2. Utilities and household debt

CPAG

Child support payments

Gas and electricity charges

Maintenance payments

Water charges

Child support payments

The term ‘child support’ is used here to describe child maintenance paid by parents under the statutory scheme run by the Child Maintenance Service, which is part of the Department for Work and Pensions. Some clients may have historic arrears from a previous scheme run by the Child Support Agency. All Child Support Agency cases have now been closed and ongoing arrangements ended. Parents needing ongoing child support have been encouraged to make a ‘family-based arrangement’. If a family-based arrangement is not possible, they can make a new application to the Child Maintenance Service under the ‘2012 scheme’.

If the client is a paying parent and her/his calculation is based on a ‘historic income’ figure from HM Revenue & Customs and her/his current gross weekly income is at least 25 per cent

different from the historic income figure, the client can ask for a supersession for her/his calculation to be adjusted. This also applies if the client’s calculation is based on current income and her/his current gross weekly income has changed by at least 25 per cent. So, for example, if the client’s income has changed for a reason connected with coronavirus, s/he may be able to ask for her/his child support payment to be changed. The Child Maintenance Service will only be able to do this if the change is reported by the client.

The legal position

The statutory child support scheme is governed mainly by the Child Support Act 1991 and the Child Maintenance and Other Payments Act 2008 (as amended by the Child Support Act 1995, the Child Support, Pensions and Social Security Act 2000 and the Welfare Reform Act 2012) and subsequent regulations and amendments.

Special features

Child support payments are worked out by the Child Maintenance Service and are based on a percentage of the paying parent’s gross weekly income. The percentage depends on the number of qualifying children (including any relevant non-resident children – ie, a child for whom the parent is paying maintenance under another maintenance arrangement). The gross income figure used is reduced to take account of any ‘relevant other children’ – ie, a child for whom the paying parent or her/his partner get child benefit.

An

appeal to an independent First-tier Tribunal can be made if anything relating to the child support calculation is disputed. Specialist advice should be obtained.

The Child Maintenance Service charges fees for:

•dealing with new applications (the fee can be waived for people under 19 and victims of domestic violence or abuse1See Guidance on Regulation 4(3) of the Child Support Fees Regulations 2014: how the Secretary of State will determine if an applicant is a victim of domestic violence or abuse, available at );

•collecting payments and passing them on to the person looking after the child (the receiving parent), for which the paying parent pays 20 per cent in addition to each child support payment and 4 per cent is deducted from the payment made to the receiving parent. There are no collection fees if the parties agree arrangements for the paying parent to make payments directly to the receiving parent;

•taking enforcement action, for which fixed charges of between £50 and £300 are charged to the paying parent.

The view of the Child Maintenance Service is that enforcement of child support arrears is a priority if the paying parent is liable to pay ongoing maintenance for her/his children. Enforcement in arrears-only cases in which there is no ongoing maintenance being paid is likely to be a lower priority. There are no set rules on how quickly arrears of child support should be paid, although the Child Maintenance Service aims to clear arrears within a maximum of two years, at a rate of up to 40 per cent of the paying parent’s income. However, enforcement officers have the discretion to extend this period in appropriate cases. All decisions relating to the collection and enforcement of child support are discretionary and the welfare of any child affected must be taken into account. This includes if the paying parent has a child in a new relationship. There is no right of appeal by way of revision and then appeal to the First-tier Tribunal against a discretionary decision, but there is a right of appeal to the courts in some cases – eg, to the family court in England and Wales against a Child Maintenace Service decision to impose an order to deduct funds (regular or lump-sum) from a bank account. If necessary, a complaint can be made, which might be escalated to the Independent Case Examiner or even the Parliamentary and Health Service Ombudsman.

If child support is being paid through the Child Maintenance Service’s collection service, it can consider taking enforcement action as soon as a payment is missed. If child support is being paid directly to the receiving parent by the paying parent, the receiving parent should notify the Child Maintenance Service if a payment is missed. Otherwise, the Child Maintenance Service will not be aware of this. If the Child Maintenance Service then decides to take enforcement action, it will also start managing ongoing payments through its collection service (and collection fees will be charged).

