Time is running out for affordability plans

Time is running out to for the water sector to get clarity on affordability plans for the next investment period, the head of CCW has said.

After rejecting recommendations to implement a single social water tariff, government is yet to set out expectations for support.

Speaking to Utility Week as part of our Action on Bills campaign, Emma Clancy, chief executive of CCW, said companies are still waiting for clarity from government, but developing their own options to support all billpayers.

With just three months to go until business plans for 2025-30 are submitted to Ofwat, pressure is on to make sure financially vulnerable customers are supported regardless of where they live.

Companies developing social tariff options for the next regulatory period are awaiting guidance from the Department for environment, food and rural affairs (Defra), the head of consumer body CCW told Utility Week.

Since declaring affordability of water bills was “not a priority” for her department, the environment secretary has yet to offer up an alternative plan to the proposed single social tariff.

A landmark House of Lords report on water regulation recommended a single social tariff should be implemented as part of the 2024 price review (PR24). However, this month government confirmed it had no plans to implement such a measure.

It said: “Defra’s strategic policy statement (SPS) encourages water companies to implement the recommendations of the CCW Affordability Review to improve awareness of access to existing support measures in the industry. There are no plans to introduce a single social tariff.”

CCW’s review also recommended a single national tariff.

Defra had previously committed to a consultation on affordability, which is expected later this year.

“Companies are looking at what can be achieved without relying on guidance changes or new policy,” Clancy said.

A committee established when George Eustice was environment secretary to develop a single social tariff has been continued by water companies, which Clancy explained was developing an alternative to the tariff.

“They came up with a proposal for a baseline of support that can be topped up with companies’ specific schemes.”

It will not feature any element of fund sharing between companies, which was understood to be an objection by Defra, Clancy explained.

The baseline being considered is Universal Credit and Pension Credit, with individual schemes remaining available to customers.

Sadly, Clancy said Defra has yet to engage with the Plan B.

“The window of opportunity to act is closing,” she said. With the sector preparing its business plans for 2025-30 to submit to Ofwat in October, clarity around support companies can offer customers is essential.

Media coverage in recent weeks of potential bill rises from 2025 onwards indicated the scrutiny all water companies are likely to experience when plans are published and charges set out.

Charges going up by estimations between 30% to 60% at a time when one in four householders are already unable to pay bills must be addressed, Clancy said.

“The situation is only getting worse and the path is unclear,” she said. “There needs to be a grown up conversation about investment needs.”

Despite broad public support for greater investment in assets to protect the water environment and ensure resilience of supplies for future generations, the impact that would have on billpayers is less well understood, Clancy said.

“The Water UK apology was the first time people really realised that £10 billion of extra investment would in part come from billpayers.”

She said the sector needs to talk about bill rises being driven by environmental improvement needs and advocated for companies to be upfront about costs to limit the “surprises” customers will face.