Typical water and sewage bills across England and Wales are set to rise by £2 this year to an average of £389, Water UK has announced, but despite the increase equating to less than 1% year-on-year, the move has been heavily criticised.
The announcement comes just weeks after a report from the Public Accounts Committee (PAC) found that industry regulator Ofwat consistently overestimated companies' costs when setting price limits, which has ultimately resulted in higher bills for customers.
The issue is that the price hike, albeit marginal, comes at a time when many would argue that households are already paying too much for their water supply. The PAC found that water bills could easily be smaller if Ofwat had taken a different approach to setting limits on the amount companies can charge consumers, but instead, companies made "windfall gains" of at least £1.2bn between 2010 and 2015 due to water bills being higher than necessary.
Despite this, Ofwat said that the increase is in line with its "tough" price review made in 2014, with Water UK agreeing that it was in line with the five-year plan drawn up with the industry. In further appeasement, Water UK said that the increase would help suppliers invest £44bn in service, resilience and environmental improvements over the next five years, and that despite the increase, water and sewerage companies will actually deliver a drop in real-terms prices in the next five years.
"For just over £1 a day, households across the country can have access to high quality water services day and night," said Water UK chief executive Michael Roberts. "Water companies understand the pressures on customers' pockets and are committed to keeping household bills as low as possible while still investing in vital improvements. Through continued efficiency improvements, the water industry is set to lower prices for households by 5% on average in real terms between 2015 and 2020."
However, the potential savings over the next few years will do little to appease consumer groups, particularly considering that customers – many of whom have little to no choice when it comes to their water supplier – already pay too much.
Tony Smith, chief executive of the Consumer Council for Water, commented: "We are pleased that the rise in bills for 2016-17 is less than 1% but it is still an increase. Affordability is still a concern for many low-income households who are already struggling to pay. Our research shows that one in eight customers in England and Wales are already finding it difficult to afford their water bill.
"Water companies need to do more to ensure that customers who are struggling or unable to pay their bill get the help they need. We have been working with the companies to ensure that they raise awareness of the social tariffs and other assistance schemes they can offer customers who urgently need support."
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