George Osborne will next week commit the Government to funding another £50 per home cut in South West Water bills to relieve the burden on hard-pressed Westcountry households.
The Western Morning News has learned the Chancellor will use his statement on the Government's comprehensive spending review (CSR) next week to make the £40 million pledge for 2015. It will be the third year in a row South West Water (SWW) customers – who pay the highest water charges in the UK – will receive the taxpayer-funded subsidy of £50.
The promise, to be announced officially next Wednesday, is crucial as questions have been raised over how long the bail-out for the region would last after the first discount started in April this year. George Eustice, Conservative MP for Camborne and Redruth, said: "It is fantastic news that the government has renewed and extended the £40 million per year grant to deliver every home a £50 discount on their water bills.
"Our bills have always been the highest in the country and this policy has been a welcome respite but I have always argued that we needed it to continue."
Treasury sources have indicated the hand-out, to make up for the botched privatisation of the water industry in the 1980s, will last at least until the end of the decade. But a cast-iron long-term promise is unlikely as governments only make spending commitments for short periods. The current CSR unveiled in 2010 lasts until April 2015. And Mr Osborne will next week set out departmental budgets for 2015-16, the financial year which spans the general election due in May 2015. He is looking to claw-back £11.5 billion.
SWW's customers are saddled with sky-high sewerage charges after privatisation left the region picking up the tab to keep an extensive coastline clean. In 2011, the WMN broke the story that the Treasury would fund a £50 per household rebate following years of campaigning over the burden placed on the region.
Last year, Westcountry Liberal Democrat peer Lord Matthew Taylor warned plans to slash £50 off water bills are only a "short-term commitment", arguing there was "no real indication of what will happen in the longer term".
But a Treasury source last night told the WMN there was "no hesitancy" in making the commitment to the region in 2015, despite austerity and the battles to get Whitehall departments to agree deep cuts.
The rebate is already having an effect on bills. The average South West Water charge fell in April by 7.3% to an average £499. But the average bill nationwide is still £111 cheaper than the typical South West Water charge. The region ended up having to pick-up the £2 billion tab to end raw sewage being dumped in the sea.
It has been a financial burden as privatisation left 3% of the population having been paying for the upkeep of one-third of the UK's coastline, with millions of tourists visiting the region each year paying nothing to keep the beaches clean. A Treasury source said: "George Eustice and other Conservative MPs made a very persuasive case and the Chancellor is delighted he is able to do this."
The rebate for 780,000 households and businesses – or 1.3 million customers – will be a key weapon during the 2015 election campaign in the region, with all three major parties claiming a part in the policy's genesis.
The Labour government commissioned an independent review into sky-high bills in 2009 that paved the way for the Treasury-funded bail-out. But both Conservative and Liberal Democrat MPs are claiming credit for delivering after years of misery heaped on customers.