Recommendations – Improving the WaterSure financial support scheme

Current

To be eligible for the current scheme someone in the household must be in receipt of an income-related benefit. These are:

• Universal Credit
• Pension Credit
• Housing Benefit
• Income-based Jobseeker’s Allowance
• Income Support
• Income-related Employment and Support Allowance
• Working Tax Credit
• Child Tax Credit awarded at a rate higher than the family element

Key Recommendation 1

Some people who have a disability are entitled to specific benefits which recognise the additional living costs they face, irrespective of the level of their income or financial circumstances. Adding these benefits (i.e. Personal Independence Payments (PIP), Disability Living Allowance (DLA) and Attendance Allowance) as alternative eligibility criteria, alongside income-related benefits, would expand the number of households eligible for help and better recognise the additional costs faced by households where a disability is present.

Two companies are already successfully operating this approach, with the additional support funded outside of the WaterSure scheme.

However we recognise that there will be cases where a high income household will be entitled to one of the above non-means tested benefits, and therefore recommend the application of an upper income threshold. This would help ensure that support from the scheme goes to households who are in need of the financial support, and avoid the risk of lower-income households contributing to cross subsidy, which may then go to significantly higher income households.

Call for Input Responses

There was strong support for the list of qualifying benefits being expanded to include non-means tested disability benefits. It was felt this could help ensure that people with the extra costs of a disability will be able to obtain support with their high water bills. Their disability benefits will generally be used in extra care costs and other expenses related to their disability or condition.

Those opposing this change noted that non-means tested benefits, such as PIP, DLA and attendance allowance, are designed to help customers with their additional expenses, and considered that this included water bills. There was also a view that it is the responsibility of government – not water companies – to address any perceived gaps in welfare support. Another point raised was that state benefits are funded though progressive tax structures, whereas any cross-subsidy funded by water customers would potentially be more regressive in nature.

Some respondents supported the inclusion of disability benefits as a qualifying criteria being subject to an upper income threshold. It was felt that this would moderate the scale of those brought into eligibility and help minimise cross subsidies flowing from lower to higher income households. Others noted that this would add administrative complexity and cost.

Drop in Session Views

Overall, there was strong support for the inclusion of non-means tested benefits. This was particularly the case in terms of stakeholders working in the community with people would benefit from this change, but also among water companies attending the sessions.

For some the inclusion of an upper income threshold alleviated any concerns about the proposal.

Within the sessions, how to set the threshold was discussed. All parties wanted to ensure that:

• The threshold effectively captures those who need the support
• The criteria is customer friendly and easy to understand
• The administration of this change would be reasonable for companies and customers

Income Threshold suggested options

• A lower level income threshold, but income from non-means tested disability benefits is not counted

Excluding the non-means tested benefits would allow for flexibility in benefit income levels or benefits for multiple household members, without the risk of them hitting a threshold.

• A higher level threshold that includes all income including that from disability benefits

This would be the least complex approach to the threshold and the easiest to administer.  It would require consideration for non- means tested benefit levels to ensure that those who have higher payments based on their disability, are not excluded.

• Different thresholds based on household size

Thresholds based on household size would be effective in tailoring eligibility for bigger households and households with multiple members with a disability. However it would be more complex to administer and more difficult for household to check their eligibility.

• Threshold based on the water bill being more than 5% of the household income spend

This could potentially set the threshold at a very low level, particularly with the addition of non means tested benefits, and would be more complicated to communicate and administer.

On balance we feel that setting a threshold which excludes income from disability benefits would be the most appropriate approach to follow. This might be set at a lower level than would be the case for a threshold which took account of all income. However we feel this should still be set sufficiently high to make it a back stop against exceptional cases (where claims are made by quite high income households) rather than something which more routinely excludes claimants.

Current

The current regulations require that annual charges to qualifying customers are capped at the level of that company’s overall average bill.

Key Recommendation 2

In order to enhance the support provided by WaterSure, we wanted to look at whether the ‘average bill’ cap was the most appropriate option or if there were alternatives that would enhance support.

We wanted to explore whether capping bills at the metered average was the right approach, or if limiting or reducing bills in some other way is more appropriate.  Some companies have moved to capping bills at their average metered bill level (which is almost always lower) – with the company funding the difference. As a recommendation of our 2021 affordability review, we called on other companies to consider doing this. Ten companies are now offering this enhanced support on a voluntary basis.

The difference in bill benefit which would be provided through this approach varies considerably, largely due to the proportion of customers in the region who are metered. Based on information provided by companies we estimate that just over half of claimants would benefit by less than £35 per annum and just under half would benefit by more than £35. The maximum benefit is £100. It should be noted that these figures include cases where the enhanced support is already being realised due to company voluntary extensions to the scheme.

