There are few bigger issues within the water industry than affordability. Acknowledged by the industry as a whole as a key challenge, water companies have committed to delivering financial support to an additional 1 million people (equivalent to 459,000 households) by 2020. But does this really go far enough? From our own research we have determined that one in eight consumers consider their water bill to be unaffordable.
Today (13th September) sees the publication of our report, Staying Afloat: Addressing customer vulnerability in the water sector. The report takes an in-depth look at the efforts the water industry is taking to support some of the most vulnerable customers. Senior Policy Manager Andy White takes a closer at look at the findings and assesses the key challenges that lie ahead.
Our research has shown water companies are making significant steps towards delivering the pledge of helping 1 Million consumers, with almost 780,000 people (338,764 households) provided with support in less than two years. While this is positive news, our own previous research suggests that this does not come close to helping all those experiencing financial difficulty, with a total of around 3 million households telling us they believe their water bill is unaffordable. A concerning figure, as this suggests the current arrangements could leave the problem unsolved for around 80% of households.
Scratching the surface
We have worked closely with water companies in recent years in order to address the issue of affordability, work which has resulted in all 21 companies in England and Wales now having a social tariff in place. A significant development, as these schemes have already shown themselves to be successful, with some reducing the bills of low income customers by as much as 90%.
Social tariff schemes offer lower bills for customers on low incomes or those in receipt of specific benefits. By the end of March 2017 over 260,000 customers were receiving assistance from one of these tariffs; a 93% increase on the previous 12 months. We are delighted that companies have worked with us to achieve this progress; however further challenges lie ahead.
Almost all the social tariffs in place are principally funded through customer bills. This limits the support which companies can offer as they must take account of customer views on how much they are willing to contribute (in most cases this has been around £2 or less per customer per annum) As a result some companies are now beginning to exhaust the funds they have available for social tariffs.
Shared funding approach
We are encouraging water companies to do more to contribute themselves to the funding of social tariff schemes so they can expand to reach more of those in need of help. Our research has also revealed customers are generally willing to contribute more, where they can see that companies are also playing their part.
Some companies are already contributing funds, recognising their role in supporting customers. This is something we would now like to see on a much larger scale, ensuring wider reaching support for those in need. We have called for the regulator Ofwat to take account of this issue in evaluating water company business plans for the next five years as it works towards setting price limits for the period 2020 to 2025.
Wider customer vulnerability
Beyond the issue of affordability, an increasing number of consumers are in a position where they need additional help to access a company’s services. To help these consumers, water companies provide priority services, which include support such as delivering bottled water in the event of supply interruptions, alternative bill formats and password protection schemes. The number of customers registered for such services has increased by 40 per cent in the last 5 years. However there are significant variations in terms of take up across the country, and our research suggests only 44 per cent of customers are aware that these additional services exist.
Water companies must do far more to ensure that those consumers that do need support are aware of what is available.
Read the full report, Staying Afloat: Addressing customer vulnerability in the water sector (pdf)