Water compensation rule change could see £2,000 payments issued

UK water customers are in line for significantly higher compensation payments from next year, following issues such as supply outages, sewer flooding or low water pressure, according to the Government. Customers experiencing problems like low water pressure could be eligible for payments of up to £250, a substantial increase from the current £25 limit.

Furthermore, households affected by internal flooding from sewers could receive £2,000 or more, compared to the existing £1,000 cap, the Department for Environment, Food and Rural Affairs (Defra) announced. While some water companies voluntarily offer compensation to customers who experience supply interruptions or other issues, there is no legal obligation to do so and rates can vary greatly among firms and locations.

The list of circumstances that can trigger compensation will also be expanded to include situations when Boil Notices are issued by water companies due to a drop in drinking water quality standards, or when firms fail to conduct meter readings or installations on time. These changes come after a public consultation found that an average of 84% of water customers and 70% of businesses agreed with the proposals, Defra revealed.

Under the new rules, residents in South Staffordshire whose water supply was disrupted last month due to a burst water main could have received a non-compulsory £150 payment, while businesses could have been paid £300.

After a fuel leak in May led to a 'Do Not Drink' notice for 600 properties in Bramley, Sussex, Thames Water offered residents a voluntary £30 payment. Under new guidelines from Defra, however, households could have triggered an obligatory payout of £220 and businesses £440, reports Devon Live.

There was no compensation during the cryptosporidium outbreak in Brixham, Devon, but affected customers under these changes would now get at least £10 for every 24 hours without clean water, potentially amounting to more than £500 for incidents lasting beyond eight weeks. Steve Reed, Secretary of State for Environment, Food and Rural Affairs, said: "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 added: "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."

The current rates for compensations, unchanged since 2000, have drawn criticism. Mike Keil, chief executive of the Consumer Council for Water (CCW), remarked: "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."

New measures have been put in place to ensure that water companies are held to higher standards and are more accountable for their actions. Mr Keil 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."

Meanwhile, water firms have requested significant increases in customer bills for the period between 2025 and 2030, despite ongoing performance issues. A decision on the allowed price hike is expected to be announced by Ofwat on Thursday.