Report from public spending watchdog the National Audit Office blasts regulators for not doing enough to raise awareness as it revealed household debts with energy and water firms have soared to more than £7billion
Awareness of social tariffs for water and broadband customers remains very low, an NAO report found (Image: Getty Images/EyeEm)
Millions of struggling households are missing out on cheaper water, energy and broadband, a report fro the National Audit Office has found.
Social tariffs offer discounted prices for essential services to make them more affordable for those on a low income. However, the NAO found that just 39% of water customers who would be eligible for such a tariff are even aware they exist. The number is even lower, only a third, among broadband customers.
The finding by the public spending watchdog came it revealed households now owe more than £7billion to water and energy companies. Levels of energy debt have soared by 118% since 2021, following Russia’s invasion of Ukraine, to almost £4.3billion. And there are four million water accounts in debt, totalling nearly £3billion.
The lack of awareness of social tariffs or other forms of help means those who are vulnerable or on low incomes could be missing out on vital support, the NAO found. For example, energy customers who have agreed a repayment plan with their supplier owe around £1,000 less than those without them. However, fewer than half of households (40%) in energy debt have them in place.
The report found that energy regulator Ofgem and water watchdog Ofwat had overseen an increase in the number of people on firms’ Priority Services Registers. These can help utility companies identify and support customers who have extra communication, access or safety needs. However, it warned awareness remained low and there was no such register for broadband firms. The report also examined the role of telecoms regulator Ofcom.
The NAO found they had strengthened protections since its last report in 2019, introducing new rules on how companies treated customers and taking enforcement action. But it said they must now make changes to keep pace with consumer needs, finding that customers still struggled to contact their providers and were not always aware of support available to help manage their bills, such as social tariffs and repayment plans..
Gareth Davies, head of the NAO, said: “Regulators have made progress to support consumers, but they’re not keeping up with the pressure now facing millions of households. With debt rising sharply, it’s more important than ever to make regulation work so that people know what support is available and can contact essential providers when they need to.”
Sir Geoffrey Clifton-Brown, chairman of the Public Accounts Committee, said: “Price volatility is now the norm across much of the energy sector, and consumers are at the sharp end of this.
“Debt to energy companies has more than doubled since 2021, yet far too many households are still not receiving or are even aware of support to manage rising costs. Regulators have a critical role to play, but today’s NAO report shows regulation is still failing consumers across water, energy and broadband.
“It remains too difficult for consumers to contact companies when things go wrong, financial support is poorly promoted, while basic billing errors are pushing households further into debt.
“While Ofgem, Ofcom and Ofwat have made some progress, they must now act with far greater urgency to ensure consumers get the standard of service they deserve.”
An Ofwat spokeswoman said: “We know there is more progress that needs to be made to drive better outcomes for consumers, particularly those experiencing vulnerability and during supply incidents. Protecting consumers who need extra help remains a key priority for Ofwat, and we continue to work with Defra to improve outcomes for customers in this period of reform of the water sector.”
Ofgem said: “Energy debt remains a major challenge, and we are taking action to reset how it is managed.
“We continue to work with Government on a targeted Debt Relief Scheme to address historical debt, alongside reforming the process people follow when they move house and set up energy accounts to avoid debt building up.
“We are also challenging suppliers to do more – including prioritising accurate billing and early engagement to offer fair, affordable repayment plans, and ensuring they are meeting the needs of the most vulnerable customers.”
