Southwark Council will terminate its contract with Thames Water and offer massive refunds to thousands more residents, after a high court found they had broken the law.
The legal challenge was brought by Camberwell resident, Kim Jones, in March.
The hearing concluded with a verdict that up to 48,000 residents had been overcharged 23 per cent by the council for water and services charges, for which the authority collected payment from its tenants on behalf of Thames Water.
The judge, Mr Justice Newey, said the council had contradicted the ‘2006 Water Resale Order’ by effectively “bought and re-sold water and sewage services” while making a profit.
In April the council released a statement that only tenants who lived in a council property between April 2010 and July 2013 could be owed £240. It has now decided to broaden the time scale from April 1, 2001, to July 28, 2013 – making thousands more residents eligible to claim. According to the council, this will result in refunds totalling £28.6 million.
This, and the decision to end their deal with Thames Water, were approved by Southwark Council’s cabinet members at a public meeting on Tuesday.
Stephanie Cryan, deputy leader of the council and portfolio holder for housing, wrote ahead of the meeting that the council needs to re-evaluate how tenants are charged for water rates.
“The preferred option,” Cllr Cryan wrote, “is to terminate the Council’s contractual agreement with Thames Water, meaning our tenants would have a direct billing arrangement for water rates.
“It is important that we consult with our tenants prior to any formal decision being made. We also need to ensure we help and support our most vulnerable residents in any transition from the current arrangements…”
Documents published ahead of Tuesday’s meeting show the council had forecast that the gross charge for Thames Water, which the council passes on to tenants, would be £13.6m for the 2016/17 financial year, leaving itself with a “commission income” of £2.4m.
Commenting on the council’s decision, Ms Jones’ solicitor, Gareth Mitchell of Deighton Pierce Glynn, said: “This is a significant development for the 48,000 current and former social housing tenants in Southwark who will now receive refunds. We calculate that these refunds will be in the region of £600 and £700 per tenant if in occupation for the whole of the 2001 to 2013 period. These refunds will make a very real difference to significant numbers of low income households.
“However, there are approximately 330,000 other tenants in the Thames Water region entitled to claim refunds. Any tenant in the Thames Water region who is liable to pay a water charge to a local authority landlord or to a housing association landlord is likely to be able to make a claim. Tenants in this position should seek legal advice as soon as possible.”
A statement from councillor Richard Livingstone in April, who at the time was Southwark Council’s cabinet member for housing, said: “While we remain disappointed with the decision, clarity about this arrangement which is used across the country by landlords and water companies is welcome and we now want to move forward.
“The council will also attempt to contact former tenants from that period, and we will set up a system where people can make claims, subject to proof of tenancy.”