My Lords, the issue of bad debt, particularly in the private rented sector, was debated in Committee. Amendment 71 seeks to prohibit water companies from making good their losses due to non-payment through increased charges on good, bill-paying customers.
Under this amendment, water companies must follow up on any debt with the specific resident customer. However, getting the details of the customer can be difficult in properties where the resident customer is a tenant in the private rented sector. The landlord of the property will be required by proposed new subsection (2) to supply details of the tenant to the water company to enable it to chase up the debt. This is an improvement on the present system, where the company simply makes good the shortfall across all other customers.
Ofwat estimates that 80% of bad debt originates from the private rented sector. As stated in Committee, it is estimated that about £15 is added to honest bill-payers’ water bills to cover bills left unpaid. We are aware that there are people who have difficulty with affordability—we have discussed this already today—but on the other hand there are those who can pay but simply do not. This is effectively stealing water from other genuine bill-payers, adding an unnecessary cost to their bills. The situation can be rectified by this amendment.
This approach is supported by the Consumer Council for Water, Ofwat, the EFRA Committee in the other place, and water companies. In June 2012 the EFRA Committee said:
“It is simply unacceptable that, at a time when so many are struggling to afford their water bills, customers face the additional burden of subsidising those who refuse to pay what they owe”.
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The Government have shown a preference for a more voluntary approach, but it is simply not working and a tougher stance must be taken to ensure the following three things: first, that tenants cannot get away with not paying their water bills; secondly, that water companies can effectively get in touch with and track down those who refuse to pay; and, thirdly, that honest customers do not have to foot the bill.
We must provide an incentive for water companies to collect their debt, which this amendment seeks to do. It forms part of a package of amendments which would make sure that the water companies and industry acted responsibly when dealing with issues such as affordability and customer service.
Although it must be recognised that some water companies such as Yorkshire Water are doing well and have already started to tackle these issues, there are still many more which have not. It is simply not fair that customers should pay for water companies’ inability to collect their own debt.
The Flood and Water Management Act 2010 made provision for secondary legislation to be introduced to deal with this problem, but none has been forthcoming. Apparently, the Government consider it to be a great burden on landlords simply to tell the water companies who their tenants are. Meanwhile, they consider it reasonable to require landlords to check the immigration status of their tenants. Perhaps the Minister can speak on his department’s views. In the absence of implementation of regulation, we could make sure that we corrected the situation with this amendment. Water companies must take bad debt more seriously and pursue those who could but do not pay rather than impose greater financial burdens on those who do. I beg to move.