CONSUMER RESEARCH IN WALES A summary report of water consumers views

Transcription

1 CONSUMER RESEARCH IN WALES A summary report of water consumers views REVISED AUGUST 2010

2 INDEX Summary report of findings of consumer research in Wales Page number Executive Summary 3 Research from June 2009 to June Comparing findings for consumers in Wales with those across England. 5 Guide to document.. 6 Section 1: Welsh consumers views on water industry services and issues.. 7 Section 2: Views on Dŵr Cymru Welsh Water s business model. 37 Section 3: Summary of the differences in views between Wales and England 39 Annex 1: Detailed research findings by project June 2009-June Living with Water Poverty, Creative Research, published June Customer Views on Restorative Justice, Fines and Enforcement in the Water Industry, FDS International, published July Customers Views on Ofwat s Draft Determinations, Accent, published October Small and Medium Business Customer Views on Competition in the Water And Sewerage Industry, Accent, published June Cross Subsidies and Social Tariffs The Consumer Perspective, Creative Research, published June Annex 2: Research methodologies. 77 List of charts, tables and maps Chart 1: Satisfaction with overall water supply Chart 2: Water supply taste and smell... 9 Chart 3: Water supply hardness/softness... 9 Chart 4: Satisfaction with overall sewerage services. 10 Chart 5: Satisfaction with overall company contact.. 11 Chart 6: Affordability 12 Chart 7: Fairness of charges.. 14 Chart 8: Value for money of water services.. 16 Chart 9: Value for money of sewerage services.. 17 Chart 10: Agree that usually drink tap water rather than bottled water.. 19 Chart 11: Awareness of campaigns to use water wisely 21 Table 1: Sewerage services - statistically significant higher satisfaction levels in Wales. 10 Table 2: Proportions of metered and unmetered households.. 17 Table 3: Awareness of rights and responsibilities.. 18

3 Table 4: Acceptability and value for money of Draft Determinations.. 28 Map 1: Proportions who agree bills are affordable. 13 Map 2: Proportions who agree bills are fair.. 15 Map 3: Proportions not taking any actions to reduce water use in the home. 20 Map 4: Acceptability of Draft Determinations across England and Wales 29 Map 5: Value for money of Draft Determinations across England and Wales

4 EXECUTIVE SUMMARY SUMMARY REPORT OF RESEARCH FINDINGS FOR WALES BASED ON CONSUMER COUNCIL FOR WATER RESEARCH JUNE 2009 TO JUNE 2010 The Consumer Council for Water represents domestic and business water consumers. We are an independent and statutory consumer body with offices and committees in Wales and throughout England. This enables us to work directly with Governments in Cardiff and London, advising on the key issues for consumers, giving the consumer perspective and providing evidence based advice for Governments to consider in developing their policy approach. We also work closely with industry regulators and water and sewerage companies, as well as with water consumers themselves. We use consumer research and direct customer feedback to inform everything we do and as such, the water industry, regulators and associated organisations recognise the Consumer Council for Water (CCWater) as the informed, influential and effective consumer champion. We cost each water bill payer 23p a year. This report analyses the issues that water consumers tell us matter to them, utilising our research programme information from June 2009 to June Overall, consumers of the water and sewerage industry in Wales have similar views to consumers in England on most aspects of their water and sewerage services. Key findings, in common with those in England are: Satisfaction with overall water service remains high (95%); Satisfaction with customer service remains high (82%); Three quarters agree that their bills are affordable to them, although fewer (63%) agree that their charges are fair; Satisfaction with value for money of water and sewerage services remains high 70% and 78% respectively; Awareness of rights and responsibilities e.g. availability of Welsh Water Assist, GSS payments and free meter option is broadly similar to that of England, and shows wide variation depending on the aspect under consideration; The numbers of households in Wales reporting that they do not do anything to use water wisely is about the same as England (30% versus 28%); Consumers in Wales have the same views as those in England with respect to the use of cross subsidies and social tariffs in the charging system for water and sewerage, and there were no particular differences when very low income customers were interviewed about living on limited means and managing their finances. In terms of views on enforcement in the water industry, again views in Wales were similar to those of respondents in England, as were views on the acceptability and value for money of the Draft Determination prices proposed for companies in Wales by Ofwat. There are some differences from England: Customers in Wales are more satisfied with their overall sewerage services than those in 3

