Will we soon be paying bills to Big Brother?

BIG BROTHER edges closer. Britain's first "super utility" - the firm that runs both water and electricity in the North-west - is bidding to take over handling council tax bills as well.

United Utilities, formed last year by the pounds 1.83bn takeover of Norweb, the electricity supplier, by North West Water, was the centre of one huge row last week when it announced 2,500 job losses. It will be involved in another from tomorrow when it launches a subsidiary, Vertex, which, besides handling all United's billing, will bid for lucrative council tax contracts being put out to tender by increasingly cash-strapped local authorities.

Many of the job losses were a direct result of merging the billing, metering and administration systems of North West Water and Norweb into Vertex after the merger.

The proposal that one company should have access to so much information about people's debts has alarmed consumer groups and civil liberties organisations. "Your whole life is going to be run by one computer owned by one private monopoly," warned Anthony Goldstone, chairman of the water industry watchdog Ofwat's north-west customer services committee. "The danger is, you have a dispute about your water bill, you become a credit risk, and everybody else gets to know about it. You are in effect on a blacklist."

Mr Goldstone has personal reasons for his anxiety. President-elect of the Manchester Chamber of Commerce and Industry, he has many bills to pay. But unlike the rest of us, most of the cheques are ultimately made out to just one company.

His family-owned leisurewear business in north Manchester gets its electricity from Norweb and its water from North West Water. Norweb also supplies him with gas - and plans to provide telephony services at a later date. Now all these bills will come from Vertex, with his council tax bill likely to follow.

He said: "People are concerned about Big Brother, that one large organisation can provide all these services. They are really going to run your life. It will get to the stage where there will be just one bill eventually. There has to be adequate protection for customers and businesses."

"Big Brother? We wish it was," said a Vertex spokesman (light-heartedly, of course). "The council tax business is very competitive. Our firm is not just about billing, anyway. We are providing a wide range of services, such as training."

When Norweb and North West Water joined forces, the water company, which has 2.7 million domestic customers, promised not to cut off users of one utility for not paying bills to the other. It also undertook not to share credit information between its water and electricity divisions. The spokesman said a similar arrangement would exist for Vertex, with billing services to Norweb and North West Water carried out on an arm's-length basis.

But that still means an enormous amount of sensitive credit data about millions of customers is increasingly being stored on one firm's computer. Worse, individuals and business may be unable to inspect such information. "You may not have a legal right to see your credit rating," says Mr Goldstone. "United Utilities should allow access."

Consumer groups are worried. "We are very concerned about the lack of transparency in their financial accounts and the need to keep information about customers absolutely separate," said Linda Lennard, senior policy officer at the National Consumer Council.

The shadow Environment secretary, Frank Dobson, was trenchant. "You are potentially getting into a position of legalised industrial espionage if one private company has all that information on your water, electricity, council tax and business rates."

Several other utilities, however, including Southern Water, London Electricity and Severn Trent, have already formed separate businesses to compete for third-party billing contracts from local councils, though none of them yet has the data processing clout of United Utilities.

Under the Government's compulsory competitive tendering policy for white-collar services, all UK local authorities have to put contracts of more than four years up for competition from this October.

Analysts reckon the programme will generate more than pounds 2bn of business over the next five years. Utilities want a slice of this business as it provides them with a potentially lucrative source of earnings beyond the reach of the industry regulator.

Vertex will also look after telesales, customer services, meter reading, financial services, procurement, computer services and training.

Ofwat is conducting an investigation into several water companies to ensure they comply with guidelines on billing. It wants to ensure that costs and prices are properly ring-fenced so that no one division subsidises another. But Ofwat admits there is potential for abuse. "It is difficult to stop it happening," said a spokeswoman.