Coronavirus ‘amplifies problems with social tariffs’

A review of social tariffs in the water sector is needed to end a “postcode lottery” which will only be exacerbated by coronavirus, a water poverty charity has insisted.

National Energy Action (NEA) highlighted restrictive eligibility criteria, different levels of support offered in different regions and lack of auto-enrolment as some of the issues facing people struggling to pay their bills.

It is calling for the government to review the system for social tariffs. It is also urging water companies to recognise areas where local employment has been hit harder and need more assistance.

It said that higher number of people living in such areas may need extra help, but the eligibility criteria of some social tariffs also need expanding to include households that have now found themselves in hardship.

NEA’s report on the impact of Covid-19 on social tariffs found a need for greater customer awareness of what support is available, and understanding of what they might be entitled to. It assessed that some households do not meet the income thresholds for support yet cannot afford to pay their bills, which is likely to worsen for some people in the short-term.

Water bills are often the first to be defaulted on because households cannot be disconnected for non-payment. With more and more people facing hardship the NEA report noted that these arrears are likely to become uncollectable and cause bad debt charges – currently at £21 each year – to rise.

NEA noted differences between the offerings from various water companies meant that in some areas people may receive a discount of 90 per cent, while in others it could be 10 per cent.

“Some companies are already providing support at the maximum level of their agreed cross-subsidy, whereas others have scope to access additional cross-subsidy funding. This may restrict companies from expanding their schemes as much as required to support customers,” NEA’s report said.

It added that companies’ financial resilience may be under pressures at the moment because of additional costs relating to lockdown contingency plans as well as reduced income from bills, so extra shareholder contributions may be limited at the moment.

The group called on government to review social tariff guidance in consultation with water companies and stakeholders to make the support fairer across England and Wales.

It said the same consultation should consider different ways to fund the tariffs and schemes and that government should set “core eligibility criteria” for companies to follow that would take regional circumstances into account but remove unacceptable differences in levels of support.

Early in the crisis the water sector offered support to billpayers with payment breaks and tariffs but there was no set policy in place. The consumer group CCW said companies should be “exhausting the wide range of options available” to help customers.

As part of Water UK’s Public Interest Commitments (PICs) the entire sector pledged to assist households that struggle with bills and end water poverty by 2030.

United Utilities chief executive Steve Mogford and Northumbrian’s Heidi Mottram champion the industry-wide commitment to bill affordability.