Why did water companies welcome it? It had little in the way of information about how to access data to reveal people who are in water poverty – one of the major concerns of companies.
We would all hope to have water tariffs that are as low as possible, as we would energy tariffs. And for water, we ought to be pretty sure they are as low as possible given what has to be achieved, or Ofwat would surely be the subject of government action.
The problem for the majority of the water-poor is not the water tariff, but the poverty.
Here’s how it seems affordability tariffs will work. Water companies will guess they have some people in water poverty in their area, but they won’t know who they are, and as people move in and out of that category over time, water firms won’t necessarily be able to follow the change. They will have to use all kinds of inventive ways to find those people. And when companies do apply their affordability tariff it could differ, in scale or characteristics, from its neighbours, and it will be funded by cross-subsidy from other customers in the region.
So what we are building is a complex, inefficient, potentially inconsistent and costly system to try to replicate, by blind chance, work already done by the Department for Work and Pensions. This is surely nonsense – and costly nonsense.
People in want should get support from the state – cross-subsidised by us all, through our taxes. And so they do, but apparently while that applies to necessities such as housing, it doesn’t apply to other necessities such as water. If the government wants to help the water-poor at minimum cost, it should build that support into its new, simplified benefits structure.
It’s relatively cheap and easy to support people through the benefits system instead of through company action – because let’s not forget that we are all paying the cost of setting up and running water-poor tariffs. And making companies set up this complex system is contradictory, for a government that otherwise wants to simplify our plethora of different benefits into a single support payment.
The simple approach would fit with what used to be called the “empowerment agenda”, which meant housing benefit was paid to claimants, instead of direct to their landlords. It has other plus points. Water firms will have a much simpler – and therefore cheaper – job in chasing those who don’t pay, because if the benefits system removes the “can’t pay” issue, almost every non-payer is really a “won’t pay”. It also addresses one problem of metering – that it may be too costly for some families – because if it does badly affect poor families, the benefits system will be the safety net.
Finally, it lets firms focus on water efficiency savings and those who have specific water needs – placing water issues with water companies and poverty issues with government. Which is where they belong.
Janet Wood
This article first appeared in Utility Week’s print edition of 29 June 2012.
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