Vale of Glamorgan Council
Cyngor Bro Morgannwg
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Agenda Item No 14

The Vale of Glamorgan Council

Cabinet Meeting: 1 October, 2018

Report of the Cabinet Member for Housing and Building Services

Water Charge Collection Agreement with Dwr Cymru Cyf (Welsh Water)

Purpose of the Report

  1. To advise Cabinet of a request to enter into an updated agreement with Dwr Cymru Cyfyngedig (DCC) for the collection of water charges from Council tenants in the Vale of Glamorgan which due to data protection issues will be determined via a later report on this agenda under Part II.

Recommendations

  1. That Cabinet notes the requirement for an agreement for the collection of water charges from Council tenants.

Reasons for the Recommendations

  1. The agreement will provide Council tenants with a simple and convenient way of paying for water charges as part of the total rental charge for their home.

Background

  1. The Council has collected water charges on behalf of Dwr Cymru Cyfyngedig (DCC) for several years. The existing agreement, signed in 2004, allows tenants to pay their water charges as part of their weekly rent.  The arrangement is very popular with tenants. During a recent survey of all tenants there was very strong support for its continuation, with 92% agreeing that the Council collecting water charges was a convenient way of paying for their water use.
  2. The original agreement was set up as the Council had good knowledge of its customers and in many cases already had an established record of collecting payments. The Council has been very effective at collecting charges and is well placed to provide advice and support to tenants who are experiencing financial difficulties.
  3. Council tenants pay the standard water charges under the terms of the collection agreement. This is calculated using the rateable value of the property and the annual charge is then converted into a weekly charge which is levied as a service charge added to the property rent. Water charges are not Housing Benefit eligible so all tenants are required to pay for their water and sewerage.
  4. Council tenants can request to have water meters fitted at their homes. When a meter is fitted, the property and the associated charges are removed from the schedule of addresses which forms part of the agreement. The tenant then pays DCC directly for water charges to reflect their personal usage. There are a small number of properties where it is not possible for DCC to install water meters. In these instances, the tenant is subject to an 'assessed measures' charge. This means they are removed from the collection agreement and pay DCC directly an amount which is deemed to be equivalent to the charges they would have incurred if a water meter had been fitted. This ensures a tenant does not suffer financially from being unable to have a water meter fitted.
  5. Under the terms of the current agreement, an annual charge is calculated for the total water costs and the Council is then invoiced quarterly for the charges less an agreed rate of commission. The Council is liable for any bad debts or charges for periods when homes are empty.

Relevant Issues and Options

  1. The collection of water charges by Council staff is time consuming and results in additional costs, including staff time and transaction costs (associated with processing payments). There are also risks associated with the failure to collect charges and debts arise when properties are empty. With this in mind, a cost benefit analysis was carried out looking at the risks/ costs against the income to the Council. The analysis identified the Council as being very effective at recovering water charges and demonstrated a financial benefit to the Council from continuing the agreement. 
  2. Changes to the Welfare system and in particular the introduction of Universal Credit, mean that more tenants will be responsible for paying their housing costs to the Council (where previously Housing Benefit may have been paid directly on their behalf). This change will help tenants to take responsibility for financial matters and reinforce the payment relationship with the Council arising from the existing water charges collection arrangement.
  3. The Money Advice team assist people to maximise their income and budget responsibly. As part of this package of assistance, Advisors are able to ensure that tenants on low income are able to move onto a subsidised Help U tariff, this has saved many tenants over £7 per week on water charges. Extending the relationship with DCC will mean that Council Officers are able to verify tenants circumstances and maximise the number of tenants who are able to benefit from reduced water charges
  4. Around two years ago, a successful legal claim was brought against London Borough of Southwark in respect of water charges. The Court found that the Council, under the terms of their collection agreement with the Water Authority, had been acting as a reseller of water, rather than an agent for collection purposes. As a consequence, Southwark were forced to repay all commission it had received via the collection agreement it had in place.
  5. In light of the ruling, the Council took expert legal advice and was advised the collection agreement in place in the Vale of Glamorgan was different to that in Southwark and the Council was acting as an agent of the Water Authority (not as a reseller). The legal advice recommended a small number of wording changes to the existing collection agreement in order to re-emphasise this relationship. These changes have now been accepted by DCC and incorporated into the revised collection agreement.

Monitoring and evaluation

  1. Water charge arrears are monitored as part of the rent arrears performance reporting.
  2. Periodic analysis of costs and benefits will take place to ensure the Council continues to derive a benefit from the collection agreement.
  3. The Collection Agreement will be in place for an initial period of two years following which it will be reviewed by both parties.  Thereafter, the agreement will continue until terminated by either party on the giving of 12 months' notice. .

Resource Implications (Financial and Employment)

  1. The costs incurred recovering water charges on behalf of DCC are covered by the commission received under the collection agreement. This include the costs of staff time recovering charges, transaction costs associated with processing payments, administration time, plus an allowance for bad debts and voids.

Sustainability and Climate Change Implications

  1. The costs of tenancy failure are high and have an impact on other Council services i.e. Homelessness, Social Services. Keeping tenants in their homes and helping them to minimise debts will therefore remain a key priority for the Housing team. 

Legal Implications (to Include Human Rights Implications)

  1. There is no legal requirement for the Council to collect water charges on behalf of DCC. The Council elects to do so because there are benefits to tenants and high levels of satisfaction amongst tenants with the current arrangements.
  2. The updated collection agreement incorporates legal advice and strengthens the intention for the Council to act as an agent of DCC in respect of the recovery of water charges.

Crime and Disorder Implications

  1. There are no specific Crime and Disorder implications arising from this Policy.

Equal Opportunities Implications (to include Welsh Language issues)

  1. The collection agreement takes into account the needs of tenants from a variety of backgrounds as well as people with protected characteristics. A range of support and assistance is available to ensure that tenants are able to pay their water charges and an undertaking within the agreement ensures that tenants at risk of eviction for water charges will be referred to DCC to establish if they are eligible for financial help via its Customer Assistance Fund.

Corporate/Service Objectives

  1. This Policy is consistent with the overarching vision within the new Corporate Plan, namely 'Strong Communities with a Bright Future' as well as the Well Being Outcome, 'An inclusive and Safe Vale'.
  2. It is also consistent with some of the core objectives (which support the Well Being outcomes), in particular: reducing poverty and social exclusion and providing decent homes and safe communities.

Policy Framework and Budget

  1. This is a matter for executive decision by Cabinet.

Consultation (including Ward Member Consultation)

  1. This report will affect all council tenants and therefore no individual ward member consultation has been undertaken.

Relevant Scrutiny Committee

  1. Homes and Safe Communities.

Background Papers

None

Contact Officer

Nick Jones, Housing & Strategic Projects Team Leader.

Officers Consulted

Pam Toms, Operational Manager, Public Housing

Mike Ingram, Head of Housing

Committee Reports

Operational Manager Finance

Responsible Officer:

Miles Punter, Director of Environment and Housing.