LGA seeks legal advice for councils caught in water bill scandal

In March the High Court ruled Southwark Council had overcharged tenants for their water bills. The council had an arrangement with Thames Water where it collected water charges from tenants, deducted a commission from the total payments and sent the rest to Thames Water.

The High Court ruled the council had acted unlawfully by failing to pass the commission savings on to the tenants.

Thames Water has now ended its agreement with Southwark Council and the council has already paid £15.3m in compensation to tenants, according to its latest report. It will pay a total of £26.8m.

The LGA is now seeking legal advice on the judgement on behalf of other councils that have the same arrangement with Thames Water. No decision has been made whether to take legal action to challenge the High Court judgement.

Waltham Forest, which has a similar agreement to Southwark, has also received complaints from tenants.

A spokesperson for the council said the income from the commission they charge Thames Water is used to fund the council’s housing stock.

The commission also covers the administration costs of collecting tenants’ payments for water and covers the risk of any arrears, he added.

The spokesperson said if the council did not charge for providing the service then it would “in effect be providing a subsidy to Thames Water, as it would be administering these arrangements for free while incurring costs”.

Paul Olford, a Waltham Forest council tenant, told Inside Housing: “[Councils] are flexing their combined muscle to fight some of the poorest in society.”