Water companies' efforts to ease cost of living pressures and areas for further action

 

This page sets out water companies’ efforts to ease cost of living pressures and areas for further action

In October 2022, Ofwat and CCW – the consumer representative body for water customers in England and Wales – jointly wrote to all water companies to ask them to set out their plans for supporting customers through cost of living pressures. Research by Ofwat shows that more customers are struggling with household bills and that two-thirds expect their situation to worsen in the coming year.

Below is a summary of water companies’ responses and provides links to the responses. It highlights examples of how companies are supporting customers in financial difficulty, as well as some areas where we would like to see further action.

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If you are worried about your bill or know someone that is, visit our cost of living page for four tips to follow. CCW’s help with my bills page is packed with advice and tools including a water meter calculator, Benefits Calculator and guide to water company social tariffs.

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Ofwat and CCW’s view on water companies’ cost of living plans and next steps

Ofwat and CCW welcome the efforts that companies are making to help customers who need it most. Responses to our joint letter show companies are increasing financial support for their customers and pursuing different initiatives to deal with growing demand. But we’d like to see water companies do even more to help.

Ofwat and CCW have identified areas where water companies can learn from best practice to increase support for customers struggling to pay, through:

  • improving access to and awareness of support– for example, making it easy for customers to apply for help in ways that suit their needs
  • increasing funding of social tariffs – for example through shareholder contributions; and
  • updating the understanding of what level of support customers are willing to fund – helping identify opportunities to expand support where customer views have not been recently sought.

Supporting more customers in financial difficulty – company examples

  • All companies have social tariffs for customers who struggle to pay their bill. Some companies are making changes to eligibility criteria, raising income thresholds to enable more customers to apply and be eligible (including South Staffs Water and Cambridge Water, SES Water, Severn Trent Water, and Thames Water). Other companies are increasing the discounts available to customers (for example, Southern Water report increasing its discount from 20 to 45 per cent, with customers most in need receiving 90 per cent off their bills).
  • Most social tariffs are funded by the cross-subsidy companies charge on customer bills. Some companies mention re-consulting their customers to gain support to increase the cross-subsidy level applied to fund their social tariffs (including Anglian Water, Portsmouth Water and Hafren Dyfrdwy).
  • Additional financial contributions to social tariffs are being made by a small number of companies. Five companies contribute their own funding (Dŵr Cymru Welsh Water, Hafren Dyfrdwy, SES Water, United Utilities and Yorkshire Water). Severn Trent Water also extended its Big Difference Scheme, creating capacity for an extra 100,000 people through making efficiencies in its business operations.
  • Initiatives to simplify social tariff qualifying criteria and application processes are mentioned by Severn Trent Water, Southern Water and Wessex Water. Efforts to encourage auto-enrolment of customers without the need for customers to apply are referenced by companies that include Northumbrian Water, Portsmouth Water, South West Water and Bristol Water, South East Water and Southern Water (with examples including data share arrangements with local councils and the Deartment of Work and PensionsDWP).
  • Working with local and national partners has helped increase social tariff take up. Northumbrian Water’s ‘One Call’ initiative is an example of a collaborative ‘one-stop’ service to housing association tenants experiencing financial difficulty. Northumbrian Water volunteers have worked alongside housing association teams to better understand each other’s tariffs and other support available. Text messages have been sent from the housing association to its tenants, offering them an assessment to see if they are eligible for reduced water bills.

Other initiatives to support customers struggling to pay bills – company examples

Alongside social tariffs, companies report undertaking (or planning to undertake) other initiatives to support their customers. A selection of examples follow.

