New rules mean water customers can claim up to £2,000 for service failures

Households across the UK are poised to receive much more substantial compensation for water company service failures following a public consultation. The Government has mandated that water companies provide new and increased compulsory payments to customers and businesses in situations such as supply interruptions, sewer flooding, or low water pressure.

Issues like low water pressure could now result in compensations of up to £250, a significant rise from the mere £25 currently available. For graver problems such as internal sewer flooding, the compensation could skyrocket to £2,000 or more, exceeding the previous cap of £1,000.

With the incoming regulations, an incident such as supply disruption caused by a burst water main would warrant a payment of £150 for households affected and £300 for businesses.

The Secretary of State for Environment, Food and Rural Affairs, Steve Reed, commented: "Customers have too often been let down by water companies, with supply cut off, low water pressure and in some cases even contaminated tap water."

He emphasised the need for improved redress, stating: "We are clear that the public deserve better compensation when things go wrong, so I'm taking action to make sure that happens. This is another step forward in our plans to reforms the water sector so it serves customers and the environment better."

Payment rates issued when water service standards fail have been static since 2000, signalling the need for significant reform. Currently, some water companies provide voluntary compensation during supply interruptions, but with no legal binding to do so, compensation amounts are inconsistent across different companies and regions.

New reforms will widen the criteria for compensation to include instances such as Boil Notices from water companies when water quality dips, or failures in meter reading or installations. These changes come after a public consultation revealing robust support—84% of water customers and 70% of businesses backed the proposals.

Mike Keil, head of the Consumer Council for Water, commented: "The current Guaranteed Standards Scheme is not fit for purpose, so we welcome the swift action the Government has taken to bring about long-overdue improvements."

He added, "The increased payment levels when things go wrong, alongside fewer reasons for companies to avoid making payments, means that there are far greater incentives for water companies to get things right first time. The overhaul of these standards marks a step forward in improving consumer protection and repairing fractured trust in the water sector."

The government has announced enhanced protection and compensation for households and businesses as part of its initial steps to resolve the crisis in the water sector.