48.Bad debt adds around £21 to the average consumer’s annual water and sewerage bill. Some 80% of those owing money to water company are tenants. Section 45 of the Act provides measures for water companies to pursue landlords as well as tenants for unpaid bills if a landlord fails to provide information on the tenant for billing purposes. These provisions have not been commenced although the Government is keeping this under review.
49.The Government’s Memorandum notes that respondents to its consultation on the section 45 regulations expressed a strong preference for a voluntary scheme, owing to the potential burdens a mandatory approach could place on small and micro-businesses.63 Water UK has since established a secure data portal, ‘Landlord Tap’, to allow landlords to share information on their tenants with WaSCs.64
50.Much of the water industry considered that implementing section 45 would help to bring down levels of bad debt.65 Not all WaSCs concurred, with Anglian Water opposing commencement.66 Water industry witnesses considered that the voluntary approach is not working well, despite promotion to landlords.67 Wales has adopted a mandatory approach: 58,000 rental properties from the rental market have been signed up by landlords to provide tenant information. In contrast, Landlord Tap has secured only 13,000 from the much larger English rental property market: a rate of fewer than 10 notifications per 1000 rented properties.68
51.However, some witnesses, including the Residential Landlords Association, had strong reservations about imposing additional costly requirements on landlords, many of whom were small or micro-businesses.69
52.Customers are paying on average £21 a year to cover the debts of those who do not pay their water and sewerage bills. With a high proportion of this debt attributable to rented properties, it is vital that landlords share information on their tenants with Water and Sewerage Companies. Whilst a voluntary approach is preferable to imposing mandatory requirements on landlords, many of whom are small and micro-businesses, the current scheme is not working well in England.
53.The Government must review the operation of voluntary initiatives such as Landlord Tap with landlords and the water industry and to make recommendations by the end of 2017 on improving communication so as to improve take-up of the scheme. We recommend also that the Government assesses by the end of 2017 the experience of the Welsh water industry to analyse the impact of a mandatory scheme on both bad debt levels and on costs on landlords. Take-up of the voluntary scheme must significantly improve by the end of 2018: we recommend that our successor Committee consider reviewing this issue then to assess whether the Government should commence the provisions of the Flood and Water Management Act to require landlords to provide information to Water and Sewerage Companies about their tenants for billing purposes.
25 April 2017