The paying parent should contact the Child Maintenance Service as soon as a payment is missed to explain why and to make arrangements to pay, if s/he wishes to avoid enforcement action. The first step in enforcement is usually to make either a deduction from earnings order or, if this is not appropriate (eg, if the paying parent is not employed or is self-employed), an order to take money from a bank account. A court order is not required.

Other enforcement action (but not recovery of arrears from the estate of a deceased paying parent) requires a liability order from the magistrates’ court. The court must accept that the payments specified are due from the paying parent and have not been made, but cannot question the child support calculation itself.

Note: from 12 July 2006, the six-year limitation period (see here) on the Child Maintenance Service applying for a liability order was abolished.

If a liability order is made, it can be enforced by taking control of goods (see Chapter 15) or the county court can make a charging order (see here) or third-party debt order (see here). The Child Maintenance Service can also apply to the High Court for an order preventing the disposal of assets if the paying parent has disposed of, or is about to dispose of, assets with the intention of avoiding payment of child support.

If all other methods of recovering arrears have failed, the Child Maintenance Service can apply to the court to commit a person to prison for a maximum of six weeks (an option of last resort). Before making a committal order, the magistrates must consider whether it would instead be appropriate to disqualify her/him from driving or disqualify her/him from holding or applying for a passport or other UK travel authorisation for up to two years. In order to do so, the court must decide that the parent has the means to pay, but has ‘wilfully refused or culpably neglected’ to do so (see here).

The Child Maintenance Service has said it is only likely to use this power in exceptional circumstances and only where arrears of over £1,000 remain outstanding. The Child Maintenance Service cannot seek both disqualification from holding a passport/driving licence and imprisonment.

The Child Maintenance Service can write off arrears if it considers that it would be unfair or inappropriate to enforce the liability and:

•the receiving parent has requested that it cease taking action on the arrears; or

•the receiving parent has died; or

•the paying parent died before 25 January 2010 and there is no further action that can be taken to recover the arrears from her/his estate; or

•the arrears accrued in respect of an ‘interim maintenance assessment’ made between 5 April 1993 and 18 April 1995; or

•it has advised the paying parent that the arrears have been permanently suspended and that no further action will be taken to recover them.

The Child Maintenance Service has the power to write off arrears that remain outstanding from closed Child Support Agency cases when the CMS considers that it will not be cost-effective to pursue the arrears. If the arrears are more than £500 (or £1,000 for cases with an effective date before 1 November 2008), the receiving parent is sent a notice of the intention to write off the arrears and will be given 60 days to contact the Child Maintenance Service if s/he believes that the arrears should not be written off. The Child Maintenance Service may still decide to write off the arrears if it believes that there is no reasonable prospect of the arrears being cleared.

If the receiving parent does not respond within 60 days, the arrears are automatically written off. Where the arrears are less than £500 (£1,000 for pre-1 November 2008 cases), the arrears can be written off without asking the receiving parent, although s/he will still be notified. Arrears below £65 are written off and no notice sent.

For more information about the child support scheme, including arrears and enforcement, see CPAG’s Child Support Handbook (see Appendix 2).

1 See Guidance on Regulation 4(3) of the Child Support Fees Regulations 2014: how the Secretary of State will determine if an applicant is a victim of domestic violence or abuse, available at »

Checklist for action

Advisers should take the following action.

•Consider whether emergency action is necessary (see Chapter 8).

•Check liability.

•Assist the client to choose a strategy from Chapter 8 because this is a priority debt.

Gas and electricity charges

Alert: Ofgem has published guidance entitled Help with Bills - England and Wales - August 2022. Produced by the Department for BEIS, Citizens Advice, Energy UK and Ofgem, it is intended for front-line advisers to help them answer clients’ questions about their energy bills, give correct advice to people who need support with higher bills and sign-post them to where they can get help. You can see it at: .

Ofgem has also issued new guidance to suppliers entitled Good practice for supporting customers in payment difficulty. Ofgem has also sent an open letter to suppliers: Regulatory expectations on supporting customers in payment difficulty, acknowledging that consumers face an increase in energy bills this winter and, notwithstanding government support, many will struggle with their bills this winter and beyond that. Ofgem expects suppliers to take the following actions in line with their licence obligations:

•Ensure customers can easily contact their supplier and are treated fairly when they do.

