The Government has announced today that water
companies will be allowed to reduce water bills for those unable to pay – the
so called “social tariff” This will be paid for by cross subsidy from other
water customers.
On the face of it, it is an imaginative idea to
solve the problem of escalating bad debts. This is already adding over 1% to
customer’s bills. The Government is proposing that water companies must ensure
that the increase in bills is kept to a level that customers find acceptable
perhaps around 1.5%. If the introduction of social tariffs helps to
significantly reduce bad debts then it is an excellent idea.
But will it actually work? There is a
significant problem. At the moment local citizen’s advice offices are advising
those in debt to pay their water bills last – after they have cleared all other
bills. This is because there is nothing a water company can do (except plead)
if a customer says they cant afford to pay. The result is that many ‘poor’
customers are choosing to pay their Sky bill but not their water bill – is that
fair? Unlike other utilities cutting off the water supply is not allowed. So
bad debts for the water companies have been escalating rapidly.
It would have been better for the government to
suggest a much larger social tariff discount but then to back this up by
restoring the right to cut off the water supply. That is more likely to be perceived as fair to all customers.
I think you are absolutely right! The water companies have little options if a customer decides not to pay. Larger discounts and more power to the companies is a solid plan, however, I would note the need for a watchdog to make sure customers who "really" can't afford to pay aren't left with no water.
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