Water industry regulator Ofwat and consumer watchdog CCW have welcomed water companies' efforts to ease cost of living pressures - but are calling on them to take further action

Information from Ofwat and CCW, published today, shows that water companies are increasing financial support for their customers, with record numbers benefiting from discounted water bills. However, both organisations are calling on companies to do even more to help in the face of immediate and urgent cost of living pressures.

In October 2022, Ofwat and CCW chief executives David Black and Emma Clancy wrote to water companies setting out their shared expectation that water companies must do more to support a greater number of customers given the current pressures on the cost of living. This included considering how water companies could reduce the impact of inflation on customers' bills for 2023-24.

Water companies submitted their plans to Ofwat and CCW in December 2022. Ofwat has today published these plans. They highlight examples of company good practice commitments, which include some water companies:

• contributing their own money to fund financial support measures and not solely relying on customer contributions;
• working to reduce the impact of inflation on 2023-24 bills, for example by deferring some element of the increase in bills due to inflation; and
• working with other utilities, housing associations, local government and charities to raise awareness and increase take-up of social tariffs and other forms of support.

However, while these steps are encouraging, in some cases companies are still using targets set before the current cost of living pressures emerged. Ofwat and CCW have identified areas where water companies can learn from best practice to increase support for customers struggling to pay, through:

• increasing funding of social tariffs – for example through shareholder contributions;
• improving access to and awareness of support– for example, making it easy for customers to apply for help in ways that suit their needs; 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.

Emma Clancy, Chief Executive of the Consumer Council for Water (CCW), said:

“We’ve seen some good examples of water companies ramping up their efforts to take the worry out of water bills for customers and we particularly applaud those that are putting in shareholders’ own money to bolster support. There is no room for complacency though and the prospect of future bill increases, fuelled by high inflation and the price tag of environmental investment, means companies will have to do even more to support low-income customers. The case for a new water affordability scheme to provide fairer and consistent support for households struggling to pay their bill has never been more compelling.”

Ofwat: water companies need to offer customers a helping hand

As water companies announce water bills for next year, showing an average increase of 7.5%, or £31, Ofwat has called on companies to go the extra mile in supporting customers in need of a helping hand.

Ofwat Chief Executive David Black said:

"We welcome the different actions that companies are taking to help those who need it most. The scale of cost of living challenges mean that this is and must remain a priority - water companies need to continue to improve the support they offer customers. With households facing unprecedented pressures on their finances, customers will expect to see water companies, and their shareholders, go above and beyond to support them".

Ofwat said that similar to previous years, the average water bill is increasing by less than the level of inflation, although there is variation between water companies across England and Wales.

However, the regulator said the companies need to make sure support is clear and accessible and show customers how they are delivering on the things that matter most – including on affordability and environmental concerns.

As highlighted last week, Ofwat has welcomed the efforts of companies to ease cost of living pressures but called on some to take further action on funding for social tariffs and increasing access and awareness of support.

“We know times are tough ,,,kind words don't mean anything unless they are backed up by action”

Alongside this, the regulator said that concerns about investment and performance need to be addressed if water companies are to regain the trust of their customers. Action from companies needs to be clearly set out for all customers to see.

David Black continued:

"We know times are tough and customers who are already struggling will be worried if they see their water bill increase, so companies should be doubling down to support those who need a helping hand. Kind words don't mean anything unless they are backed up by action, which is why we were pleased to see the recent increase in support."

Water bills are affected by a number of factors including inflation, population changes, previous deferrals and yearly performance targets. In particular, average bills are calculated using assumptions about how much water customers will use in the following year. Ofwat announced last November that the majority of companies would charge customers less than they would have otherwise because of missed targets.