Social tariff failure shows ‘lack of leadership’ in water

The chair of the Industry and Regulators Committee has slammed the government for abandoning plans to introduce a single social tariff to cover water bills.

Lord Hollick has criticised the government’s “lack of leadership and deep-rooted complacency” following the committee’s water industry inquiry, in a strongly worded letter to environment secretary Therese Coffey.

In particular, Hollick takes aim at the government’s failure to address the “postcode lottery” when it comes to bill support.

A single social tariff was recommended by an independent report by CCW and backed by the House of Lords in an inquiry into the water industry.

However, in response to the Industry and Regulators Committee’s inquiry, the government confirmed that it no longer had plans to introduce a single social tariff.

Instead, ministers have committed to “looking at possibly standardising the tariffs and universal eligibility criteria” currently offered by individual water companies, but say that this would be “more like guidance” rather than a single social tariff.

In the letter, Hollick urges government to announce its proposals on social tariffs as soon as possible: “We believe it is inevitable that water bills will increase, given the huge need for investment.

“Accordingly, we are disappointed that the government did not proceed with a single social tariff as it had previously planned to ensure consistent support for those struggling to pay their bills. Water companies already provide social tariffs but the differences between them mean that support remains a postcode lottery at a time when financial pressures on households are increasing.”

Hollick also criticises the government for not understanding the seriousness of issues within the water sector.

He adds that the “dismissive brevity and complacent tone” of the government’s response to the committee’s inquiry “amounts to a cursory approach to these vexing problems”.

He also accuses the government of attempting to avoid proper parliamentary scrutiny by suggesting that the committee had gone outside the scope of its inquiry.

Hollick further calls on the government to:

• Set out what action it intends to take to increase investment in the water sector
• Give clear guidance to Ofwat on the balance between investment and the affordability of customer bills ahead of the next Price Review
• Provide long-term, outcomes-based targets for the key areas of investment needed in the sector, particularly in relation to infrastructure investment
• Introduce compulsory water metering
• Set out whether it intends to introduce sustainable drainage requirements in advance of any relaxation of nutrient neutrality rules

Hollick concludes: “While the government has begun to set out its vision for the sector, our cross-party committee has concluded unanimously that there is insufficient policy or drive to meet the government’s targets. Sadly, the only thing that is becoming clear in the murky, polluted waters of the sewage crisis is a lack of leadership and deep-rooted complacency.

“The government must therefore provide firmer policy detail and greater guidance to regulators, who cannot be left to resolve these huge challenges by themselves. In particular, the government must give clear guidance on the trade-off between much-needed investment and the level of customer bills.”

Responding to the letter, a Defra spokesperson said: “We take our oversight of the water industry incredibly seriously and firmly disagree with these conclusions.

“We are delivering increased investment, stronger regulation, and tougher enforcement right across the sector. This includes being the first government to set ambitious targets for water companies to address storm overflows, which the High Court has ruled go even further than existing law.

“We agree that more needs to be done. That’s why we are introducing unlimited penalties for polluters, driving the largest infrastructure programme in water company history, and have set clear expectations for water companies to deliver the changes that we all want to see.”

Utility Week’s Action on Bills campaign is calling on government to set out clear terms for how affordability should be addressed in the face of the cost of living crisis and the need for a step up in infrastructure investment.

Affordability across water and energy will also be a core theme at the Utility Week Forum in October. Find out more here.