Severn Trent customers struggling with cost of living and with a household income below £16,385 can seek up to a 90% reduction on their water bill under The Big Difference Scheme. The scheme is already up and running and supports about 215,000 households with a social tariff – the extra money will provide support for a further 100,000 people.

Severn Trent claims to be the first water company in the UK to offer support on this scale. The funds are available to those on low incomes.

Liv Garfield, Severn Trent CEO, said: “As cost of living pressures continue to rise, we’re acting now to support people struggling to pay their bills. Our customers have the second lowest bill in the UK, at around £1 per day, but we know that for some, paying this remains a challenge.

“I’m pleased to announce a commitment today to help thousands more people on low incomes to reduce their water bill by up to 90%.”

New guidelines published by Ofwat require companies to offer more flexible payment options for customers on irregular incomes and zero hours contracts. Water companies will also need to ‘talk sensitively’ with customers struggling to pay to understand their circumstances and resolve problems without needing to take debt recovery action.

The Ofwat guidelines also cover other areas such as bereavement support, customer rights and debt recovery.

Research carried out by Ofwat earlier this year showed that just over half of water bill payers believe they will struggle to pay a utility bill over the coming year, rising to seven in 10 if there are children in the household. It says companies should speak to their customers in multiple ways to ensure that the support they offer is known.

The regulator has called on water companies to work with each other and consumer and debt advice organisations to reach customers that are struggling, share best practice and improve services further. It says doing so should lead to customers getting further help when they need it, including the offer of a ‘social tariff ‘that reduces water bills for eligible customers.

Emma Kelso, senior director at Ofwat, said: “Many customers were struggling before the pandemic, and the current cost of living pressures are squeezing household incomes even further. We were pleased to see water companies step up their support during the height of the pandemic, and now that many more households are likely to experience financial difficulty in the coming months, we want companies to continue to go above and beyond for customers.

“Our new guidelines are clear in what water companies can do to support customers. They can be making bills easier to understand and pay, helping those that need further support, and go further to help people repay their debt if they fall behind. By helping customers avoid falling into a debt spiral, companies can also help reduce bad debts and keep bills lower for everyone.”

Research by management consultants CEPA suggests 6.5% (around 1.5 million) households in England and Wales are in water poverty. Water poverty applies to customers who spend more than 5% of their total income (after household costs) on their water bill.

Emma Clancy, chief executive of the Consumer Council for Water, said: “No one should have to worry about being to afford their water bill, so we’re delighted to see Severn Trent putting its hand in its own pocket to help thousands more low-income households at a time of real crisis for many people.”

“Our independent review of water affordability set out a clear path to ending people’s worries over water bills and with the support of companies like Severn Trent and the wider water sector we can ensure people struggling to pay always get the help they need, when they need it most.”