Information provided by companies suggests that at the present time just one company has an average overall bill level which is lower (to a small degree) than its average metered bill level. To address this, we propose that the requirement is for bills to be capped at the lower of the two average bill levels.

Call for Input Responses

There was strong support for the bill cap applied by companies being their average metered bill level rather than their overall average bill level. It was noted that this seems logical since the claimant must be metered in the first place. Several companies noted that they already follow this approach, currently funding the difference in costs themselves.

It was pointed out that the arithmetic average ‘metered’ bill includes subsidised tariffs – i.e. customers on social tariffs and WaterSure itself. A fairer measure could be the average metered bill for a customer on regular charges – i.e. the metered bill of a customer with average consumption.

Two respondents did not favour this change. One highlighted the added complexity of regionally different bill cap levels for New Appointments and Variations (NAV) companies operating across different operating areas.  The other advocated for the existing overall average bill cap being retained on the basis that it provides for a balanced level of support that is both fair and sustainable.

Drop in Session Views

In the sessions, there was strong support for capping bills at the lower average bill to enhance the support provided by WaterSure.

It was raised again that the ‘average’ could be calculated excluding the bills of customers on social tariffs for fairness.

Other Considerations

On balance we propose that the ‘average’ is calculated based on the overall average without the exclusion of the bills of customer on social tariffs as we are concerned that the exclusion would reduce the value of the additional support to customers.

However we do recognise that excluding the bills of customers on social tariffs in calculating average bill levels is an alternative option for consideration.

Key Recommendation 3

Under current arrangements a single occupier may have significant extra water use due to a medical condition, resulting in a higher bill, but would not benefit (or receive limited benefit) from the WaterSure scheme. This is the case due to the bill cap being linked to the overall average household bill.

A separate bill cap for single person households, with a relevant medical condition, would open up support or enhance help for this group. This approach would be more inclusive. People previously below the household cap level would move into support, and those already receiving help would get a larger bill reduction. The cap would be linked to the average bill level for a single person. One option could be for companies to use the Assessed Volume Charge (AVC), currently applied for single occupiers who opt for a meter but are unable to have one installed.

Call for Input Responses

The addition of a single occupier bill cap received some positive support.

Several respondents felt that this would be a really helpful way to reach those with high medical water usage needs that are currently missing out on support. It was noted that this would enhance the support provided by WaterSure without significantly increasing the required level of cross-subsidy.

There were mixed views on whether this change would add significant administrative complexity and cost.

Several stakeholders called for further exploration into the impact of implementing the change in terms of likely cross subsidy and the opportunities to obtain data from the Department of Work and Pensions (DWP) and Councils to validate claims and auto enrol customers.

Drop in Session Views

Overall, there was good support for this recommendation in the sessions.  However a small number raised questions about the administration of this.

It was suggested that, like single occupancy assessed charges, single occupier WaterSure can be applied on receipt of a single occupier discounted council tax bill in order to utilise a process that companies already follow.

Current

Companies can require a note from a medical practitioner as evidence in the event of claims related to ‘unlisted’ conditions.

Key Recommendation 4

In March 2024, CCW asked companies that did not already do so to move to accept a broader range of evidence and/or self-declaration options recognising the difficulties and costs claimants might face in obtaining a medical practitioners note.  All companies agreed to do this on a voluntary basis and we therefore recommend that this change is adopted into the regulations.

Call for Input Responses and Drop in Session Views

There was strong support for this within the responses and drop in sessions. Companies confirmed that this is how they now operate following the recommendation from CCW.

Current

The regulations name the following conditions:

• desquamation (flaky skin disease)
• weeping skin disease (eczema, psoriasis or varicose ulceration)
• incontinence
• abdominal stomas
• renal failure requiring dialysis at home – unless already getting a contribution to water costs from the NHS
• Crohn’s disease
• ulcerative colitis

However they also require companies to offer the support in respect of any medical condition which requires significant additional water usage.

Key Recommendation 5

Feedback from organisations representing groups who apply for the scheme has suggested that on occasion there can be confusion about the eligibility of conditions which are not specifically listed in the regulations. This can be particularly true for mental health conditions which can lead to excessive water usage, such as obsessive compulsive disorders or dementia.

We believe it would be helpful to signal the fully inclusive scope of the regulations more clearly by extending the list of specific conditions named, accompanied by a clear statement that reflects that the list in not exhaustive. We recommend that the final list of core named conditions is agreed by further engagement with companies and stakeholders who represent those likely to benefit from the scheme. Companies should also have the freedom to highlight additional conditions in promoting the scheme if they wish to do so.

Call for Input Responses

There is a strong consensus that it would be helpful to signal the universal nature of qualifying medical criteria more clearly.  Some stakeholders felt this would be best achieved by fully replacing the list of named examples of conditions which might require additional water use with a clear description – to avoid giving an impression only those conditions are covered.

