After George Osborne announced measures intended to give UK customers more choice over aspects of their water supply, a study has revealed that these changes may be more welcome than ever.
Ofwat, the energy regulator, has reported that with the average water bill in the UK currently sitting at £385 per year, the total amount owed to water companies across the country has reached a record £2.1 billion ñ up from £1.9 billion in 2010.
Bad debts to water companies are becoming a growing problem, with Ofwat estimating that they are responsible for an annual bill increase of around £21 each year and currently, some 2.5 million UK households are either struggling or entirely unable to afford their bills.
The highest bills are in the South-West of England, but the highest levels of debt are, geographically, in Wales and, demographically, among single pensioners, single parents and working-age adults who live alone.
Water bills have been going up more or less in line with inflation in real terms, in recent years, but independent reports have shown that since the privatisation of utility supplies championed by Thatcher, average water bills have actually outstripped inflation by almost 40%.
Indeed over the course of the financial crash, while prices at the supply end for the water companies fell, prices at the customer end continued to rise.
Further, what Ofwat have revealed is the extent to which costly tariffs are contributing to a more pressing, wide scale debt problem that has led to an increase of 56% in the number of households seeking out the help of debt charities over the last three years.
This increase in unaffordability has let Ofwat to recommend water suppliers to offer more ësocial tariffs ‘ ñ more affordable, subsidised plans that were first introduced in 2013 but are now more important than ever. Yorkshire Water, for example, have been rolling out their social tariff to some 10,000 customers and in the process have cut down those customers ‘ annuals bills by around £150.
As well as pushing providers to provide more social tariffs, Ofwat recently ordered water companies nationwide to cut their bills by at least 5% over the next five years.
The regulator ‘s CEO, Cathryn Ross, said: “Ofwat ‘s priority is to protect customers ‘ interests” with a predominant focus on making sure that “customers who struggle to pay get the help they need.”
Referring to their recent report, she said that “this important research highlights that while three quarters of customers think their water services are good value, there is a growing problem that more customers are not paying or are not able to pay their bill”
She admitted that a proportion of those not paying most likely actually can pay, and that therefore water supply companies need to do a better job at getting hold of due debts from such customers, but said that the report clearly shows that “many households are feeling the squeeze and need support.” Hence the call for increased numbers of social tariffs.
“While some companies are improving how they respond to these customers,” she said, “others have to get better at identifying those at risk and helping those who are genuinely struggling.”