This post is by Mike Keil, senior director of policy, research and campaigning at the Consumer Council for Water (CCW).
Not a week goes by without another story about the shocking state of many of our rivers and coastal waters. There’s pretty much universal agreement that investment is needed to protect our water environment from pollution. There is also a lot of anger directed at water companies – some deserved, some misplaced – but there’s little discussion about who pays for the improvements.
Ultimately, it is water customers that foot the bill, yet that isn’t made clear when the large sums of money involved are discussed, like the £56 billion earmarked for the storm overflow discharge reduction plan. Officials want to take the credit for announcing significant investment plans, without answering the more difficult question of how customers will afford it.
Environmental investment is falsely pitted against affordability
The next price review for the water sector in England and Wales, where water companies submit their business plans to the regulator Ofwat for scrutiny and approval, is gathering pace. Already, we are getting a picture of a very large price tag for environmental investments. Some early estimates show that the environment programmes (called the WINEP) are going to be many times larger than at previous price reviews. In some cases, over £300 could be added to water bills; when you consider the average water and sewerage bill is currently £420, that’s a huge increase.
Around one in five households in England and Wales struggle to pay their water bills, which is around five million households. This figure doesn’t take into account the full effects of the cost of living crisis during this winter. Our modelling shows that an increase of £100 on water bills would push over a million more households into water poverty.
We are being presented with a stark choice: invest to improve the environment and push millions into water poverty or keep bills low and starve the environment of the investment it desperately needs and deserves. This is a false choice. Things do not have to be this way. For far too long the environment has been pitched against consumers. This has to stop.
Financial support for households varies wildly across the country
Our extensive research clearly shows that people value the environment and they want to see support given to households who struggle with their water bill, wherever they live. Doing both is the solution to the situation the water sector faces. However, the big flaw is that support in the form of social tariffs (special rates for struggling households) vary from company to company. This postcode lottery means that both the criteria for who gets support and the amount of help received can vary enormously.
At CCW we are campaigning for the creation of a single social tariff, underpinned by a one central funding pot, to end the current patchwork of support. The single pot would ensure costs are shared between contributing customers across England and Wales, rather than falling most heavily on regions already facing the most significant poverty challenges. Many of these same regions also require the largest environmental investments.
This new approach is best achieved through legislative change and we were hugely encouraged when the government signalled that the scheme would be consulted on. However, the current secretary of state at Defra has put the brakes on this work. The consequences of this are that we are back to the stark choice between environmental improvements and pushing millions into poverty. We can collectively do better than this. And people deserve better than this. The environment deserves better than this. There is still time, although not much, and it will require government, regulators and the water sector to focus on solutions and pull together. Given the fragile trust that exists between water companies and the people they serve, we must act now to turn this around and create a more sustainable water sector.