UK water bill rip-off: Ofwat slammed for high water bill cost
Households would be "appalled" at way they are being over-charged for their water bill, according to MPs.
Millions of households across Britain are shelling out far more than they ought to on water bills, according to a new report from the Parliamentary Public Accounts Committee (PAC).
And it’s all the fault of the industry regulator Ofwat.
Water windfall
One of Ofwat’s duties as regulator is to limit the price that water firms can charge customers in its five-yearly price reviews.
According to the report, Ofwat has consistently overestimated water firms' financing and tax costs when it decides what price cap to implement. As a result since 2010 water firms have been able to enjoy windfall gains of at least £1.2 billion between them, gains which have not been shared with customers.
The MPs behind the report have ordered Ofwat to review how it calculates companies’ various costs and report on how it will improve.
Meg Hiller MP, chair of the committee, said that many households would be “appalled” to find out that their water bills could have been smaller if Ofwat had adopted a different approach.
She added: “We are also calling for greater transparency over windfall gains made by water suppliers, and more effective action to see these gains passed on to customers.”
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Helping struggling customers
Water bills represent a significant outlay for households with smaller salaries – around 5.3% of household spending in 2013, compared to just 2.3% for the average household.
And while water firms have support schemes in place to help those that struggle to pay, the actual help on offer varies significantly from company to company.
The report argues that Ofwat should ensure that all water supplies provide a minimum threshold of support for low-income customers, and force them to advertise clearly the support they provide to all customers.
What do you pay for your water bill?
Water bills fell by an average of 2% for the 2015/16 tax year, according to Ofwat. You can see how your area’s bill compares to those of other regions in What does the average UK water bill cost?
One of the problems with water bills is that suppliers operate a regional monopoly – if you don’t like your supplier, you can’t shop around and switch to a new one, as you can with things like energy or phone bills.
That said, the Government wants to introduce an element of competition into the market by the end of this Parliament, allowing people to choose between rival suppliers for billing and customer services. However they won’t be able to change the water supply itself.
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