Memorandum submitted by Water UK
The Business and Enterprise Select Committee
is reviewing future services to be offered through the post office
network and has asked for suggestions of additional services that
could increase the network's financial viability.
Water UK—which represents all UK water
and wastewater service suppliers at national and European level—has
been working with other organizations to develop a new service
that could be delivered by the post office network. We would be
grateful if the Committee would consider the benefits that "Saving
from Poverty" would bring to the post office, to essential
service providers, to Government Departments, and to a wide range
of low income customers.
This new type of service, known as "Saving
from Poverty", could be delivered by an enhanced version
of the existing Post Office Card Account and would be a way of
helping a wide range of lower income customers to manage their
finances.
The account would collect income, as well as
benefits, and make direct payments for essential services such
as water, gas and electricity, on an agreed customer—creditor
basis, without the penalty payments associated wit the current
direct debit systems.
Household debt is a serious and increasing issue
for the water sector with £1 billion in revenue outstanding
from households for longer than three months and over £670 million
outstanding for more than 12 months. Part of this debt will
be down to those who can, but choose not to, pay. However, more
than half will be down to vulnerable or low income customers who
are genuinely struggling to pay their bills and Water UK is keen
to promote a scheme which will assist them.
We believe that the Post Office Card Account,
with enhanced functionality, could meet the needs of up to eight
million customers and potentially anyone who does not currently
use Direct Debit to pay their bills—around 50% of the population
(Future Foundation, Inclusive Financial Services, Understanding
the Market for weekly budgeting and debt management services,
March 2007)
Three water companies and one energy company
provided data to AT Kearney who carried out the business case
feasibility study on the "Saving from Poverty" model.
Extrapolation suggests that the current debt collection practices
across the electricity, gas and water sectors cost utilities nearly
£600 million. Overall, across both the public and private
sectors, vulnerable consumers account for at lease £1.6 billion
in additional direct cost-to-serve. "Saving from Poverty"
could reduce this cost significantly.
Former Secretary of State for the Environment,
Food and Rural Affairs, Phil Woolas MP said that "Saving
from Poverty" was "a significant proposal for addressing
fuel poverty and water affordability". More recently,
Alan Duncan MP, former Shadow Secretary of State for Business,
Enterprise and Regulatory Reform, said something very similar
"a significant weapon for attacking the growing pain of
fuel poverty".
We hope that the Committee will consider "Saving
from Poverty" as an additional service that the post office
might offer. It would have the advantage of increasing the number
of people using their post office, it would make a significant
contribution to addressing the challenge of household debt, and
would be a means of promoting financial inclusion.
January 2009
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