Breaking down the water sector’s postcode lottery

The current disjointed approach to social tariffs in the water sector leaves consumers at the mercy of a postcode lottery.

With each water company setting its own support mechanisms, calls for a single social tariff have increased during the cost-of-living crisis.

While water companies do all offer financial help to billpayers, the generosity of support available varies from company to company.

Many of the existing schemes are also dependent on the willingness of customers to pay extra to help others in the region who cannot afford to cover all or part of their bill.

This can result in more support being available in affluent areas, where more are able to pay into the scheme and fewer billpayers need to use the funds. Conversely, in deprived areas with more people who need financial assistance, others are less able to afford to pay a little more to help.

Ending water poverty and bringing fairness to how support is distributed is central to the idea of a single social tariff, which Defra had spent more than a year developing before environment secretary Therese Coffey binned the idea. Coffey is yet to clarify what the government wants in its place, but she has suggested more cohesion between what was on offer in different regions.

As part of our Action on Bills campaign, Utility Week is calling on the government to clarify its position on social tariffs within the water sector sooner rather than later.

To illustrate the current “postcode lottery”, Utility Week has also broken down the support currently offered by the country’s water companies:

Affinity Water, average bills for 2023-24 are £187 for water-only services. Households on a low income, below £17k, or receiving benefits can have their bill capped at £115.10, people in receipt of council tax support can have their bill further discounted to £76. Metered properties with an annual bill lower than the discounted rate would be kept on their current tariff. The company has launched a pilot of the first rising block tariff to encourage efficiency while promoting affordability.

Anglian Water, annual charges for water are £222 and £492 for combined sewerage services. Customers can apply for a 50% discount on their bills, as well temporary payment plans, forgiveness schemes and payment breaks. The company pledged £200 million of support last year to help low-income homes through the cost of living crisis.

Bristol Water, £213 annual water-only bills. Low income households assessed as needing financial assistance can be eligible for a low rate tariff worth up to 88% off their water bill. Billpayers on pension credit can also apply for 20% off of bills. Since its acquisition by Pennon Group, customers of Bristol are eligible for the same WaterShare+ scheme as South West bill payers.

Hafren Dyfrdwy, customers pay an annual average of £193 for water and £372 for combined sewerage services. Discounts of up to 90% are offered for any customers with household incomes below £18,278.

Northumbrian Water, annual charges are £188 for water and £391 for water and sewerage bills. Households with incomes under £17k, those receiving pension credit or homes where an annual water bill is more than 3% of the family’s total income are eligible for discounts up to half their bill. This is based on billpayers’ circumstances. The company champions ending water poverty, with Heidi Mottram leading the Public Interest Commitment together with United Utilities.

Portsmouth Water, the lowest in the country at an average £117 annually for water-only. Homes with an income below £17k can have bills capped at £82. Payment breaks, discounts for vulnerable customers are available as well as the social tariff.

SES Water, customer bills average £216 for water supply. Available bill support is based on income and whether the home is in a London borough or not to reflect living costs. The company offers 50% bill discounts for incomes under £17k-21k. Charges can be paused for temporary financial troubles or capped for homes with medical reasons to consume a high amount of water.

Severn Trent, customers pay £213 for water, and £419 for water and wastewater combined services. Through its Big Difference scheme, low income homes can apply for a reduction up to 90% of annual bills. Households with income under £18,278 are offered lower rates and homes with children can be eligible for more discounts. Last year it cut bills for more than 300k households by expanding its support with £30m of new funding.

South East Water, bills are £242 for annual water only charges. The company offers capped bills to households with incomes under £18,005. Billpayers in the eastern region would pay £174, while those in the west would pay £140.

South Staffs Water, bills are £173 annually for water-only. Customers can receive support up to 60% off of bills for one year, and 40% off thereafter if their household income is below £19k, excluding certain benefits. The company offers more support for homes with children also.

South West Water, customers pay £216 for water only, and £476 for combined services. The company offer bill discounts, which are dependent on having a metered bill and for homes in receipt of means tested benefits. Its WaterCare Tariff is available for homes where the water bill is more than 5% of income, after housing costs and support is offered between 15% and 85% dependent on circumstances. Customers are eligible for a discount from their bills, or a share in Pennon under the WaterShare+ scheme.

Southern Water, billpayers are charged an average of £186 for water and £439 for combined water and sewerage. Reflecting high living costs in the south east, Southern customers with an income under £21k with savings less than £16k can qualify for discounts of between 45% and 90% depending on income. Recipients of pension credit can have their bills cut by 45%. It is trialling a Water4All pilot to provide an end-to-end financial affordability and benefit eligibility solution.

Thames Water, an average water only bill is £258, and £456 for water and sewerage. Like SES, Thames measures household income dependent on location – between £17k and £21k and offers 50% off of bills.

United Utilities, customers pay an average of £210 for water annually, and £443 for combined services. The company recognises the number of deprived areas within its region and offers tiered support to reduce bills through a number of schemes. Discounts reflect circumstances and the company will match debt payments for billpayers who stick to repayment plans until the debt is cleared. UU was the first company to add a pay-as-you-go option that lets people pay more or less of their water bill depending on their current financial situation.

Welsh Water, charges £193 for water and £499 for combined sewerage services. Bills are limited to £266 for low-income homes based on banded income amounts – between £9.7k and £16k, excluding eligible benefits and support.

Wessex Water, charges average £261 for water for the year, and £504 for combined services. Customers can apply for a low rate tariff that discounts up to 80% of annual charges. Those receiving pension credits may be eligible for 20% off of bills.

Yorkshire Water, average bills are £198 for water and £446 for annual water and wastewater bills. The company caps bills through WaterSupport at £350 for low-income homes. Last year Yorkshire’s shareholders pledged an additional £15m of support for households struggling with bills, bringing the total support in AMP7 to £115m.