  • Support for customers just missing out on social tariffs is an initiative mentioned by a couple of companies. This includes Thames Water’s plan to create a new scheme of temporary support for customers who have a household budget deficit but are not eligible for its social tariff. Welsh Water proposes to use unused higher than expected revenue to provide short term support to struggling non-social tariffs customers. The company is piloting this initiative in January 2023 with the intention of rolling it out later in the year.
  • One-off payments to customers receiving financial support are mentioned by some companies. For instance, Yorkshire Water highlight a one-off cost of living payment of £71 to customers on its support schemes. Affinity Water plans to introduce a one-off affordability payment for up to 30,000 customers in 2023-4.
  • Deferral of some of next year’s revenue allowance (for 2023-24) to subsequent years is a reported by four companies (Bristol Water, Severn Trent Water, Portsmouth Water and Wessex Water). By deferring to later years (when the inflation adjustment is forecast to be lower), this will avoid large changes to customer bills, making it easier for customers to manage household budgets.
  • Income and expenditure tool for helping customers is an initiative committed to by Thames Water. Its review form will be integrated with its billing systems during 2023 to enable customers to understand their eligibility for support, as well as accepting a payment plan in a single interaction. Thames Water forecasts that 50,000 customers will use this channel in 2023-24 out of which 40,000 customers will be on ‘reduced plans’ paying at a rate below their charges during 2023-24.
  • Writing off customer repayments during Breathing Space (of £60–80 per customer) is an initiative being taken forward by Yorkshire Water. The initiative aims to provide customers with debt relief to help them re-engage and access further support – with the overall aim of reducing bad debt.
  • A one stop application process to sign up customers for support is a key part of Hafren Dyfrdwy trained ‘Approvers Programme’. It gives external organisations such as Warm Wales, Citizens Advice and Age Cymru a one stop application process to signup customers to support schemes. Welsh Water also reports working closely with local authorities to target its support to free school meals families.
  • Business as usual’ communications are being used to encourage customer contact. From February 2023, Severn Trent Water will be adding text promoting its affordability schemes to its paper billing envelopes – building on learning from the Dŵr Cymru CCW pilot.

Areas for further action by companies

There is still work to be done. We expect urgent action to support customers struggling to pay their bills in the coming months. Below are some areas we think individual companies – and companies together – could take further action.

Improving access to and awareness of support 

  • We would like to see companies do more to raise awareness of support, communicate consistently as a sector and remove barriers to access. Companies can draw on significant guidance from the CCW affordability review and company pilots linked to it.
  • Promoting schemes widely and in simple and accessible language is vital if customers are to become aware and be able to access support. We know from Ofwat’s recent cost of living research that only one-third of bill payers know that financial support is available from water companies.
  • There is variation in the visibility and prominence of company social tariff support. Some companies have ‘support with your bill’ messages prominently displayed on company homepages and accompanying videos to explain their support (good examples of prominence and web content include United Utilities, Northumbrian Water, Southern Water, Thames Water and Wessex Water, as well as Hafren Dyfrdwy’s video on support options).
    Other companies require customers to undertake multiple clicks to find out more.
  • Some companies are reducing the effort needed to apply for social tariffs, but we still see examples of companies providing limited channels for customers to access support. Examples include customers having to apply for social tariffs by printing off and completing pdf forms or calling the company or messaging to access support.
  • We urge companies to review the effectiveness of social tariff application processes, so customers can apply for support using a communication channel that suits them.
  • Companies should have alternative methods of contact in place for offline customers. Some companies offer customers in financial difficulty a chargeable phone number to call for support: this could deter customers in financial difficulty from getting in contact, undermining company aims and efforts.  Other companies are already offering direct call phone lines for financial vulnerability with free-phone numbers to call and/or are proactively facilitating call backs to customers.

Increasing funding for social tariffs – efficiencies and company contributions

  • We know many people currently face problems paying their bills and the need for support could escalate rapidly given the scale of cost of living challenges.
  • During these pressing times, companies should continue to improve the support they offer and identify ways to directly fund additional help. This might include through operating efficiencies, cost neutral approaches and contributions from their own money (in line with those companies already leading the way on best practice by doing so).

Increasing funding for social tariffs – re-engaging customers

  • We are encouraging companies to re-engage with customers at this time to establish the support levels they find acceptable to fund.
  • Companies who have not carried out research to check customer willingness to increase the funding cross subsidy in the last 3 years should do so (or be able to demonstrate this is unnecessary as existing capacity is sufficient to deal with a surge in demand)

Companies’ responses to Ofwat and CCW’s October 2022 letter

Company and link to response

Examples

Anglian Water

Anglian Water – customer booklet

  • Supported over 300,000 customers through support measures such as payment breaks
  • Partnership with the Gov.uk benefits checker, local councils, charities to identify customers in need
  • Extra £135 million being made available to customers in 2023
Dŵr Cymru