Others felt the list should be retained, and possibly extended, to help people identify their eligibility whilst also accompanying this with a strong statement around the universality of the scheme.

It was suggested that customers, including older people on low incomes with high water usage, should be engaged as part of the process of identifying an improved approach to communicating eligibility.

One stakeholder called for eligibility to be extended to cover those with medical conditions living in properties where they are not the bill payer. However this is already the case under the current scheme.

Drop in Session Views

There was strong support for this in the sessions, with all parties wanting to ensure that customers who would be entitled do not exclude themselves based on what is and is not on the list.

There was also support for having a clear statement highlighting that any list is not exhaustive and any condition with higher water usage would be considered.

There was a suggestion that companies should be able to tailor this based on their own customer base and what works best for their customers.

One company has recently removed the list and has replaced it with a statement that says customers who are medically reliant upon water could be eligible. It is too soon in the process to see what impact this has had on applications.

Key Recommendation 6

WaterSure is currently operated on a voluntary, rather than statutory, basis in Wales.  To ensure that, in future, customers in Wales continue to benefit from the same protections as those available to customers in England, we recommend that the scheme is adopted into statute in Wales.

Call for Input Responses

One stakeholder commented on the status of WaterSure in Wales. They supported WaterSure being put on a statutory basis in Wales, on the basis that this would make the regulatory landscape clearer.

Drop in Session Views

Those attending the sessions were all comfortable with this recommendation.

Recommendation 7

In responding to our call for input several organisations were keen to ensure steps are taken to raise awareness of WaterSure and for water companies, CCW and others to work together to take greater advantage of the opportunities that an industry-wide scheme brings in terms of national promotion and consistent messaging.

It was felt further action is needed to proactively increase awareness among disabled customers of the extra help available to them. It was noted that this should not be solely online, as some of those eligible for help are often more likely to be digitally excluded.

Recommendation 8

A pilot scheme carried out by Thames Water as part of CCW’s affordability review found that water efficiency measures were most effective when targeted at household with high occupancy levels. WaterSure helps ensure that large families in receipt of benefits don’t face high bills due to essential usage. However there is also an opportunity to utilise engagement with those customers on WaterSure to also provide advice and support in using water efficiently and avoiding unnecessary waste.

Recommendation 9 

Some respondents highlighted the significant overlap between WaterSure claimants and those needing support through the Priority Services Register (PSR). It was noted that engagement on WaterSure provided a good opportunity to also register customers for PSR services where appropriate, and vice versa.

Drop in Session Views

Within all of the sessions there was strong support for the additional recommendations with some companies stating that they already operate the recommendation relating to the PSR.

A common theme in responses was the need to recognise the potential for changes to the scheme to increase the cost of operating it and associated cross subsidy applied to other customer bills. And for an appropriate balance to be struck in this regard.

However it was also observed that even a doubling of costs (around £2-3 per on annual bills) would have minimal impact on other customers. A respondent also called for companies to fund some of the support rather than relying on cross subsidies from other customers.

Estimation of cost impact of single occupiers

Approximately 1 in 3 households comprise of a single occupier . Thus as an extreme assumption the change would extend the scheme (or enhance support) by a third for medical condition claimants. Medical claimants constitute around two thirds of all Watersure claims. On that basis we estimate that a high-end estimate is that this change, in isolation, might over time increase the costs of the scheme by about 25%.

Estimation of cost of disability benefit addition

Information shared by a company which has already extended its WaterSure scheme to be inclusive of disability benefits indicates that 23% of claimants achieved eligiblity on the basis of such benefits. On the basis of this information, we estimate that this change, in isolation, might ultimately result in a need to increase funding by 25%.

Estimation of cost of setting the bill cap at the lowest of average or average metered bill level

The value of the difference between the average bill levels varies considerably from company to company. Based on information provided to us by companies the biggest difference is around £100. That would equate to around an additional 64p bill cross subsidy to fund.

Taking this into account and that a lower cap will open up the scheme to a larger group of claimants, we believe that a high- end estimate is that the change may also result in a maximum cost increase of a further 25%. Although for many companies the impact would be much lower.

Overall Impact

An upper end estimate for each of the 3 main proposed changes is that they might each, in isolation, increase costs by about 25% over time. There will also be interplay between proposals – ie a lower bill cap would give bigger benefit to those claiming based on disability benefits.

Taking everything into account, we estimate that a high-end estimate of the likely increased costs of all proposals taken together might be a doubling of the cross subsidy over time. So increasing cross subsidy levels from around £2-£3 to £4-6 per household per year.

Additional Considerations

Some companies are already operating enhanced measures (lower bill cap or eligibility based on disability benefits) outside of a cross subsidy on customer bills. Where our proposals would bring these measures into the statutory scheme, they would in future be funded through bills. In these instances, we would want to see the additional funding which is currently being put into WaterSure be used to deliver other support for financially vulnerable customers.