In further evidence of potential costs to councils from the economic downturn, Liverpool has vowed to take High Court action to ensure power to residents’ fire alarms, lifts and water pump systems is not disconnected and the council is not left facing huge financial liabilities.
Councils have a statutory duty to ensure residents are not exposed to health and safety risks from the disconnection of such services.
However, a report to Liverpool’s executive board claimed that “increasingly disconnections are averted only at the last minute and, in one case, actually occurred”.
The report stated the utility company said it would reconnect the supply only “if the council not only paid the arrears, but also accepted liability for future arrears”.
With officers claiming arrears in some blocks have built up to five-figure sums, the council has resolved to resist the demands and will only pay debts for “modest amounts”.
“With the credit crunch there is a real possibility that there will be more disconnection as leaseholders run into financial problems,” Marilyn Fielding (Lib Dem), executive member for safer communities, said. “We will do all we can to avoid property being disconnected, but we need to ensure we do not become liable for future debts.”
Options open to the council include legal action to prevent disconnection or pursuing freeholders or management services companies for non-payment.
But David Hewett, chief executive of the Association of Residential Management Associations, warned such action would leave homeowners unable to sell their flats.
“Blocks of flats are often owned by the residents through a resident management company. If the council were to put the company into liquidation, the residents would either lose the freehold or control over the management of services. The flats would effectively become unsellable.”
Officers at Liverpool claimed there have been similar situations in Manchester.