Customer vulnerability is a major theme for all utilities. In its annual Water For All report, the Consumer Council for Water (CCWater) called on the water industry to pour more of its profits into helping those most in need after it emerged that almost three million households in England and Wales consider their bills to be “unaffordable”.
What’s more, local cost drivers mean that while the average household water and sewerage bill is £405, bills vary considerably from one geographic area to another – ranging from £102 to £251 for water bills and £169 to £324 for sewerage. For those receiving water and sewerage services from the same company the average combined bill ranges from £349 to £540. It should also be noted that a family of four, say, on a metered supply could pay considerably more.
Affordability is something Ofwat wants water companies to address with urgency and it forms one of the four pillars of its PR19 methodology.
Lack of awareness
In its report, CCWater recognises that progress was made by companies last year in increasing the number of households in vulnerable circumstances receiving support, through methods such as customer-funded social tariffs. However, Tom Kiedrowski, managing director of Cedar Tree Advisory Service, says it is important to remember that vulnerability is not a “static position”.
“People dip in and out of being vulnerable and there are a variety of reasons for customers being vulnerable in the first place – including mental health issues, unemployment or being on a low income. While all efforts to boost support for vulnerable consumers are welcome, effective support needs co-ordinated and considered responses by companies working with regulators and consumer groups,” he says.
Kiedrowski cites a study by Citizens Advice that identifies the lack of awareness of the schemes in place to support vulnerable customers as a key issue.
“We only have to look at the terrible situation last winter when few consumers in vulnerable circumstances were given extra support during the days they were without water,” says Kiedrowski. “Companies need to be proactive in identifying those customers who are, often temporarily, vulnerable rather than waiting on customers to identify themselves. Companies need also to take a sensible and sensitive approach in relation to debt collection, because those who are in debt to their water companies often have debt issues elsewhere.”
So what are water companies doing to increase support for vulnerable consumers?
Thames Water says it has “ambitious” plans to “significantly” increase the support it offers as part of its five-year business plan. Its social tariff will be extended from around 49,000 to 200,000 households. Furthermore, discounts of up to 75 per cent will be provided, depending on individual circumstances.
“Those in vulnerable situations will be further supported during operational incidents, with our priority services register increasing sevenfold to 400,000 people,” a spokesperson for the company says. “And our customer assistance fund will allow an additional 15,000 customers to wipe clear their Thames Water debts. All of these proposals are ambitious, well costed and widely supported by our customers, who agree we should prioritise the most vulnerable.”
One thing CCWater is concerned about is that water companies aren’t giving enough of their own money to help those in vulnerable circumstances. Andy White, senior policy manager at CCWater, said at the time the report was released: “We are calling on water companies to bridge the gap by dipping into their own pockets to expand the support available, rather than exhausting the goodwill of their customers. People are far more willing to chip in when they see their water company playing its part.”
SES Water – which serves around 707,000 people in east Surrey and parts of West Sussex, west Kent and south London – says it already does this.
The company has increased the number of people it assists, with nearly 10,000 customers on its water support scheme – double its current target of 5,000. Dan Lamb, head of retail services, says: “Most of our customers do not struggle to pay their bill but we recognise that for some people it can be a challenge, which is why we set out to significantly increase the number of eligible people on our water support scheme.
“As the scheme is funded through a £2 supplement from other customers, this does mean there has been a gap in funding, which we have bridged with money from our shareholders. This is set to increase as we aim to have more than 11,000 customers on the tariff by next year.”
Lamb adds that SES works with organisations such as Citizens Advice and has recruited more customer liaison officers to work in the communities it serves.
United Utilities – which serves around seven million people in the North West – has a unique approach to helping customers in some of the most deprived areas of the UK. Head of income Michelle Atkinson says the company has realised a lack of awareness of its schemes has been an issue. Therefore, she says, the company has gone to great lengths to ensure it speaks in a “language they understand”.
The company also claims its policy of early intervention has allowed customers to get out of the danger of debt before they find themselves unable to pay.
United Utilities’ new “payment break” scheme is designed to provide breathing space in a customer’s payment plan to help low-income customers who experience a reduction in income which could arise as a result of many different changes in circumstances such as a bereavement or transition into Universal Credit.
Atkinson says: “We are looking at early interventions. One of the things our customers, agents and debt advisers told us is that we wait for customers to get into debt before we help them. What we are trying to do now is introduce new schemes and propositions that mean they can get help before they really need it.”
The company also has a scheme called “payment matching plus”, which incentivises customers to pay by matching their contributions. It is schemes such as this which have helped thousands get out of water debt, the company insists. “The payment matching plus scheme means that for every pound a customer in arrears pays, we will match a pound. And then, after six months, if they have stuck to that payment plan, we will match it two pounds for every pound they pay. If they stick to that payment plan, they will be debt-free within two years, which is a real selling point for customers.” The scheme has apparently already freed 10,000 customers of debt this year alone.
Southern Water – which estimates it has around 90,000 customers who may require support to pay bills – takes a slightly different approach to dealing with vulnerability. Its plan is to build a system to support more than 150,000 customers if needed. The company has also set up a programme that focuses on ensuring its service is “inclusive and accessible” for all.
Head of billings and collections Mark Field says: “We have launched an innovative programme called “reach and support”, which focuses on ensuring our service is inclusive and accessible for all customers. This programme of improvement will support customers who may be struggling to pay, require additional non-financial support or may find our service harder to access from time to time.”
The “reach and support” programme includes several initiatives such as developing bilateral data-sharing agreements with energy companies in order to share data regarding priority services customers, working with other water companies to align the qualification criteria for its main social tariff, and improving the way it identifies customers who need help.
Overall since 2015, Southern says it has helped 257,234 customers through schemes and tariffs, benefit entitlement checks and grants. It currently has 73,242 people on schemes and tariffs and 17,380 on its priority services register.
CCWater is also urging companies to work together to address the “significant regional variations” that mean customers’ access and levels of assistance are largely dependent on where they live.
It appears that while water companies are doing a lot to help customers in vulnerable circumstances, more needs to be done. A more uniform approach will also be needed in future to simplify the system and offer protection to those that are most financially vulnerable.