Sutton LibDems Break the Law Overcharging Residents £Millions

Sutton’s Lib Dem Council has been illegally making a profit by overcharging their council tenants for water and sewerage services over a period of several years. Not only have they failed to pass on the rates received from the water company as they are legally required to, but have also received a reseller’s fee from the water companies for charging these rates. We estimate the Liberal Democrat Council have profited by over £2million to date. To make matters worse, council tenants were tied into the contract with the Council, and were not allowed to install a water meter to benefit from lower charges (potentially saving some households £100s per year), with some tenants being taken to court for rent arrears which included the inflated water charges.

The law on reselling water and sewerage services

On 1st April, 2001, rules were established to protect consumers who buy their water or sewerage services through a third party company (‘the reseller’) instead of directly from the water company. Under these rules, any reseller who resells water or sewerage services should charge no more than the amount they are charged by the company supplying the water.

Resellers under this legislation are defined in contracts such as the by the use of “Customer” vs “agent”, who have the liability to pay the bill or who add on VAT to downstream users. All of which the Sutton Liberal Democrat Council are described as within their own contracts.

Sutton and Kingston Lib Dems as resellers

Sutton and Kingston LibDems have been embroiled in a multimillion pound scandal to hike up water rates for the whole of their social housing stock where they have illegally profited millions from residents.

In an unredacted contract outlining the provision of water from 2010-2015, Sutton Lib Dems can be seen to be directly profiteering off the back of council tenants.

Contractual terms within the document “Sutton Housing Partnership and Sutton and East Surrey Water – Agreement for the Provision of water services 2010-2011 to 2014-2015” state that the rates charged by the water company to Liberal Democrat Sutton Council would be reduced in 2010 by 10% plus VAT up to a maximum of a 12% reduction in 2014/15 which they then illegally kept for themselves at the expense of tenants.

Liberal Democrat controlled Kingston council has recently suffered a crushing defeat in court over its unlawful activities where it was highlighted that they, similarly to Sutton, had been overcharging residents millions. The court documents outline how Kingston is described as “the Customer” evidencing that they are acting as a reseller, identical to how Sutton is described in its contracts with the water companies, and therefore in direct contravention of the 2001 regulations.

Illegal profiteering

Further clauses go on to outline how Sutton will be invoiced at a reduced rate for the water charges, detailing their role as the reseller, as they benefit from selling on the water at higher rates to council housing tenants who had no option but to pay the inflated charges.

In the document “Sutton Housing Partnership – London Borough of Sutton January 2010”, it is stated “The commission fee for collecting water rates for the water authority was re-negotiated bringing in additional income” in other words the Sutton LibDem Council was knowingly making a profit from their tenants by not passing on the rates from the water companies, in contravention of the legislation.

Troublingly, the unlawful agreement describes how these inflated charges will cover all premises where the water supply provided is not measured by a meter. In a Freedom of Information Request (FOI) made by Independent Councillor Nick Mattey, LBS reports that they have no properties that have a water meter fitted, meaning that all social housing tenants across the borough have been affected.

In addition to the illegal charges levied by Sutton Council, they also received a fee of tens of thousands of pounds from the water companies for levying these rates, in other words they received a further commission for overcharging residents.

Tenants punished further

Similar FOIs also made by Independent Councillor Nick Mattey reveal that the Council has taken legal action against many tenants for non-payment of rent which includes Sutton LibDems illegally high water charges. Other councils which had undertaken similar schemes accepted the court ruling and provided refunds to those affected. Sutton & Kingston however pursued a High Court claim against a council tenant who asked for a refund, dragging out the issue a further 2 years and incurring excess costs.

Councillor’s response

When asked directly about this, Liberal Democrat Councillor Jayne McCoy said “The Council hasn’t raised any money or made any profit by reselling water and sewerage to tenants over the last 15 years” a statement which is clearly contradicted by the court ruling, legislation and other internal documents indicating the Liberal Democrats are willfully lying to residents.

Liberal Democrat Jayne McCoy interestingly was the Chair of the Housing Economy and Business Committee in 2012 which decided to impose these inflated rates on council tenants. Cllr McCoy is also one of the Councillors behind the £millions overcharged to Hackbridge residents tied into the SDEN district heating project where councillors mislead propsective buyers.

Despite Cllr McCoy’s statement that her party and the Council had not been profiting from residents, a 2016 Housing, Economy And Business Committee has constructed a report which recommends that the water and sewerage charge collection arrangements she helped organise be brought to an end due to “outstanding legal issues”. The same report advises that tenants could benefit financially by not being part of the Liberal Democrats scheme.

A final FOI shows the Council’s statement that “The Council has not made any money from tenants over the last six years, or at any time” once again, in direct contradiction of the Council’s own agreements with the water companies and of reports they had compiled themselves, indicating once again that the Liberal Democrat Council is lying to residents in official documents.

Council profits from tenants and residents

Based on the rates shown in the redacted contract, we can report that Sutton Liberal Democrats have extracted from council housing tenants profits in excess of £2million. This figure is also set to be subject to an 8% interest rate when recovered by those affected.

Similarly, Sutton Liberal Democrats are also expected to receive in excess of £3million from overcharging residents who are forced to pay their grossly inflated fees for heating from SDEN.

Like the water charge scandal, Liberal Democrat Councillor Jayne McCoy has refused to acknowledge these issues, and local Liberal Democrat Ward Councillors Ben Andrew, Vince Galligan and Hanna Zuchowska have refused to highlight misrepresentation and overcharging for hundreds of residents, despite mounting evidence to the contrary.

Residents in Sutton are now starting to ask questions about possible corruption within the Liberal Democrats, and asking where the millions of pounds they are illegally extracting from residents are going to. For SDEN, the Liberal Democrats have left residents no choice but to pursue legal action, and for water charges, council housing tenants may well feel obliged to follow the same approach.

Calling Council Tenants!

Are you a Sutton Council Housing Tennant who has paid for water as part of your rent in the last 20 years? If so, you are likely to be entitled to a refund plus interest at 8% since the charges were levied. You can contact Water Claims UK to outline how Sutton Liberal Democrats have profited from you and reclaim your money plus interest.