Water customers to receive up to £2,000 compensation for serious service failures

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Water customers will start receiving higher rates of compensation for a wider range of issues as part of the government’s crackdown on poor customer service.

New proposals double the compensation customers are legally entitled to when key standards are not met, and when the taps stop working or water company staff fail to attend appointments.

Environment secretary Steve Reed said he wants to expand the circumstances in which customers are entitled to compensation. There is currently no automatic payment when water companies fail to conduct meter readings or issue a “boil notice” – where water must be boiled before use.

At the moment, customers are entitled to £20 compensation when their provider fails to restore their water supply, plus £10 for every 24-hour period in which it is not restored. This would increase to £50, with an additional £50 every 12 hours.

All compensation payments will rise to a £40 minimum.

Serious issues, such as low water pressure, could bring payments of £250, while maximum payment for internal flooding from sewers will rise from £1,000 to £2,000.

The compensation rises would be the first in nearly 25 years.

Mr Reed said: “Our water industry is broken.

“After years of failure, households and businesses have been let down by water companies time and time again.

“The new government will clean up the water industry and turn the tide on the destruction of our waterways, ensuring water companies protect the interests of their customers and the environment.”

The Environment secretary says the plans come after incidents in Hastings, Brixham and Bramley were under-compensated last year.

The proposals are subject to an eight-week consultation.

A Water UK spokesperson said: “We share the government’s ambition to reform an out-of-date system and look forward to seeing the details of these proposals.

“In the meantime, we are focused on delivering our largest ever investment plan to secure our water supplies, end sewage in rivers and enable economic growth.”

Major changes to the way water companies operate were introduced in July’s King’s Speech, with the introduction of the Water (Special Measures) Bill. These include ensuring water bosses face criminal liability for breaking the law, allowing Ofwat to ban bonus payments and introducing automatic and severe fines.

Last month, Ofwat fined three water companies a total of £168m for failing to manage their wastewater treatment. The largest fine of £104m went to the ailing Thames Water, with Ofwat promising this was just the first batch of fines to come from its “biggest ever investigation”.

While the new measures will be welcomed by customers, water bills are set to rise all over the country. Bills are set to increase by an average of £94 over the next five years, with some places seeing much higher rates.