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The UK’s imminent exit from the European Union is set to push up water bills and hit vulnerable consumers hardest, according to Ofwat.
Speaking at Utility Week Congress today, Ofwat senior director for customers and casework Richard Khaldi warned costs to consumers are likely to rise in the wake of Brexit as the British economy suffers.
Khaldi told delegates that the decline in sterling and the resulting increase in inflation will see bills go up in what he said is a “worrying scenario”.
“The inflation rate rose to 1 per cent in September and if you look at RPI that’s 2 per cent. It is expected to rise to 2.6 per cent by next year.
“Water bills are linked to RPI which means in the short term we could see bills going up. This could pose a very significant challenge to customer legitimacy and customer trust and confidence in the sector.”
He added that his is adding to the “looming affordability challenge” for water customers, which is already hitting home.
Khaldi told delegates that one in five customers are now reporting affordability issues with their water bills – up from one in eight last year – and that bad debt has increased by 17 per cent to a total of £2.2 billion, equivalent to £21 per household bill.
Wessex Water chief executive Colin Skellett also warned that Britain’s withdrawal from the EU could also hit the water companies by exacerbating the skills crisis.
He told the conference: “With Brexit we may not have the same access to skills in Europe that we currently have.”
Skellett added that the sector as a whole will have to look to bring training more in house to help address with the shortages that the UK is set to face.
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