•Identify customers in vulnerable situations and provide additional support where appropriate, including ensuring that Priority Service Register data is up-to-date.

•Make proactive contact with customers in payment difficulty through a range of communication methods.

•Always take into account a customer’s ability to pay, including before escalating the debt recovery process, giving due consideration to information provided by third parties representing them, including use of the Standard Financial Statement.

•Ensure pre-payment meters are safe and reasonably practicable in every case and act quickly to change the meter to non-pre-payment if necessary. Additional credit support should be offered to customers who have self-disconnected or self-rationed where it is in their best interest and/or where they are in a vulnerable situation. Force-fitting a pre-payment meter under warrant is always a last resort and all other routes of debt recovery should be fully exhausted before applying for a warrant. Ofgem guidance points out that it might not be safe and reasonably practicable to force customers on to prepayment meters (or switch smart meters to prepayment mode) where they are risk of self-disconnecting or to continue with prepayment once installed if clients are self-disconnecting.

•Debt recovery action should always be fair and proportionate, and not escalated too quickly. Ensure third party debt collection agencies treat customers fairly.

You can and also the .

Subsequently, OFGEM has written an open letter to suppliers regarding what is says ‘appears to be serious failings’ in the remote switching of smart meters from credit to pre-payment mode without full regard to licence conditions, leading to serious detriment to some customers. Suppliers have been reminded that they must treat all domestic customers fairly and make extra effort to identify and respond to the needs of customers in vulnerable situations. Smart meters should not be remotely switched without an assessment that it is ‘safe and reasonably practicable’ to do so. In addition, following remote switching, suppliers should take proactive steps to ensure it is safe and reasonable practicable for the customer to stay in pre-payment mode, which could involve monitoring self-disconnection. If necessary, suppliers should make alternative arrangements which do not involve pre-payment. You can .

Following press and television reports that suppliers were forcibly fitting pre-payment meters in homes where the occupants appeared to be in a vulnerable situation. Ofgem confirmed that energy suppliers had agreed to immediately halt the forced installation of, and remote transfers to, pre-payment meters until a new code of practice has been agreed by energy suppliers.

Meanwhile, Ofgem told suppliers to check their recent forced, and remotely switched, pre-payment meter installations with a view to considering their removal and payment of compensation where Ofgem rules were not followed.

The pause on the forced fitting of pre-payment meters and the remote switching of smart meters to pre-payment mode without express customer consent has been lifted with effect from 18 April 2023 following all UK domestic energy suppliers signing up to an updated code of practice. Note: However, should not re-start forced fitting of pre-payment meters or remote switching of smart meters until they can demonstrate their readiness to implement the new code. Ofgem is consulting on incorporating the code into suppliers’ licence conditions so that it is legally enforceable. The code includes provisions requiring suppliers (and their contractors) to:

•make at least 10 attempts to contact a customer before forced installation of a pre-payment meter;

•carry out a site welfare visit before a pre-payment meter is installed;

•refrain from all forced installations for the highest risk customers including:

◦households which require a continuous supply for health reasons;

◦people over 85 years of age (where there is no other support in the property);

◦households with residents with severe health issues, including terminal illnesses or those with a medical dependency on a warm home; and

◦where there is no-one within the household who has the ability to top up the meter due to physical or mental incapacity;

•wear audio or body cameras on all warrant installation or site welfare visits to check for vulnerabilities (footage to be available for audit);

•give a £30 credit per meter (or equivalent non-disconnection period) on all warrant installations or remote switches as a short-term measure to remove the risk of customers going off supply; and

•reassess the case once a customer has repaid debts owed and contact the customer to offer assessment of whether pre-payment remains the most suitable and preferred payment method of choice for the customer.

.

New guidance has been issued by the Department for Business, Energy and Industrial Strategy (BEIS) entitled which includes guidance at p.27 on how suppliers should treat the EBSS payments to clients who are in arrears. How the EBSS payments are treated depends on the payment method for ongoing usage:

•Direct debit: If the EBSS payment is geater than the amount by which the supplier reduced the direct debit, any balance will be applied towards the arrears;

•Credit payment (-ie, on receipt of bill): The whole of the EBSS payment can be used towards the arrears at the supplier’s discretion whether or not a repayment plan is in place;

•Smart/Traditional prepayment meter: The whole of the EBSS payment can be used towards the arrears at the supplier’s discretion whether or not a repayment plan is in place.

