The burden of bad debt in the water industry, and its impact on everyone’s water bills, is to be tackled through a new consultation launched by Environment Minister, Richard Benyon.
Every year the failure of some customers to pay their water bills adds an average of £15 to every other customer’s bill, which the Government is determined to see reduced.
Water Minister Richard Benyon said:
“I want to tackle the problem of bad debt in the water industry as people not paying their bills cost those that do £15 a year. It is just not right that responsible people have to pick up the bills of those who are not paying.
“However, mindful of the burden that regulation may impose, I want to explore whether we can take action through a voluntary approach.
“We will consider the consultation responses before making a final decision but we must find a way to fill the information gap which is at the heart of this problem.”
The level of outstanding revenue from domestic water customers in the UK was over £1.6 billion in 2010-11. The industry had to write off approximately £328 million of household debt in 2010-11 which leads to higher bills for those that do pay.
The majority of water debtors are tenants in rented properties and, unlike for electricity and gas bills, there is currently no requirement on the owners of the building to provide information on the identity of the occupier to the water company.
With the aim to lower bills, the Government is launching a consultation in England which will consider two options;
1) the introduction of a regulatory measure, which would make landlords liable for the water charges in their tenants’ properties if they fail to supply details of their tenants to the water company, or
2) a voluntary alternative which would ask landlords and other holders of data on occupancy to share this information with the water company.
The level of bad debt in the water industry is approximately three times higher than that of the energy sector, despite water and sewerage bills being around a third of the cost of average energy bills.
The Government, as part of the Water White Paper, recently announced measures to enable water companies to introduce new social tariffs for people struggling to pay their bills.