Efforts to address climate change and water poverty must go hand in hand

Andy White, Senior Policy Manager
Andy White, Senior Policy Manager

A major challenge facing all water companies is ensuring water and sewerage services can meet the needs of future customers in our changing climate, and in a way that protects our environment.

Meeting this challenge will require a long-term vision, planning, decisive action and significant investment. And for customers, this investment means they are likely to face upward pressure on bills.

In the aftermath of the pandemic, and with rising energy costs, many customers will understandably be concerned about this possibility.

Our recent work has highlighted that, despite water companies offering significant support to those who need it, around 1.5m households in England and Wales remain in water poverty.

Figures published by the Joseph Rowntree Foundation indicate that as many as 1 in 5 people in the UK live in households that face wider poverty.

Holding off on essential investment isn’t an option, but neither is pushing financially vulnerable households further into hardship and debt. We believe it is vital that the recommendations we made in our recent review of water affordability are put into practice.

In particular, we want to work with the sector to deliver a single social tariff, replacing the current postcode lottery of support and ensuring customers pay no more for their water services than they can afford.

Our review also recommended that greater priority should be placed on water efficiency. In particular, companies should take action to:

  • raise awareness that using less water can lead to smaller utility bills
  • help struggling households to access water efficient products that can save them water and money
  • give bill guarantees to lower income households who could benefit from switching to a meter to encourage them to make the change

Action on water efficiency has the triple benefit of: assisting those who struggle with their bills; building resilience, through making existing water resources go further; and reducing carbon emissions (from water production and directly in the home from the heating of water).

We are pleased to see that water companies are already taking steps to implement many of the recommendations from our affordability review. A number of these are also being piloted by companies, and learnings will be shared across the sector. Read more about the Pilot Schemes here.

We are also delighted that Defra and the Welsh Government are leading work with CCW, water companies and key stakeholders to explore how a single social tariff might be structured.

Water companies are already beginning work to develop investment plans for 2025 to 2030. We believe it is essential that a new social tariff, capable of ending water poverty, is in place by the time Ofwat’s price determinations for that period take effect in April 2025.

Ending water poverty in this way would enable us to move the conversations about investment along from what is affordable to our poorest households, to what is acceptable to the wider group of customers. Doing what is right for lower income households isn’t just about what’s fair for this generation – it can unlock the potential to ensure a resilient and sustainable water service for future generations too.