The guidance reminds suppliers that licence condition 27 requires them to take into account a client’s ability to pay and so you should encourage suppliers to use the whole EBSS payment towards ongoing usage where otherwise the client would be unable to afford payment for this. You can .

Gas and electricity suppliers charge for their fuel in a number of ways. Pre-payment meters, quarterly accounts, direct debit and online schemes are common payment methods. Clients have a choice of supplier, although a supplier to whom arrears are owed can object to a transfer in certain circumstances. The industry is regulated by Ofgem. Suppliers are required to operate codes of practice on the payment of bills and disconnection, including guidance for customers who may have difficulty in paying. You should obtain copies of the codes of practice of your clients’ suppliers.

Suppliers are required to take into account clients ability to pay when recovering debts. With effect from 15 December 2020, new measures were announced by Ofgem to support clients with pre-payment meters and people with fuel debt. Suppliers are now expected to:

•offer emergency credit to clients struggling to top up pre-payment meters;

•offer clients ‘friendly hours credit’ provided overnight, at weekends and on public holidays when their meters have run out or are running low;

•offer extra pre-payment credit to clients in vulnerable circumstances to give them time to make alternative arrangements to pay;

•ensure they put clients in debt on realistic and sustainable repayment plans, including making proactive contact with clients and setting repayment rates based on ability to pay.

The legal position

Electricity

A person is liable to pay an electricity bill if:

•s/he has signed a contract for the supply of electricity; or

•no one else was liable for the bill or her/his liability has come to an end (see below) and s/he is the owner/occupier of premises which have been supplied with electricity (known as a ’deemed contract’).

A person is not liable to pay an electricity bill if:

•s/he has not a made a contract with a supplier; and

•someone else is liable to pay the bill and her/his liability has not come to an end (see below).

A person is no longer liable to pay an electricity bill under an actual or deemed contract if:

•s/he has terminated any contract in accordance with its terms (but s/he is still liable if s/he continues to be supplied with electricity); or

•s/he ceases to be the owner/occupier of the property, starting from the day s/he leaves the property, provided s/he has given at least two days’ notice of leaving; or

•s/he did not give notice before leaving the property, on the earliest of:

◦two working days after s/he actually gave notice of ceasing to be an owner/occupier; or

◦when someone else begins to own/occupy the property and takes a supply of electricity to those premises.

This means that if the fuel supply is in the sole name of the client’s partner who has subsequently left the home, the client is not liable for any arrears up to that date. However, s/he could be liable for the cost of any fuel supplied after this date, regardless of whether her/his partner has terminated the contract.

Advise clients to arrange for a final reading of the meter before leaving the property, if possible, and that they should, at least, read the meter themselves in order to be able to check their final bill.

Gas

A person is liable to pay a gas bill if:

•s/he has signed a contract for the supply of gas; or

•no one else was liable for the bill or her/his liability has come to an end, but s/he has continued to be supplied with gas (known as a ’deemed contract’).

A person currently liable under an actual or deemed contract remains liable until:

•s/he terminates the contract in accordance with its terms (but if s/he still occupies the premises and continues to be supplied with gas, s/he remains liable to pay for the gas supplied); or

•s/he ceases to occupy the premises, provided s/he has given at least two working days’ notice that s/he intended to leave; or

•if notice was not given before s/he left the premises, the earliest of:

◦28 days after s/he informed the supplier that s/he has left the premises; or

◦the date when another person requires a supply of gas.

Advise clients to arrange for a final reading of the meter before leaving the property, if possible, and that they should, at least, read the meter themselves in order to be able to check their final bill.

Special features of electricity and gas arrears

Fuel supplies may be disconnected if there are arrears, and this is likely therefore to be a priority debt (see Chapter 8). The prioritisation of the debt depends on the client’s continued need for that fuel at her/his present address.

