My Lords, I fully support affordability schemes but regret that I do not believe that they should be a statutory requirement.
The new social tariff guidance from Defra is to be welcomed, as this means that from this year more companies can introduce social tariffs. It is, however, disappointing—as has been pointed out—that so few companies have so far introduced social tariffs or seem to be preparing to do so. It is right that water companies are best placed to come up with the most suitable scheme for their customers, given their own regional circumstances. Any government regulations could end up being overly prescriptive, instead of allowing sufficient flexibility.
I am lucky enough to come from the West Country where Wessex Water is a major supplier and a forward-thinking company. Over the past 10 years, it has developed its own affordability scheme called Tap. Wessex Water recognises that every household is unique and has adapted Tap to ensure that its services are right for each individual’s situation. Through Tap, Wessex Water offers customers an extensive range of schemes and low-rate tariffs to enable them to afford their ongoing water charges and repay any debts they have accumulated. This runs in conjunction with practical help to reduce water and energy use. Wessex Water delivers this help through successful partnerships with the debt advice sector and other organisations supporting vulnerable customers. Customers are signposted so that they can receive holistic debt advice and income maximisation, as well as make proposals for a sustainable offer of payment, however small.
Wessex Water currently has around 14,000 customers benefiting from one or more of its schemes, with around 8,000 on its very low-rate tariff, Assist. The company is doing a lot of work out in communities to raise awareness and promote Tap, particularly the Assist tariff. It is a scheme for those unable to afford ongoing water bills. Working with debt advice agencies, the customer’s personal finances are assessed and a lower bill than normal is agreed, based on their ability to pay. The range of services covered by Tap, as well as Assist, includes Water Direct, which is for people on benefits, who are able to have payments for water taken from their benefits before they receive them.
A second scheme is WaterSure Plus for those who are on one of the main social benefits and who have either a medical need for extra water or three or more children under the age of 19 living at home. In this case, the annual bill is limited to the average annual bill for metered customers in that region, so they pay less than the bill would have been for the amount of water used. Lastly, the scheme includes Restart and Restart Plus for those who are already in debt with their water bill payments. This allows a payment plan to be agreed and, if the plan is kept to for the first year, the debt is reduced by an equivalent amount in year two. If in year two the payment plan is adhered to, the remaining debt is cleared and the customer has a fresh start.
There will be similar schemes—but not many, I agree—run by other water companies in the country, each developed with knowledge of their customers and their customers’ needs. To ignore all this hard work and impose a statutory affordability scheme is to stifle innovation and enterprise.
Therefore, although I accept that affordability schemes are essential, I believe it is far better for each water company to develop its own scheme rather than have
the possible straitjacket of a national scheme imposed on it. However, a government review of the situation in 2015 would identify just how many water companies had failed to implement a scheme. Government encouragement to water companies to enter discussions with the Consumer Council for Water to come up with affordability schemes is essential. They would not have to do the hard work; the evidence is out there for them to utilise and access. Just as essential is clear communication of just how much paying customers are subsidising those who refuse to pay. The subsidy for low-income families struggling and willing to pay is very small compared with that for wilful bad debt. Wessex Water is a shining example of best practice which others would do well to emulate. I regret that I will not be supporting Amendment 55.
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