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Water users face rate hike to subsidise poorest customers

By Western Morning News  |  Posted: June 23, 2012

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London Editor

South West Water is under pressure to hike bills for thousands of households across the Westcountry to pay for discounts for the poorest.

The Government has issued guidance to water firms to create "social tariffs" to help those most struggling to pay the levy.

But the document suggests water companies should push up prices for households not benefiting from the reduction by up to 1.5% to fund the discount.

This would equate to adding £8 to the average South West Water bill, which is already the highest in the country, and would eat into a £50 Government discount to be given to customers from next year.

The Environment Department (Defra) said water companies are bound by regulator Ofwat's licensing conditions, leaving them unable to reduce bills for certain customers. But the new guidance will free them to make cuts for struggling customers.

MPs in Devon and Cornwall had called for a national discount scheme funded by all water companies, which would have disproportionately helped the Westcountry. But ministers rejected the idea, opting for individual companies to come up with their own plans.

Announcing the policy at the Rio+20 Conference in Brazil yesterday, Deputy Prime Minister Nick Clegg said: "If you're struggling to make ends meet, not paying for essential utilities isn't an option but it can mean making tough choices elsewhere, like sacrificing healthy meals for the family or new school books."

This year, South West Water's average bill rose by £26 to £543. That's £167 more than the national average.

Legislation has now been passed to give every household in the region £50 off their bill each year from next May.

The unprecedented move – effectively a £35 million annual Treasury bailout – addresses the long-standing "unfairness" felt by the region because of botched water industry privatisation in the 1990s. The "social tariff" reform addresses a separate issue to tackle "affordability".

South West Water, which provides services to 700,000 households, will now consider how to respond to the guidance and adjust its existing help schemes.

Andrew George, Liberal Democrat MP for St Ives, warned there was "little incentive" for South West Water to introduce significant levels of help to hard-pressed families.

"Wherever you draw the line you will be asking households on medium-to-low incomes to pay more so a relatively small number of people might benefit," he said.

A spokesman for South West Water said: "We are already looking at several options for a new company social tariff, but we will need to examine the practicality of each with different groups of customers to help choose a model which will work in the long term.

"We also need to balance the desire to help individuals who have difficulty paying their bills with the interests of all our customers."

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  • Terrywright1  |  June 24 2012, 9:01PM

    Ooh! I wish I could forecast lottery numbers like I can Government decisions. I said when the so called rebate for SWW customers was announced that it would come to nothing, and what happens? almost the reverse! People! we are being robbed in the name of economy. The water companies and the Government will make sure that no-one will feel the benefit of the so-called rebate. Just pay-up and shut-up as usual, dear reader, you will NOT win.

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  • MrClutterbut  |  June 24 2012, 4:54PM

    @pandddawso why would they have to rethink it? Their customers are hardly going to desert them, nor are they going to stop using water and refusing to pay will just land them in court. What would you do?

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  • Yesboy1  |  June 24 2012, 3:28PM

    why should this french owned company be expected to help the British poorest?

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  • josdave  |  June 24 2012, 11:19AM

    As for the rebate it is not coming out of SWWs huge profits but from the government, via us the taxpayers. So we are subsiding ourselves. Why can't SWW pay?

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  • pandddawso  |  June 24 2012, 11:15AM

    I disagree, henryblince, and here's why. South West Englanders may not realise just what a premium they are already paying for their water. Our family moved here from the South East in 2006; our water bills were exactly the same, only they were now arriving every 3 months instead of every 6 months - ie our water was costing twice as much! The problem in this area is that the waterways and coasts need to be kept clean of sewage, and SWW ignored the problem for so many years that it is now faced with massive costs to sort it all out. On balance I think that clean bathing water is so important that extra costs cannot be avoided. An extra 1.5% will not worry very poor people, nor wealthy hotel and restaurant owners. But it may well upset the finely balanced budgets of the hard working majority who are making the biggest contribution to the area's wealth. The authorities have really got to think again on this one.

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  • henryblince  |  June 24 2012, 9:15AM

    @hashford ""why on earth should hard working people pay for (the poorest) do they think we ourselves can just keep helping the poor" Have you any idea how much like miserable old git you sound. And it's a measly 1.5%, it's hardly going to break the bank. Get some perspective.

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  • StanStill  |  June 24 2012, 8:27AM

    The water companies should subsidize the poorer members of society, they make enough profits. They are just greedy and make any excuse to put costs up, usually to pay for the CEO's massive bonus.

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  • greygail  |  June 24 2012, 8:11AM

    I live on my own with a water meter,work hard on night shifts so i am not home a lot to use water and it has just been put up from £25 a month to £31 a month,what are they going to do when we are all poor

    |   18
  • Yesboy1  |  June 23 2012, 9:02PM

    think of the french (who own this company) they want as much money as possible to set up companies to provide healthcare--- and then make loads more once the nhs is privatised

    |   9
  • realityzone  |  June 23 2012, 8:59PM

    This kind of price engineering is madness. Taken to its logical conclusion some will have to pay more for basic foods in the supermarkets to that others can pay less. In social housing some would have to pay more rent so that others could pay less, etc . etc.

    |   6