All customers in England and Wales should have access to a single social tariff to avoid the potential “postcode lottery” of support available to the 1.5 million households that cannot afford water and those just about managing to pay, a consumer watchdog has said.
Following an independent review into affordability of water on behalf of governments in England and Wales, CCW proposed recommendations for a simpler and fairer system to help people pay their bills and for eight pilot schemes with nine water companies.
There are 40 actions included in the recommendations for those just about managing to pay as well as those who would qualify for a social tariff.
She told Utility Week: “We’re proposing to look at it as a percentage of income post-housing costs. There are three or four ways of achieving this. We think there should be a single tariff and we’ve been explicit about the design principles for that tariff but there are different ways of achieving that, which is what we need to do next. It’s critical this is done with industry and with government and other consumer groups and stakeholders to find out what’s the best way.”
The review found that a single tariff needed to be funded via a “reliable source” and not dependent on customers’ willingness to pay, which has resulted in the current inconsistent approach to support offered. Research showed the majority of people felt funding through taxation would be the fairest approach, however with the public purse already significantly stretched, the report also suggested that governments could require companies to fund support through bills at a sufficient level to meet the level of regional support needed.
In the absence of public funding, the UK and Welsh governments could choose to require companies to fund support through customer bills at a sufficient level to completely meet the level of regional need.
The cost of lifting 1.5 million households out of water poverty equates to around £6 per home annually, which is significantly below contributions made towards the Warm Homes Discount.
“We are discussing bringing water into a similar circumstance as energy, both are on a par in importance in peoples’ lives,” Clancy said, “so why would we all contribute to the warmer home discount scheme but for water the amount I give versus the amount I receive is dependent on where I live.”
The review follows sector-led work to eradicate water poverty by 2030, which Clancy said together with growing financial pressures on many households because of Covid-19, added to the timeliness of the report. The report provides a framework for the sector being able to meet its Public Interest Commitment with many measures that can be implemented independently of the Welsh Government or Defra, which are reviewing the findings.
“The problem isn’t going to go away, action needs to be taken,” Clancy said. “A single social tariff is three times more effective than the current model so I’m confident we can keep going and will get a response in a timely manner.”
There are 40 proposals in the report including for water companies take steps to develop a better understanding of their customers’ needs and raise awareness of the support they can offer and for all customers to be able to interact more easily with their water company irrespective of their circumstances.
Furthermore, through information and data-sharing, companies should increase the information they hold to improve the identification of customers in need of financial support. It also said water companies should take a proactive approach to identifying customers who may need support.
Bills and investment needs
Ahead of the next price review, bill reductions at scale seen at PR19 and PR14 would be unlikely, and indeed rises are not something CCW is against providing value can be demonstrated in the propositions and stakeholder support is gained. “If we deliver the recommendations of the Affordability Review – in particular to eradicate the postcode lottery – to create a consistent safety net for all of us then we can have a different conversation about bill rises.
“It’s absolutely clear that investment is needed, and we’ve got some big targets to meet and reparations to attend. But we will be clear that if we do not see the change we want from the Affordability Review then that position is untenable. We cannot ask customers who are just about managing to pay more on their water bills if the help they get depends on where they live.”
Meeting environmental challenges including resource management and decarbonisation together with the growing population and aging asset infrastructure will take sector-wide investment and responsibility to prepare for a drier future.
“People expect us as a sector to come together as leaders with a view to making progress,” Clancy said, “From CCW’s point of view it’s about having a partnership approach and collaborative approach to these huge challenges.”
She cited research that shows people are willing to pay a little more for a better future for their children and the environment as a societal responsibility.
Pilot projects
While the single tariff proposal would require governmental support, other recommendations are purely down to the industry to move forward, including the eight pilot schemes.
Severn Trent was awarded funding through the Innovation in Water Challenge for a project that feeds into the Affordability Review around messaging and communications for hard to reach communities. Clancy said she hopes this will inspire other consumer focused bids to be made in the next funding round.
Another pilot will be taken forward as part of Northumbrian’s Innovation Festival recommendation to create a single hub across utilities, so householders only need to inform one organisation of their situation and receive all the support they need from energy, water and telecoms.
Improving water efficiency measures to lower bills is something CCW wants to see in the sector’s approach and features in a scheme by Southern Water in its approach to its meter installation programme.
“Giving both metered and non-metered customers information on a more regular basis to see if they can manage their bills more effectively and their water efficiency more effectively. The premise is that more information available and how to manage water to drive bills down, the more water efficient behaviours we’ll see.”