Poorer households must be protected from future water bill rises, body says

People on lower incomes must be safeguarded from future rises in water bills, Scotland’s statutory body for consumers has said.

Consumer Scotland recommended an increase in the threshold of the existing Water Charges Reduction Scheme (WCRS) to limit rises in water poverty in future, and consideration of new proposals to target consumers who currently miss out on support.

The body said new analysis has revealed that one in 10 Scottish households are living in water poverty, and one in 20 are in severe water poverty, facing charges for water and sewerage exceeding 5% of their disposable income.

Future water bills for the six-year period from 2027/2028 to 2032-2033 will be considered by Strategic Review of Charges – which will be undertaken by the Water Industry Commission for Scotland (WICS), the Scottish Government, and Scottish Water.

It will look at ensuring sufficient income is raised from customer charges to provide funding for existing services and investment in infrastructure required for the future. It will consider the point that charges do not unfairly burden customers.

However, Consumer Scotland warned Scottish consumers are likely to face above-inflationary increases to respond to the twin challenges posed by the climate crisis and ageing water infrastructure.

They said unless action is taken, the number of people in Scottish households living in water poverty will increase.

A new Consumer Scotland report said the most cost-effective way of mitigating the impact of rising bills on low-income consumers in the short term is to increase the WCRS by start of the 2027/33 charge period.

Currently those who qualify receive a reduction on their water bills of up to 35% depending on their council tax status, but Consumer Scotland recommends the upper limit is increased to 50% throughout the 2027/33 period.

Consumer Scotland says his would reduce water poverty for the equivalent of some 13,000 households at a cost of around £22 million, and would also improve the affordability of bills for the almost 500,000 households who receive the reduction.

However, analysis suggests that a significant number of households in water poverty do not receive the WCRS.

Consumer Scotland is also recommending the Scottish Government considers a new temporary by-application scheme, also by 2027, allowing customers experiencing water poverty who are not covered by the WCRS to apply for support.

Consumer Scotland director of research and analysis David Eiser said: “Increasing the level of discount available under the WCRS represents a cost-effective way of helping to keep bills affordable for many households in the short term.

“We recommend that the sector, coordinated by the Scottish Government, begins work to implement this enhanced rate of discount so it is in place when new charge levels come into effect in 2027.

“The design of an additional by-application scheme would help customers who fall through the gaps of existing affordability support mechanisms and we think this is also worthy of consideration.

“Progressing these recommendations would provide additional protection for those on low incomes while the sector explores more comprehensive reform to the structure of water charges in the coming years.”

A Scottish Water spokesperson said: “About 50% of our household customers currently benefit from our Water Charges Reduction Scheme (WCRS) or other discounts and exemptions on charges.

“Our prices are regulated by the WICS, with our current regulatory settlement spanning the period 2021-2027 and defining the maximum amount by which prices can increase.

“For each regulatory period, the Scottish Government defines its Principles of Charging, which Scottish Water and the WICS must follow when setting prices. The Principles of Charging define the level of support available to customers via the WCRS – this is set at 35% for the entire 2021-2027 regulatory period, having increased from 25% previously.

“The Scottish Government has started engaging industry stakeholders on the Principles of Charging for the 2027-2033 period and Consumer Scotland’s report is intended to inform that discussion.”

Acting Cabinet Secretary for Net Zero Gillian Martin added: “I welcome this report from Consumer Scotland which we will consider fully.

“By linking water charges to council tax bands, customers in Scotland are already benefitting from far more progressive charges than in England and Wales, helping to protect those who are most vulnerable.

“Charges are set on a six-yearly basis with the next regulatory period due to commence in 2027. We will consult widely on the principles of charges in the usual way before any decisions are finalised.”

WICS was approached for comment.