Smart card technology springs a leak

A new method of paying for water services is being blamed for an increasing number of disconnections, reports Roger Pearson

The future of an electronic "smart card" method of payment for water services hangs in the balance as the High Court ponders its legality.

Six local authorities – Manchester, Liverpool and Birmingham city councils, and Lancashire County Council and Tameside and Oldham metropolitan borough councils – have lined up against Ofwat, the water industry regulator, and the North West Water and Seven Trent water companies in a test case over the system.

Mr Justice Harrison has reserved judgment in the case. The six authorities, backed by a further 14 local authorities from around the country, claim that the growing use of smart cards to pay for water services is resulting in more disconnections and that consequently they pose a threat to public health.

It was argued before Mr Justice Harrison that the high-tech payment method is illegal because it enables water authorities to override the provisions of the Water Industry Act 1991, which allow councils to use the courts to delay disconnections.

John Howell QC for the local authorities claimed that the system wrongly forced customers to pay their bills or face being cut off without protection from the courts.

He argued that each water company was a monopoly supplier of a vital commodity, saying: "The continued supply of water for domestic purposes is not merely vital for domestic customers but… of vital concern to others."

In Oldham, where the smart card equipment has been installed in 120 homes, it is claimed there were 120 disconnections lasting more than 24 hours between January 1996 and September this year. This compares with just two statutory disconnections in all the 90,000 other Oldham households during the same period.

The medical profession and environmental health workers fear that an increase in the number of disconnections could increase the spread of infectious diseases such as hepatitis A and dysentery.

Ofwat and the water companies denied claims that the system is unlawful and said that disconnection only occurred as a result of a customer failing to keep a card charged with units of credit. Ofwat stressed in its submissions that the payment system could only be installed voluntarily and was aimed at giving customers a more flexible means of paying water bills.