Water Service vulnerable to collective action?

Interesting piece from Newton Emerson from the Irish News last week, in which he points out a potential loophole in legislation that could open the Water Service to a concerted action against a rise in Water Rates.By Newton Emerson

It is my rare and genuine pleasure to put a reader’s mind at rest. Newry native ‘BL’ wrote to the Irish News last Wednesday to ask if those not paying their water bill could have their benefits cut. The answer is a resounding no. This was confirmed two weeks ago with the publication of the Draft Sewerage and Water Charges Information Sharing (Northern Ireland) Order 2006, which sets out the relationship between welfare and water bills.

The Order allows the Department of Regional Development or “any person or body providing services to the Department” to obtain names and addresses from the Social Security Agency. These will be used to compile a billing database for whatever “person or body” acquires the ‘Government-Owned Water Company’ when the government decides to stop owning it. Anyone in receipt of Housing Benefit can also be identified as they are eligible for a discount on their bills. However, the Order contains no powers to cut benefits if the water charge is not paid – and no wonder.

It is absolutely vital, when discussing non-payment of the water charge, to remember that the issue is privatisation. If it was merely a case of paying more for water, then we would merely be facing higher domestic rates. The sole purpose of separate water charging is to prepare the Water Service for a quick sale – and a private company cannot expect the welfare system to collect its debts. Such a thing would be unprecedented, impractical and illegal.

For example, it would be a clear breach of European competition law – and that’s a real European law, unlike the totally bogus ‘European requirement’ that the NIO made up to justify water charging in the first place.

So if your benefits can’t be cut for non-payment, what can happen? The Water Service has contracted out billing to a private consortium called ‘Crystal Alliance’. Refusing to pay a private company is a civil matter, so there is no possibility of a criminal conviction, a criminal record or even brief imprisonment. Initial water bills will be quite small, because rates have been artificially jacked up over the next three years to ‘soften the blow’.

This means it won’t pay Crystal Alliance to take people to court – so, being a profit-driven business, it won’t. Instead, it will send out increasingly hysterical but utterly meaningless threats. Crystal Alliance can’t cut off your water, because disconnecting a domestic supply is illegal under the 1999 Water (Northern Ireland) Order. It can threaten you with ‘credit blacklisting’ but this is a laughable concept in today’s consumer borrowing bonanza.

In practice, anyone with a credit card will find their ability to borrow unaffected – while anyone with a mortgage will still be showered with dodgy loan offers daily. Consequently, Crystal Alliance will give up hassling you after a few months and sell your debt on to a recovery firm for a proportion of the money owed – if it can. Like any market, the secondary debt market reacts badly to uncertainty.

Just how much is an unpaid Northern Ireland water bill actually worth? Half its face value? A quarter? A tenth? Nobody knows – nor has the legality of pursuing private debt from a ‘Government-Owned’ utility been tested in our courts. What if the debt recovery firm picks on someone with a good solicitor – and loses? These are just some of the questions the NIO has left to be sorted out as privatisation rolls along. If enough people throw a spanner in the works, they will never be sorted out at all.

Last year, water companies in England and Wales wrote off £960 million in bad debt from the 15 per cent of householders who consistently refuse to pay their bills. Further action would be unprofitable – and profits are the name of the game. Last week, Severn Trent Water reported profits of £400 million after raising prices by 15 per cent. However, it still missed leakage targets set by the industry regulator.

Meanwhile, Thames Water applied for an emergency drought order. These are the ‘benefits’ of 17 years of privatisation. If separate water charging succeeds, similar profits will also be extracted from Northern Ireland while the pipes and sewers rot beneath our feet. Eventually, when its contract runs out, the lucky monopoly will retire and leave taxpayers to clean up the mess. That is why privatisation must be stopped. But fortunately we can stop it, by refusing to pay the separate charge – and there isn’t one damn thing the NIO can do about it.

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