Note: a supplier cannot transfer a debt from a previous property to a new account and then disconnect that fuel supply for the previous debt. A supply can only be disconnected at the address to which the bill relates.1Sch 6 para 2 EA 1989; Sch 2B para 7 GA 1986, as amended by UA 2000. Although the legislation refers to unpaid charges for the supply of gas/electricity to ‘any premises’, it then goes on to provide that the supplier may disconnect ‘the premises’. If the legislation had intended the supplier to be able to disconnect any premises and not just the premises to which the supply relates, the legislation could have specifically said so.

It may be possible to reduce charges by changing supplier. Under the industry’s licence condition 14, if the arrears are at least 28 days old and are not in dispute, the old supplier can object to the transfer unless the arrears are paid. This does not apply to clients with pre-payment meters, provided the debt does not exceed £500 and the client agrees that the new supplier can collect the arrears through the meter. If the client has both gas and electricity from the same supplier, the figure is £500 per fuel. If the transfer goes ahead without objection, the arrears cannot be transferred to the new supplier.

A pre-payment meter can only be fitted at the address to which the bill relates (unless the client requests otherwise).

Estimated bills

Alert: Standard Licence Condition (SLC) 27.15 currently requires suppliers to ‘take all reasonable steps to ensure that the fixed amount of the regular direct debit payment is based on the best and most current information available… including information as to the quantity of electricity/gas which the licensee reasonably estimates has been or will be supplied…’ (unless the supplier’s contract with the client clearly and expressly provides for a different method of calculation). With effect from 21 October 2022, Ofgem has amended SLC 27.15 by deleting the reference to contractual conditions (so that suppliers will no longer be able to rely on these when setting the amount of a direct debit) and also by deleting the reference to taking ‘all reasonable steps’ so that suppliers will be required to ensure any direct debit is based on the best and most current information available. Note that suppliers will still be able to estimate future usage (- eg, over the winter) when setting the amount of a direct debit.2See G O’Malley, ‘Unaffordable Direct Debits’, Adviser online, 1 September 2022 You should, therefore, advise clients who pay by direct debit to regularly check their usage and provide accurate and up-to-date readings to suppliers where it appears a direct debit may have been set at an unreasonably high level.

Arrears of gas or electricity payments may arise as a result of high bills. While high bills may be caused by high consumption, price increases or previous underpayments, they may also be caused by estimated bills based on wrong assumptions about the amount of fuel used.

Many bills are based on estimated meter readings. Under their licence conditions, suppliers are only required to obtain actual meter readings once every two years. If the estimated reading is different to the actual reading, the client should read the meter her/himself and ask for this reading to be used in order to avoid either an overpayment or an underpayment which could lead to arrears. The name and address of the client, as well as the address to which fuel was supplied, should be noted from the bill.

If the bill is estimated and the estimated reading is higher than the actual reading, it is possible to reduce the amount owing. The bill will explain (often by means of an ‘E’ next to a reading) whether an estimated reading has been given. Clients can read their own meters and provide the supplier with their reading, and so should never be disconnected on the basis of an estimated bill. You should ask the client to read the meter and request an amended bill.

Backbilling

Ofgem has introduced a licence condition (applying to both electricity and gas suppliers) to protect customers from backbills. The licence condition applies to all meter types and payment methods. With effect from May 2018, when a supplier issues a bill, it can only seek to recover charges for energy consumed in the previous 12 months unless:

•it has previously issued a compliant bill and is chasing previously billed charges; or

•the client behaves in an ‘obstructive or manifestly unreasonable way’.

Ofgem has provided a few examples of when it would consider a client’s behaviour to be ‘obstructive or manifestly unreasonable’:

•where the client behaves unlawfully by stealing electricity or gas or not keeping her/his meter in working order (where the client is using her/his own meter); or

•the client prevents physical access to the meter – eg, by not allowing a meter reader into the home without good reason.

Ofgem has confirmed that it does not consider a client to be ‘obstructive or manifestly unreasonable’ when s/he does not supply a meter reading. If clients do not respond to requests for a meter reading, suppliers should take a meter reading themselves to avoid billing based on estimates. This means suppliers will have to put more effort into obtaining meter readings from their customers.3Ofgem, Decision: Modification of the electricity and gas supply licences to introduce rules on backbilling to improve customer outcomes,

Social tariffs

Social tariffs (reductions on the standard tariff) have been phased out, but clients on a low income (eg, getting pension credit) might also qualify for a £140 Warm Home Discount. See for more details.

