Government to double compensation for poor customer service from water companies
The Chief Executive of Ofwat, has been speaking after Thames Water's credit rating was downgraded twice last month.
Last updated 12th Aug 2024
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 notices or when water companies fail to conduct meter readings or installations as promised.
Environment Secretary Steve Reed said the Government hopes to "turn the tide on the destruction of our waterways".
The proposals, which will be subject to an eight-week consultation, will increase the amount of reimbursement that customers are legally entitled to when standards are not met by water companies.
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.
Earlier this year, around 16,000 residents of Brixham, Devon, were left without tap water for eight weeks, and were told to boil their water before drinking it, cooking with it, or brushing their teeth.
If the compensation changes had been in place when the outages occurred, the residents would have automatically been entitled to payments. But the Government has said the regulations will not apply retrospectively.
Announcing the proposals, Mr 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."
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, said: "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."
The Guaranteed Standards Scheme, which covers timely restoration of water supply following an interruption, responding to written complaints, and managing the risk of sewer flooding, is being updated for the first time since 2000.
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 previously announced a Water (Special Measures) Bill to cut sewage spills and attract investment to upgrade infrastructure.
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."