How can water companies ensure customers are more supportive of contributing to social tariffs?

UK water companies now offer a social tariff, or discounted bill, to customers that may be experiencing financial difficulty.

To qualify for the discounted bill, the payer must usually meet eligibility criteria based on a household income threshold.

Social tariffs are funded via a cross subsidy arrangement. Most customers pay a little more on their annual bill so that those in financial difficulty can receive the discount.

But how do the majority of bill payers feel about this? And are there ways to improve the way the cross subsidy is viewed?

Our research has revealed some interesting insights.

Attitudes to bills

Water customers are asked to pay typically around £5 a year, which helps thousands of customers in need of financial support.

And using cross subsidy to help those in more vulnerable circumstances is not unique to the water sector. Other examples include:

• Bus use – working age customers pay slightly more for tickets so that pensioners can receive free bus travel
• Home insurance – all customers pay a little more on their premiums so that those living in flood risk locations can get cover
• The Warm Home Discount allows energy customers to receive a reduced tariff
• Postage stamps – shorter, simpler deliveries help cover the cost of longer more complicated ones.

Qa Research has worked with a number of water companies to ascertain customer attitudes to bills and the cross subsidy process.

We have asked bill payers if they were aware of the system and how it made them feel. A good way to summarise the prevailing attitude is: “I’m happy to contribute more on my bills (water or otherwise) for those that genuinely need it.”

Customers supportive but cautious

Customers tend to be supportive of contributing more to support those in need, but often temper this with a clear warning to the water company to ensure that only those that genuinely need or deserve a discount actually receive one.

Our work suggests that another key challenge for water companies is how they communicate to general customers why they may be paying a little more on their bill.

And the way to overcome that challenge is to demonstrate the impact that social tariffs have on those that receive the support.

If water companies do that, their customers are much more likely to value their contribution, and the difference it is having on people in straitened circumstances.

See also:

• Helping water customers who struggle with bills
• How UK utility companies are supporting their most vulnerable customers
• Three ways the water sector is changing the way it’s working
• A fun house and The Beatles: creative ways water companies hope to change customer behaviour
• Four ways water companies are investing in the environment
• Unblocking Britain’s £90m sewer problem

Photograph: Kirsten-Marie-Ebbeson on Visboo