Dŵr Cymru – customer booklet

  • Increased the capacity of the social tariff scheme to support a further 50,000 customers
  • Established an annual Vulnerable Customer Conference to engage with a wider group of stakeholders to promote support and share best practice
  • Piloting a proposed community fund (‘Cymuned’) in two local authority areas from January 2023
Hafren Dyfrdwy
  • Up to 90% discount available to customers eligible for social tariff
  • Community engagement to raise awareness of support, including reaching an extra 3,000 families through schools education programme
  • Helping an extra 640 customers in 2023-24 by increasing social tariff subsidy
Northumbrian Water
  • Increased the number of customers benefiting from WaterSure by more than 60%
  • £1.5 million a year company-funded reduced bill scheme for households with budget deficits
  • Trialling a water saving smart meter tariff in 2023-24 to reward customers who reduce their consumption
Severn Trent Water
  • Helping a further 100,000 people reduce their water bill by up to 90% through their Big Difference social tariff scheme
  • Ten-year plan to help up to 100,000 people find employment and support them to reach their potential
  • Severn Trent’s trust fund provides £3.5 million of support every year to customers in severe hardship
South West Water & Bristol Water
  • Over £70 million of support made available to customers across South West Water and Bristol Water since 2020
  • Watershare+ and Stop the Drop programmes giving over £50 million back to customers through reduced bills
  • More than doubling the number of customers on support tariffs in South West Water
Southern Water
  • Increased the basic social tariff discount from 20% to 45%
  • Increased the number of customers they plan to support from 108,000 to 128,000 by end of 2024-25
  • Continuing £250,000 Hardship Fund to support some of the most vulnerable customers with debt write offs, bill reductions and grants for white goods
Thames Water
  • Increasing support packages for customers by 74,000 to 324,000 in 2023-24
  • Exploring the creation of a temporary support scheme for customers currently struggling but not eligible for a social tariff
  • Trust fund of £500k a year to help customers with debt advice and grants
United Utilities
  • At least £140 million of shareholder support during 2020-25 to help customers out of debt
  • Expect to provide financial support to over 200,000 customers each year from 2022-23 to 2024-25
  • Created ‘Hardship Hub’, a Trip Advisor-style website which provides a onestop-shop for debt advice
Wessex Water

Wessex Water – Appendix 

  • Fast-tracked up to another 60,000 customers onto the ‘Assist’ tariff for discounts of up to 90% on their water bills
  • Worked with Department of Work and Pensions to automatically apply a 20% discount to the bills of 55,000 low-income pensioners
  • Invested an extra £150,000 into the debt advice sector to help increase capacity
Yorkshire Water
  • Provided a one-off cost of living payment of £71 to all customers on the WaterSure and WaterSupport schemes
  • Funding the charges of customers referred under ‘Breathing Space’ legislation within the 60-day respite period
  • Continues to support the existing WaterSupport social tariff with £2 million of company funds each year
Affinity Water
  • Worked with energy companies and local council to target support to customers
  • 6,000 extra customers signed up to social tariffs by March 2023
  • One-off affordability payment of £50, targeted at the most financially vulnerable in 2023-24
Portsmouth Water
  • Increased payment holidays from three to six months
  • Expanding social tariff offering after reaching 2025 target of 10,000 customers
  • Continue to fund and support the ‘Home & Well’ initiative to help patients that have been receiving long-term healthcare to integrate back into society
South East Water
  • Current support package will provide about £24 million of support to customers by 2025 
  • Extra £20 million of third party support for customers through collaborations and partnerships, including wastewater providers
  • Increased social tariff threshold from £17,005 in 2022-23 to £18,005 in advance of 2023-24 changes
South Staffs Water
  • Payment breaks offered when customers’ financial circumstances change
  • Increased the income threshold of ‘Assure’ social tariff to £19,005 a year
  • Trialled open banking to identify and support vulnerable customers
SES Water
  • £1.6 million shareholder subsidy of customer support schemes in 2021-22
  • Have established relationships with 17 food banks and food clubs – and attend 35 events a month to raise awareness of support
  • New Trusted Partner process in 2023-24 to give eligible customers referred by approved partners fast track access to support schemes