Water bill compensation to double for poor customer service

Government reforms of the water sector to double the level of compensation for water customers when basic service standards are not met

Compensation for customers receiving poor services from water companies who are failing to meet standards could more than double under new government proposals.

As part of the plans, the list of circumstances that can trigger compensation will also be expanded, including automatic payments for those issued boil water notices or when water companies fail to conduct meter readings or installations as promised.

Environment secretary Steve Reed said:

‘Our water industry is broken.

‘After years of failure, households and businesses have been let down by water companies time and time again.

‘The new government will clean up the water industry and turn the tide on the destruction of our waterways ensuring water companies protect the interests of their customers and the environment.’

The eight-week public consultation is open for comment until Monday 7 October.

Broader set of standards to trigger compensation

The government has said it will expand the list of circumstances that can trigger compensation.

These include automatic payments when boil water notices are issued or when water companies fail to conduct promised meter readings or installations. 

A boil water notice is issued when concerns about water quality have been identified. Customers are asked to boil their water before drinking, cooking or brushing their teeth with it.

These changes would mean that recent water quality issues in Brixham and Bramley would have automatically led to compensation for all affected South West Water and Thames Water customers, where there was no entitlement before.

Around 16,000 residents of Brixham, Devon, were issued with a boil notice for their water supply after reports of illness emerged in the town.

Most were able to safely use their tap water again within a few days, but 1,500 homes continued having to boil their water, some for up to eight weeks.

In the aftermath, compensation was paid automatically by South West Water to those affected. The government’s proposals seek to ensure that all water customers across the country are treated in the same manner.

Overhaul of standards ‘long overdue’

Under current rules, water companies must automatically compensate customers when certain standards of service haven’t been met – see table, below. 

These cover things such as making and keeping appointments, maintaining the right water pressure, dealing with supply interruptions and responding properly to queries and complaints.

Levels of compensation for when these standards aren’t met have remained the same since 2000.

Consumer Council for Water (CCW) said increasing compensation will incentivise water companies to get things right the first time.

Jenny Suggate, director of policy, research and campaigns at CCW welcomed the proposals but said they were ‘long overdue’:

‘We’re delighted the government is fast-tracking efforts to improve the Guaranteed Standards Scheme, with the potential to boost compensation and support for hundreds of thousands of people each year when they are let down by their water company.

‘Given that there has been little change to the standards since they were first introduced, an overhaul is long overdue, and we know it is a pressing priority for household and business customers.’ 

‘Demanding higher standards of service and improving levels of compensation when things go wrong will incentivise water companies to get things right the first time for all customers.’

Compensation levels could increase to up to £2,000

Compensation payments will double for the current agreed service standards. Our table, below, sets out the minimum levels of compensation water companies should currently pay.

For households impacted by an incorrect notice of planned supply interruption, compensation will rise from £20 to £50, meanwhile reimbursement for internal flooding from sewers will increase from a maximum of £1,000 to £2,000.

Table of existing levels of compensation customers are legally entitled to:

Problem	Compensation	Late payment penalty
Appointments not made or kept	£20	£10
Low water pressure incidents	£25	None.
Incorrect notice of planned interruption	£20	£20
Supply not restored within an agreed period	£20	£20
Supply not restored for each 24 hours beyond above agreed period	£10	£20
Complaints and queries not responded to on time	£20	£10
Sewer flooding inside your property	£150 to £1,000 (payment equal to annual sewerage charges)	£20
Sewer flooding in your garden or drive	£75 to £500 (payment equal to 50% of annual sewerage charges)	£20

Liberal Democrat Environment spokesperson Tim Farron MP said of plans to boost compensation: ‘We will scrutinise these proposals closely and welcome any attempts to crack down on these greedy firms but make no mistake, our water industry needs top to bottom reform.

‘That must start with abolishing Ofwat and replacing it with a new regulator with real teeth to clampdown on these polluting firms, end the sewage scandal and get bill payers the fair deal they deserve.’

Water company reforms to tackle sewage spills

The launch of today’s consultation comes a month after the government announced its intention to reform the water sector. The Government has previously announced a Water (Special Measures) Bill to cut sewage spills and attract investment to upgrade infrastructure.

This comes as water companies face criticism for their handling of sewage, with Ofwat proposing £168 million of fines for three of England’s biggest water companies.

The penalties include a £104 million penalty for Thames Water, £47 million penalty for Yorkshire Water and £17 million for Northumbrian Water for failing to manage sewage spills.

The government has said new legislation will ‘fundamentally transform and reset the water sector and restore our rivers, lakes, and seas to good health’. This includes:

• Strengthening regulation to ensure water bosses face personal criminal liability for lawbreaking  
• Giving the water regulator new powers to ban the payment of bonuses if environmental standards are not met  
• Boosting accountability for water executives through a new ‘code of conduct’ for water companies, so customers can summon board members and hold executives to account  
• Introducing new powers to bring automatic and severe fines   
• And requiring water companies to install real-time monitors at every sewage outlet with data independently scrutinised by the water regulators 

A Water UK spokesman said: ‘We share the Government’s ambition to reform an out-of-date system and look forward to seeing the details of these proposals.

‘In the meantime, we are focused on delivering our largest-ever investment plan to secure our water supplies, end sewage in rivers and enable economic growth.’

Legal action against water companies over pollution concerns

Professor Carolyn Roberts is taking legal action against six water companies on behalf of 20 million households over allegations of under-reporting pollution incidents and over-charging customers as a result. 

Anglian Water, Northumbrian Water, Severn Trent Water, Thames Water, United Utilities Water, and Yorkshire Water are all accused of failing to reveal the true scale of sewage discharges and spills made into UK waterways.

They are accused of breaching competition law because any under-reporting could have affected the price they could charge customers.

The competition court will consider whether to grant permission for the claims to go to trial at a hearing on 23 September.