Environment, Food and Rural Affairs CommitteeWritten evidence submitted by the Department for Environment Food and Rural Affairs
Water White Paper – Follow up Information
In your letter of 18 April you asked for further information on the legislative constraints to the sharing of data on benefits claimants with water companies. The sharing of data is controlled by the Data Protection Act 1998. Under the Act, data sharing may be lawful under certain circumstances, including where the subject has given their informed consent. This means, for example, that if a water customer was to apply for a social tariff and consent to that company confirming with DWP that the customer was in receipt of benefits that could be lawful. Similarly, DWP could ask all benefits recipients to consent to having their details shared with their water company.
Data sharing may also be lawful to enable an organisation to comply with a statutory function or legal obligation, for example, a mandated scheme.
The Committee may be aware of DECC’s Warm Home Discount scheme. Government shares information about people in receipt of a subset of Pension Credit Guarantee with participating energy suppliers, in order that the energy company can provide those low income pensioners with a supplier-funded discount from their fuel bill. There is special legislative authority for this data sharing under section 142 of the Pensions Act 2008 and in regulations. This means that the pensioners’ direct consent is not needed. The use of the information is strictly limited to the provision of the discount of their energy bill.
Article eight of the European Convention on Human Rights deals with the right to private life. Any new legislation which seeks legal authority for data sharing would have to be compatible with that Article. If we were to design a data sharing scheme for water we would have to consider how we could demonstrate this. In addition to showing Data Protection Act compliance, we might, for example, want to show that the people whose data was to be shared would automatically receive a corresponding benefit in order to show that any interference with the right to private life was proportionate.
Water companies are able to reduce the bills of those customers who would otherwise struggle to pay in full through company social tariffs. Many water companies have requested access to benefits data so that they can passport customers in receipt of benefits to a social tariff.
We would seek to ensure that such a scheme was able to provide a proportionate benefit to a suitable group of people (ie those actually struggling with water affordability). In their scheme, DECC were able to identify a clear group at risk of fuel poverty—older, poorer pensioners, who were well represented amongst the recipients of a subset of Pension Credit Guarantee. However, the profile of people at risk of water affordability problems is less clear. Ofwat found that the group most at risk is working-age adults living alone. Many of those customers would save money by paying for their water via a meter. Ofwat found that 60% of households at risk of affordability problems do not receive benefits. The picture of those most at risk of water affordability problems does not present a clear group of benefits recipients who could be automatically eligible for a discount via a data sharing scheme. Providing a guaranteed discount for all benefits recipients (or a subset group) would be very expensive for other water customers, who would fund this through cross-subsidy. Furthermore, the evidence suggests that it would not be an effective way to target those at risk of water affordability problems, the majority of whom are not on benefits.
On your second point, our affordability consultation stated that impact assessments would be prepared for policy proposals included in the White Paper. The key change which was being considered was a change to the WaterSure cap. Having carried out an assessment of the likely costs and benefits of this proposal the Government decided not to make any change. This decision reflected concern that the proposed change would not deliver support to many of those most at risk of affordability problems. Responses to the affordability consultation emphasised that many people at risk of affordability problems fall outside of the narrow WaterSure eligibility criteria. A decision to amend the cap would also have increased the cross-subsidy paid by bill payers across the country, with a disproportionate impact on bill payers in the South West. South West bill payers already make the greatest contribution to the costs of the WaterSure scheme and under the proposed change to the cap this would have increased to around eight pounds per household per year. Placing an additional burden on South West bill payers ran counter to the Government’s objective of reducing the disproportionately high bills faced by households in that part of the country. Our analysis also showed that Government funding of WaterSure would not have been affordable, as the costs would have been completely open-ended as levels of metering increase. Having determined that a change to the WaterSure cap would not have represented good value for money we did not publish a formal impact assessment as there was no policy change.
We have prepared an impact assessment of the decision to issue guidance on company social tariffs, which will be published alongside the final guidance. We did not prepare an impact assessment on the payment to South West Water as this was a spending decision made by the Chancellor.
May 2012