Meter faults

If a gas or electricity meter is registering fuel consumption at too high a rate, the client will receive a bill that is higher than it should be. According to the industry, meter faults are rare but, if the client believes a meter is faulty, the fuel supplier will check the accuracy of the meter if requested to do so.

See CPAG’s Fuel Rights Handbook for more details (see Appendix 2).

Meter tampering

Tampering with a meter in order to prevent it registering or to reduce the amount it is registering is a criminal offence. Accusations of tampering usually follow a visit to the client’s home by a meter reader who has noticed and reported something unusual about the meter. The supplier should write to the client informing her/him of an investigation into suspected tampering. If the meter is considered to be in a dangerous condition, it may be unusable pending the investigation. The investigation should be carried out in accordance with the code of practice and you should obtain a copy of this from the supplier.

If a client is threatened with prosecution, s/he should be referred to a solicitor.

Other assistance

Clients may be able to obtain a grant to pay off fuel debts.4See also M Egan, ‘The Good Trust Fund Guide’, Adviser 164 Some energy suppliers have trust funds to help customers who are in debt, or may fund projects for the fuel poor. Grants are available for electricity and gas bills and may also be available to pay other essential household bills. In response to OFGEM’s April 2022 increase in the fuel price cap, the British Gas Energy Trust (BGET) has launched the British Gas Energy Support Fund to provide help to British Gas customers with debts of £250 - £750. This new scheme (which will run alongside the existing BGET scheme) aims to help those who are most financially vulnerable who are struggling with their fuel bills. Auriga Services (which works with utility companies to assist customers who are vulnerable or in financial hardship) publishes a booklet summarising the schemes, called Help with water and energy bills, available at .

Clients can also take steps to help save energy and reduce fuel bills. The Energy Saving Trust offers free advice on ways to reduce fuel consumption and should be aware of grants that are available locally to help cover the cost of energy efficiency measures. See or telephone 0800 444 202.

All suppliers must provide a range of free services (including quarterly meter readings) to clients who are on their Priority Services Register. This is available to clients who:

•have a disability; or

•are over pension age; or

•are chronically sick; or

•are visually impaired or have hearing difficulties.

See CPAG’s Fuel Rights Handbook for more details (see Appendix 2). Thanks to funding from Indigo Trust, this handbook is now available online for free.

1 Sch 6 para 2 EA 1989; Sch 2B para 7 GA 1986, as amended by UA 2000. Although the legislation refers to unpaid charges for the supply of gas/electricity to ‘any premises’, it then goes on to provide that the supplier may disconnect ‘the premises’. If the legislation had intended the supplier to be able to disconnect any premises and not just the premises to which the supply relates, the legislation could have specifically said so. »

2 See G O’Malley, ‘Unaffordable Direct Debits’, Adviser online, 1 September 2022 »

3 Ofgem, Decision: Modification of the electricity and gas supply licences to introduce rules on backbilling to improve customer outcomes, »

4 See also M Egan, ‘The Good Trust Fund Guide’, Adviser 164 »

Checklist for action

Advisers should take the following action.

•Consider whether emergency action is necessary (see Chapter 8).

•Check to see whether an application for breathing space would be an appropriate course of action (see here).

•Consider a debt relief order (DRO) application. Fuel arrears are a qualifying debt for a DRO (see here).

•Check liability and whether the client is eligible for any assistance with the charges.

•Assist the client to choose a strategy from Chapter 8, as this is a priority debt.

Maintenance payments

Before April 1993, either the magistrates’ court or county court made orders to require a parent or ex-spouse to make maintenance payments to the other partner for her/himself and/or any children.

From April 1993, child maintenance payment powers passed to the Child Support Agency (the predecessor of the Child Maintenance Service – see here). The only new court orders made after this date are for applications not covered by the child support scheme (eg, for additional maintenance) and for spousal maintenance.

The legal position

Magistrates’ courts make maintenance orders and also collect and review maintenance orders made by the county court, divorce registry and High Court.1s1 MOA 1958

1 s1 MOA 1958 »

Special features

If a maintenance order is unpaid, the magistrates’ court has powers similar to those for unpaid fines (see Chapter 14). Maintenance payable under a court order should be distinguished from voluntary maintenance payments, even those written as a legal agreement.

