The Consumer Council for Water (CCW) is warning that two in five households across England and Wales say they will find it difficult to afford the increases to water bills being proposed by the regulator Ofwat.

The Consumer Council for Water (CCW) has today published the findings of an in-depth study of 9,500 households. It gauged billpayers’ views on the regulator’s draft decisions to allow water companies to increase bills by an average of 21%, before inflation is added, over the next five years to help fund £88 billion of investment in improving services and the environment. The proposed bill rises would begin to take effect from April 2025.

A representative sample of household customers served by each water company in England and Wales were asked how easy or difficult they would find the proposed bill rises for their supplier. They were also asked how acceptable they found the five-year investment plans for their area, based on Ofwat’s draft determinations in response to companies’ business plans.

Overall, 40% of customers said they would find the proposed changes to their water bill difficult to afford – more than double the 18% who say they have difficulty paying their current bill. In Wales, these concerns were even more acute with nearly half (48%) of customers saying they would find the planned rises difficult to afford.

Customers were broadly supportive of the way their money would be spent to tackle issues like curbing leakage and reducing pollution into rivers, lakes and seas, with 75% of those surveyed finding the overall investment package for their company acceptable.

However, the consumer watchdog says the findings show that while the majority of people back the need for investment in water and sewerage services, the price tag would be too much to bear for millions of households.

CCW has already voiced concerns that some water companies’ proposals to expand financial support for struggling customers do not go far enough. There remains an urgent need for a single social tariff for England and Wales to end the current postcode lottery of assistance.

Survey found that many billpayers were walking a tightrope.

Mike Keil, Chief Executive of the Consumer Council for Water, said:

“These bill increases would put an intolerable strain on the finances of millions of households and only a single social tariff can provide the safety net that is needed to ensure water is affordable for everyone.”

“People support the need for investment but there is a strong undercurrent of mistrust over whether water companies can deliver on their commitments. Customers need to see evidence their money is being well spent, otherwise fractured trust in the water sector will never be repaired.”

CCW conducted the research in collaboration with Ofwat to help ensure participants were presented with a clear and understandable picture of the proposed changes to their water bill – including the impact of forecast inflation - and how their company would be expected to invest in services.

The survey set the scene by looking at how people were currently managing financially and found that many billpayers were walking a tightrope. Key findings include:

• More than 2 in 5 customers (42%) said they had struggled to pay at least one household bill in the past year.
• Among those that said they would find the proposed water bills for 2025-30 difficult to afford, over half (54%) said they would cut back on non-essentials to pay for it – while 43% said they would use less water and 38% would cut back on food shopping and other essentials.
• Although three-quarters of customers found companies’ investment plans acceptable, there was considerable variation among the companies – with 81% of Severn Trent Water billpayers endorsing its draft determination, compared to 65% of Southern Water households at the other end of the spectrum.
• Overall acceptability of the investment plans shrank to 58% when customers were reminded of the proposed bill rises later in the survey.

The findings support many of the recommendations CCW made to Ofwat when it submitted its formal response to the draft determinations in late August. In particular, some water companies need to show vastly more ambition in their support for customers who will not be able to afford these proposed bill rises.

CCW says failure to listen to customers’ concerns over the affordability of their bills risks further exposing the limitations of existing financial assistance.

Impact Research was commissioned to carry out the survey during August and September 2024. Impact targeted a representative sample of billpayers for every water company in England and Wales. The sample was drawn from two sources: online panels and customer databases from each water company.

Ofwat - "We are acutely aware that any rise in water bills will have an impact on customers"

Commenting in response, an Ofwat spokesperson said:

“We are acutely aware that any rise in water bills will have an impact on customers, especially the vulnerable. These findings will be fully considered along with all other representations as part of our ongoing work to reach the PR24 final determinations in December.

“In parallel, we are already working with CCW, water companies and charities to improve companies’ support for customers who are struggling to pay. Our recent Ofwat / Ofgem Vulnerability Summit saw us bring together key organisations to look at how we can better support these customers.

“From the research it is also clear the majority of customers accepted the investment being proposed and the increase in bills needed to fund it, but it is crucial companies deliver the meaningful improvements this investment is designed to bring.

“Performance in the past has not been good enough. This is the challenge the companies will need to meet in the years ahead – and we will be closely monitoring progress as they do.”

Click here to download the report in full