Customer compensation for water supply problems to increase from next year

Water firms are to be forced to significantly increase compensation payments to customers affected by failures such as supply outages, sewer flooding or low water pressure, the Government has said.

Customers who suffer problems like low water pressure could receive payments of up to £250, compared to the £25 currently available, while households affected by flooding inside their homes from sewers could receive £2,000 or more, compared to £1,000 under current rules, the Department for Environment, Food and Rural Affairs (Defra) said.

Some water companies voluntarily offer compensation to customers who experience interruptions to their supply or other problems, but there is no statutory requirement to do so and rates can vary significantly among firms and location.

The list of circumstances that can trigger compensation will also be extended to include situations when Boil Notices are issued by water companies when drinking water quality standards drop, or when firms fail to conduct meter readings or installations on time.

The changes follow a public consultation which found an average of 84% of water customers agreed with the proposals, as did 70% of businesses, Defra said.

Compensation for residents in South Staffordshire whose water supply was disrupted last month due to a burst water main was not compulsory, but households could have received a £150 payment under the new rules, while businesses could have been paid £300.

A ‘Do Not Drink’ notice for 600 properties in Bramley, Sussex, after a fuel leak in May resulted in Thames Water offering a £30 voluntary payment, but could have triggered a compulsory payment of £220 for households and £440 for businesses under the new rules, Defra said.

There was no entitlement to compensation for those caught up in the cryptosporidium outbreak in Brixham, Devon, but those customers could now receive at least £10 per 24 hours, potentially amounting to more than £500 for incidents over eight weeks.

The changes are expected to come into force next year.

Steve Reed, Secretary of State for Environment, Food and Rural Affairs, said: “Customers have too often been let down by water companies, with supply cut off, low water pressure and in some cases even contaminated tap water.

“We are clear that the public deserve better compensation when things go wrong, so I’m taking action to make sure that happens.

“This is another step forward in our plans to reforms the water sector so it serves customers and the environment better.”

Payment rates for firms failing to meet water service standards have remained unchanged since 2000.

Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “The current Guaranteed Standards Scheme is not fit for purpose, so we welcome the swift action the Government has taken to bring about long-overdue improvements.

“The increased payment levels when things go wrong, alongside fewer reasons for companies to avoid making payments, means that there are far greater incentives for water companies to get things right first time. The overhaul of these standards marks a step forward in improving consumer protection and repairing fractured trust in the water sector.”

Water firms have asked Ofwat to grant steep hikes in customer bills for the five years to 2030 despite performance issues.

Ofwat is expected to confirm on Thursday how much it will allow them to increase their bills by over the period.