Checklist for action

Advisers should take the following action.

•Consider whether emergency action is necessary (see Chapter 8).

•Check liability.

•Assist the client to choose a strategy from Chapter 8 as this is a priority debt.

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 DRO (known as an ‘insolvency clause’). The company then sends a new bill to the client for the remainder of the current year. Specialist debt advice should be sought if the client wishes to challenge this. If a water company has an insolvency clause and on re-billing post-DRO the client refuses to pay, the company may issue a county court claim. The client would then need to enter a defence to the claim and may have to attend a court hearing. if the client were to lose, s/he would have a money judgment for the debt (plus costs) to pay. Alternatively, the client may choose to make alternative arrangements to pay the reissued bill and include the ongoing water charges as a necessary expense in the financial statement.

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 were replaced in May 2022 with the . The new guidelines set out the following principles that water companies should follow to support residential customers in England and Wales pay their bills, access help and repay debts:

•Companies should help make it easy for all customers to pay their water bill, including offering flexible payment and billing frequencies, and choice and availability of payment methods. These payment options should be advertised to all customers.

•Companies should make sure customers who are eligible for help receive it when it is needed. This involves identifying customers in vulnerable circumstances, including customers at risk of falling into debt as well as other life events such as financial abuse and bereavement.

•Wherever practicable, customers whose accounts are managed by, for example, local authorities or housing associations should receive the same level of services and care as customers whose accounts remain with the water company.

•Companies should be proactive in contacting customers in debt to identify whether they are in payment difficulty and use that contact to gain more information about the customer’s ability to pay. Debt recovery strategies should be tailored and companies should stop chasing customers if they are receiving debt advice.

•Communications to customers in debt should be clear, courteous and non-threatening, including setting out clearly the action the company will take if the customer fails to make payment or contact the company. Enforcement action should be used as a last resort: ‘Any enforcement action taken or charges added should be proportionate and reasonable in relation to the circumstances of the customer and the size of the debt. Where possible companies should avoid using High Court enforcement, except in those cases where they can show customers are persistently and deliberately not paying’ (para 5.13).

•Companies should agree payments that are right for each customer in debt: ‘Set repayment levels which are realistic and sustainable given the customer’s circumstances including taking into account all outgoings. Customers should not be pressured into paying the debt in full or in unreasonably large payments’ (para 6.11). Companies should establish each customer’s ability to pay using the standard financial statement and allow the customer sufficient time to consider any payment proposal and seek independent debt advice: ‘Support instalment payment proposals where the customer has worked with a debt adviser who has prepared a budget using the standard financial statement’ (para 6.5). Customers should be referred to the company’s financial hardship fund or other affordability schemes for help and customer shuld be helped to reduce future charges.

•Customers whose accounts are managed by debt recovery agents should, wherever practicable, receive the same level of service and care as those whose accounts remain with the company. Companies should use use reputable debt collection companies that treat customers fairly and in line with agreed levels of service.3For further information, see D Spedding, ‘Paying Fair with Household Customers in Water Debt’, Quarterly Account 65, IMA

Some landlords act as collection agents for water charges. If the tenancy agreement defines the rent as being inclusive of ‘service charges’, then the water charges and the ‘net rent’ are defined as ‘rent’. On arrears accruing, the landlord could take possession action based on non-payment of rent. On the other hand, if there is a distinct, separate obligation in the tenancy agreement for charges such as water charges to be paid, it is likely arrears of these charges would not be considered arrears of rent. In this situation, if the landlord issues possession proceedings, obtain specialist housing advice.4See also The new Ofwat guidelines referred to above provide that, where eviction for non-payment of water charges is a possibility, water companies should discuss such cases with landlords with a view to finding alternative solutions (see para 7.13).

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. 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.5In 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 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 For further information, see D Spedding, ‘Paying Fair with Household Customers in Water Debt’, Quarterly Account 65, IMA »

4 See also »

5 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).

•Check to see if an application for breathing space would be an appropriate course of action (see here).

•Assist the client to choose a strategy from Chapter 9, as this is a non-priority debt.

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