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The flow of things to come? Customer views on the challenges for water.

We are now promised that by December 2011 the Government’s plans for the water industry in England & Wales will be set out in a Water White Paper. The independent David Gray review of Ofwat will report to Ministers ahead of the White Paper and Ofwat itself has been busy generating ideas about the future for the water industry.

So this means there is no drought when it comes to views about the future for water. But what about the views of those who matter – the people who use the services and pay the bills?

In September 2010, DEFRA invited “members of the public” to have their say. But you will turn up to the party if you know about the invite and while according to DEFRA 800 responses were received on their online consultation the risk is that this party will be full of the usual water insiders and gate-crashers.

To inform a wider public consultation about the issues raised by DEFRA, ICS Consulting in collaboration with YouGov recently conducted a nationwide and representative survey of householder views in England & Wales on a range of issues critical to the future direction for the water industry.

In this article, we present some of the key messages to emerge from the survey. What do the people who pay the bills & experience the service want from their water industry going forward? And what kind of steer does this offer DEFRA in its thinking about the forthcoming White Paper?


The principal - in most cases only – contact customers have with their water companies is when the bill arrives. We found that 68% of metered respondents look at their bills in detail or pick out the key points, whereas 66% of unmetered respondents skim or do not read their bills. When you pay for what you use it seems the bill becomes more of a focus.

And what about the bills themselves? Here 53% judged water & sewerage bills to be affordable with 22% saying they were unaffordable. Unaffordable bills rose to 28% for the C2DE socio-economic group (SEG) and to 34% for those paying high bills (>£400). When asked about value for money, overall 19% said current bills were poor value for money, contrasting the 47% who said current bills were good value for money.

We then asked about the companies to whom customers pay these bills. They were most likely to label water companies as “invisible” and “only interested in making money” and least likely to describe them as putting customers first. So the broad contentment on bills did not appear to translate to a positive perception of the current service providers.


Does this apparent ambivalence to the incumbent suppliers hint at an untapped desire for alternative providers? The Coalition’s early policy statements talk about increasing choice and competitive opportunities in water, but most likely restricted to business customers as in Scotland. A notable 70% of household respondents felt to some degree that a choice of supplier was important, albeit this figure was lower than for other utility services where retail choices are already available.

The motives for being supportive of choice were also interesting. Dissatisfaction with existing providers did not feature strongly (only 6% cited this). More important was simply the idea of not having of a choice and the expectation that competition would mean lower prices and new kinds of service. Environmental performance was an area of interest to a notable number of respondents.

This dimension of service may therefore be an important differentiator... For those who did see not choice as important, the dominant factors were around uncertainty and information. Uncertainty about the benefits of choice and a lack of confidence that changing supplier would be worth it. Negative perceptions of choice in other sectors also explained some of these views as did the idea that water was different.


With the recent Walker Review(1) putting water charging on the policy agenda, we asked about people’s views on metering and the role for social tariffs. A majority of respondents (63%) agreed with charging by meter. For those presently unmetered, 48% agreed with charging by meter compared to 88% of those already metered.

Metered respondents were also more likely to think about their water use compared to unmetered respondents. Interestingly, unmetered respondents indicated a meter would significantly increase how much they think about their own water use. Overall, there was some nervousness amongst unmetered respondents about water metering; this unease was highest for the older age groups and the C2DE group.

In our survey 69% of respondents placed “Water bills affordable and as low as possible” in their top 4 current service priorities. While rated highly, affordable bills were less important than tap water that was pleasant to smell and taste and reliable supplies with no interruptions.

The Walker Review proposed a number of ideas on affordability, including offering reduced bills to some households. When asked who should be eligible for support with their bills, a majority of respondents only agreed with assistance for pensioners (74%) or those with high use for medical reasons (85%). Lowering bills for low income households on benefits (46%) and families with 3 or more children (28%) attracted notably less support.

Resistance to extending social tariffs more widely as signaled by recent legislation was also evident(2). 51% of respondents disagreed with Government allowing water companies to reduce bills for households finding it difficult to pay their bills with the cost covered by other bill payers, with disagreement strongest in the high bill (>£400) and ABC1 groups. There was a sense from this group that the responsible majority would end up paying for a profligate minority who should already be supported through the tax & benefit system.

Notably fewer – 29% - expressed agreement with this policy and when asked how much more extra they would be willing to pay 1 in 4 of this group indicated “nothing”.

The challenging picture that emerges for policy-makers is that while affordable bills are viewed as important, the means for ensuring affordable bills also matters. Making the bills for some groups more affordable at the expense of other bill payers will depend in part on the scale of the expense but also the underlying legitimacy / perceived fairness of the support. In terms of paying for wider social tariffs as opposed to extending the current WaterSure arrangements, Government appears to be signalling with its current proposals that the buck stops firmly with water customers. Companies may feel they will be left stuck between the proverbial rock and hard-place.


DEFRA asked for views about the future challenges in water. The results of our survey show that affordability of bills remains the top priority followed by managing water use and ensuring a clean and healthy water environment.

Our findings also highlight another challenge; one that is institutional in nature. We noted above respondents were most likely to label water companies as “invisible”. This invisibility is shared by other water organisations. Close to 6 in 10 of respondents claim never to have heard of the Drinking Water Inspectorate, CCWater, Water UK and Waterwise. The EA and Ofwat fared better in terms of “brand recognition” but only 12% and 6% respectively claimed to fully understand what they do.

Successfully meeting the future challenges for water – some of which require active participation and buy-in from water customers – will be built from institutional foundations that command a higher level of public awareness and perhaps legitimacy.

When asked who has most responsibility for addressing future challenges, water companies came out on top. Of note, this contrasts evidence from the more fragmented and competitive energy sector where research suggests customers feel Government is most responsible for issues like maintaining secure supplies. Hence, water companies need to take the lead in meeting future challenges if they are to satisfy their customers’ expectations.

On how should future challenges be met the only clear conclusion is that retaining the status quo for the water sector holds least appeal for the public. Alternative paths like a return to public ownership or encouraging more competition attracted marginally more support. The most favoured options are those that give customers a clearer idea of what they are getting from water companies, give them an increased, perhaps more visible, role in the setting of price and service and which would clearly hold companies to account for failure.

They say one swallow does not make a summer and one customer survey does not make a White Paper. But if DEFRA wants to respond to the hints being offered by this evidence from the paying water customer, then the water sector could be seeing some landmark changes later this year.

A version of this article appeared in Utility Week, 4th March 2011


Details of full report available from ICS Consulting

(1) See Walker, Anna (2009) Independent Review of Charging for Household Water and Sewerage Services,

(2) Clause 44 of the Flood and Water Management Act 2010.


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