Adviser 105 contains a series of articles on dealing with water debt. See also, J Guy, ‘Maximising Income: using utility trust funds’, Quarterly Account 4, IMA.  »
Checklist for action
Advisers should take the following action.
    Check liability. Consider whether the client is eligible for assistance under the water company’s consumer assistance scheme(s).
    Assist the client to choose a strategy from Chapter 9, as this is a non-priority debt.