New research from Ofwat shows unpaid water bills are an increasing problem in England and Wales – the regulator says the water companies need to do more to prevent it and help customers struggling to afford their bill.

Ofwat’s ‘Affordability and debt’ report’, published today, shows that between 2010 and 2015 the number of customers at risk of struggling to pay their water bill has remained stable. Yet in that time there has been a big increase in unpaid bills. The cost associated with unpaid bills is around £21 a year for every household – an increase from £17 in 2009/10.4 And £2.2 billion unpaid revenue is now outstanding. 

The assessment of customers most at risk of struggling to pay their bill is based on the proportion of income, after housing costs have been taken into account, spent on water bills. In 2014/15 around 24% of households spent more than three per cent of their income on water, and 11% spent more than five per cent.

The report shows that low-income households, working-age adults living alone, lone parents and single pensioners are more likely to have problems paying their bills, and are more likely to be in debt.

The regulator says the rise in debt over the last five years comes despite below-inflation rises in average bills - Ofwat’s latest price review will result in a further five per cent real terms fall by 2020. The report recognises that even if water bills are being kept down, changes in income and the cost of other essential services going up has put added pressure on households’ budgets.

According to the debt charity StepChange, the number of people needing help to manage their debts has risen by 56% since 2012. And the proportion of customers contacting National Debtline with issues related to water bill debt has increased by almost 10% in the last five years.

"Availability and quality of help for customers varies significantly across companies"

Ofwat has already challenged companies to do more to help those struggling to pay bills. This led in 2014 to companies committing to more than double the number of people benefiting from financial support to around 1.8 million by 2020. Yet the report shows that the availability and quality of help for customers varies significantly across companies.

Some companies have made progress in establishing more support and getting smarter at targeting customers who need help. And awareness of support is generally rising. Yet most companies have not achieved their initial targets for customers signing up for their new social tariffs, which offer cheaper bills to customers who are struggling to afford their bill.

Ofwat - "there is a growing problem that more customers are not paying their bill"

Cathryn Ross, Ofwat Chief Executive said:

“Ofwat’s priority is to protect customers’ interests and clearly customers who struggle to pay get the help they need. This important research highlights that while three quarters of customers think their water services are good value there is a growing problem that more customers are not paying their bill.

“Some companies need to get better at collecting unpaid bills from those customers who can pay but don’t. Yet this report is clear that many households are feeling the squeeze and need support. While some companies are improving how they respond to these customers, others have to get better at identifying those at risk and helping those who are genuinely struggling.

“This is not only the right thing to do, but benefits everyone as it will bring down the cost to everyone of unpaid bills and increase trust and confidence in the provision of these vital public services.”

Click here to download  Affordability and Debt 2015