Benefits system is best way to direct support to the needy

SectionThe Water Industry (Financial Assistance) Bill, which started its Parliamentary journey last week, will finally redress a problem for South West Water customers - that the costs of improving bathing waters fall disproportionately on a small community with a long coastline. It will provide a £50 subsidy on bills until 2015. That's a socialised subsidy. But the Department for Environment, Food and Rural Affairs (Defra) says it was a "unique situation", where the customers were penalised by geography.

The bill will also allow government to provide subsidies to other water company customers – at least those wholly or mostly in England. That will no doubt be viewed with interest by, for example, Anglian Water, which might argue that its vulnerability to the effects of climate change could disadvantage its customers, and by companies in the perpetually dry South East, who face water restrictions. More “unique situations” geographically?
The financial assistance bill comes as water companies and Defra start to grapple with issues of affordability as raised in the recent Water White Paper. And there’s no question that the South West has suffered from the cost of cleaning up bathing waters. But not everyone in the region needs the extra £50. Giving everyone a subsidy has the merit of simplicity, but it doesn’t really put the money where it is needed. The fundamental problem – for energy subsidies as well as water – is poverty.
All utilities set aside funding to assist the vulnerable, and there are any number of schemes intended to help. But these are very badly targeted, and sometimes not targeted at all. So utilities and government are forced to spend a lot of time and effort – and money – trying to find ways to share bits of data so that subsidies can reach those who need it.
The social care system should already have that information. The Department for Work and Pensions is best placed to know who is in want, or otherwise vulnerable, because it is already supporting them.
Most of the money spent by government and utilities on patchwork schemes would be better handed directly to the needy via the social care system. That point was made by one respondent to Utility Week’s most recent senior executive panel (UW, 3 February), who said: “Social support and income redistribution should be carried out through taxation and benefits.” Companies do provide additional subsidy, but maybe that would also be ­better routed via tax and benefits.
This week, in a hard-hitting report, the Commons Select Committee on Health pointed out the importance of joining up social care and health care. The committee quoted one witness, who said: “There is research evidence of the value of having a warm and secure home, in terms of reducing demand on the health service.”
Our utility subsidies, too, should be joined up with social and health care, but they are a hotchpotch of measures that are difficult to administer and in some cases humiliating to access.
Support should instead be delivered via existing social care mechanisms direct to those who are in poverty or otherwise vulnerable. That would be more efficient and more effective.

Janet Wood

This article first appeared in Utility Week’s print edition of 10 February 2012.
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