Water poverty and social tariffs

Since water was privatised in 1989, household water bills have risen faster than the rate of inflation. Despite this, the regional water companies have been pressing the regulator OFWAT to raise their charges. OFWAT initially rejected the water companies’ demands for an increase of 40 per cent above inflation over the next five years, and proposed an increase of 21 per cent. On 19 December OFWAT announced an average increase in charges of 36 per cent above inflation over the next five years, with considerable variations between companies ranging from a 53 per cent increase for Southern Water customers to 21 per cent for customers of Northumbrian Water and Wessex Water. Across England and Wales, water bills will rise by an average of £123 a year from April.

Findings:

• 15.6 per cent of households in England and Wales already spend more than 3 per cent of their income after housing costs on water; 7 per cent spend more than 5 per cent of their income.
• Single parent households, Black African, Black Caribbean and Black British households, and households in relative poverty have the highest rates of water poverty. 
• Water poverty rates are projected to increase to 22.8 per cent at the 3 per cent threshold and 9.9 per cent at the 5 per cent threshold. 
• The paper looks at four options to reduce water poverty.