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Water companies to triple customer support, but further reforms needed
Last month, the economic regulator Ofwat confirmed it would allow water companies in England and Wales to invest a record-breaking £104 billion over the next five years. This will help to secure future water supplies, enable economic growth, and end sewage in rivers and seas. Alongside this step up in investment, which requires an increase in water bills after nearly 15 years of real-term declines, companies have also announced that more than 3 million households will be supported by a new £4.1 billion affordability package.
This blog provides new details on that affordability package and the reforms needed to allow the sector to go even further.
More households to be helped with their bills than ever before
Since 2020, water companies have significantly increased the number of households receiving social tariffs or other forms of reduced charges. Water companies expect to have 1.6 million households on either social tariffs (mainly aimed at low-income households) or WaterSure (mainly for those with large families or certain medical conditions) by the end of March 2025, up from around 900,000 in 2021.
Over the next five years, water companies will go even further – with plans for 2.2 million households to receive reduced charges in 2025-26, rising to nearly 3 million by 2029-30. In addition, around 360,000 households will also be able to access additional financial support, such as payment matching and debt forgiveness schemes, over the next five years.
Figure 1 – Number of households supported by social tariffs or WaterSure charges in England Wales

Figure 2 – Number of households expected to be supported by type of affordability measure in England Wales by 2029-30

This amounts to a substantial package of financial support for households that struggle to afford their bills. When water companies first proposed their investment plans in 2023, they set ambitious targets for affordability support. Now, those targets have grown even further — the support available to struggling households will more than double in 2025-26 to nearly £700 million, before reaching over £900 million per year by 2029-30, more than triple previous levels.
Figure 3 – Financial support provided by water companies to households that struggle to pay their bills (£m, 2022-23 prices)

This means that water companies expect to deliver £4.1 billion of affordability support over the next five years. While the majority of this financial support is due to be provided through reduced charges – such as social tariffs (£3.2 billion) and WaterSure (£470 million) – other forms of financial support will be available, such as payment matching and debt forgiveness (£457 million). This is more than double the £1.7 billion of equivalent affordability support provided over 2020 to 2025.
While water companies are going as far as they can under the current rules, reform could enable further support
It is worth noting that the breadth and depth of affordability support in the water sector is unmatched in other regulated sectors such as broadband and energy. There are currently five times as many households on water social tariffs as their equivalents in the broadband sector. And while the average household receiving affordability support – such as through the Warm Homes Discount or the Cold Weather Payment – receives an average discount of around £200 (12% of a typical energy bill), water social tariffs reduce bills by an average of 40%.
But despite these comparisons and plans to increase affordability support to their highest levels ever, we know that bill rises are never welcome. Water companies can only go as far as they can under current rules to provide support. Under existing legislation and regulation, water companies can only fund social tariffs from their existing customer base – and their customers must be willing and able to pay. This limits the amount of support that can be made available in regions with relatively higher levels of deprivation, such as the North West of England. While companies have managed to secure greater customer backing for providing more support than before, this remains a barrier and creates inconsistency between regions. And, while nearly every company is providing shareholder funding for affordability schemes (as shown by Ofwat) that can only go so far.
That is why campaigners and think tanks have been calling for reform in recent months. Before Christmas, the Independent Age charity published research into what a ‘single social tariff’ could achieve through transfers between different company regions. This followed an open letter from charities and other organisations to the Water Minister in August 2024. The Social Market Foundation also recently produced a report on how a social tariff could be designed to unify eligibility and support levels. It is therefore promising to see the government put further reform on the table by proposing enabling legislation that could see the introduction of a new affordability scheme in the future.
In the meantime, water companies will continue to ramp up their affordability support for those households that need it – working with government, regulators and wider partners to raise awareness and explore potential reforms to how households can be further supported with their bills.