5 England (93% versus 87%) and they are more satisfied with the taste of their tap water (94% versus 87%) and hardness of their tap water (94% versus 72%); They are also less likely to contact their company if worried about paying their bill (31% unlikely versus 23%); More likely to agree with the statement that they usually drink tap water instead of bottled water (86% versus 78%); And more likely to rate their company as being trustworthy (mean score in Wales of 7.46 versus 7.17 in England where 10 means the company is completely trustworthy and 1 means they are not at all trusted). In terms of the attitudes of Small and Medium Enterprises (SMEs) towards the potential for competition in Wales, views were similar to those of England with respect to key aspects, such as views on having competition in principle and likelihood of switching. However, SMEs in Wales are less likely than those in England to have switched energy supplier, and also less likely to think of any new services that would be useful to them if they could come about as the result of competition. Awareness of Dŵr Cymru Welsh Water s business model is generally low. When it has been explained to respondents as part of various research projects it has prompted mixed views. Some do not think that this particular business model makes a difference to them whilst others see it as generally being a good thing (SME competition research) and others are less certain a company which doesn t have shareholders and which re-invests it s profits into the business to benefit customers almost sounds too good to be true (research into water industry enforcement). The kind of response has varied with the issue under research but on balance views are more positive then negative. 4

6 SUMMARY REPORT OF RESEARCH FINDINGS FOR WALES BASED ON CONSUMER COUNCIL FOR WATER RESEARCH JUNE 2009 TO JUNE 2010 This report gives an update on the views of consumers in Wales towards issues in the water and sewerage industry based on research published by Consumer Council for Water (CCWater) from June 2009 to June The findings from this research are used by CCWater to inform policy and messaging development. The first summary of June 2009 covered the following reports which can be downloaded from our website CCWater and Ofwat Deliberative fair charging research 2007, Corr Willbourn Research; Ofwat and CCWater Quantitative Charging Research 2007, ORC International; CCWater Annual Tracking 2007, FDS International; CCWater Annual Tracking 2008, FDS International; Deliberative research concerning consumers priorities for PR09 for the water industry stakeholder steering group, published June 2008, Corr Willbourn Research; Household customers views on competition in the water and sewerage industry Ofwat and CCWater, report by FDS International published October 2008; Setting strategic direction: Competition research with business customers, MVA consultancy in association with WRc, June Research from June 2009 to June 2010 Research findings from the following reports are included here. They are: CCWater Tracking Survey 2009, FDS International, published March 2010; Living with Water Poverty, Creative Research, published June 2009; Customer Views on Restorative Justice, Fines and Enforcement in the Water Industry, FDS International, published July 2009; Customers Views on Ofwat s Draft Determinations, Accent, published October 2009; Small and Medium Business Customer Views on Competition in the Water and Sewerage Industry, Accent, published June 2010; Cross Subsidies and Social Tariffs The Consumer Perspective, Creative Research, published June The full reports are available to download on our website. Comparing findings for consumers in Wales with those in England The differences have been established from CCWater s 2009 Tracking Survey by: Checking the data tables to see where percentage figures for Wales and those for England have been flagged as being statistically significantly different; Where this is the case, this is reported in the Tracking Survey section along with trends for previous years (as noted on page 7, prior to 2009 data for England was not available separately, so trend comparisons are made by showing findings for the full England and Wales sample and the sample for Wales. As the sample for Wales is a small proportion of the total, the figure for England, had it been available is likely to have been the same as, or close to the figure for England and Wales combined); Differences in SME views on competition have been taken from the report on our website the research agency identified these and ensured they were covered in the report of findings. 5

7 For our qualitative research we rely on the research agency to identify any differences between focus groups held in Wales and those held in England or any of the regions of England. Any differences are not representative of consumers or customers in Wales as the sample sizes for qualitative research are too small to give us this confidence. Guide to this document Section 1 contains a summary of Welsh consumers views on water industry issues based on CCWater s Tracking Survey 2009 (FDS International, published March 2010); Section 2 summarises views on Dŵr Cymru Welsh Water s business model from across our projects, including projects from previous years; Section 3 summarises differences in views between Wales and England based on research from June 2009 to June 2010; Annex 1 contains a more detailed summary of key findings from each research report published between June 2009 and June 2010 (except the Tracking Survey which is detailed in Section 1). These summaries include quotes from participants of focus groups and deliberative research workshops held in Wales; Annex 2 outlines the different research methodologies that have been used in these research projects, and what this means in terms of sample sizes and representation for Wales. 6

8 SECTION 1: WELSH CONSUMERS VIEWS ON WATER INDUSTRY SERVICES AND ISSUES CCWater s Tracking Survey 2009 This is the fourth survey CCWater has commissioned to help us understand the household customer s experience of the water and sewerage industry in England and in Wales. The survey is based around the 10 water and sewerage company (WASC) regions of England and Wales with a sample of 200 customers per WASC region being interviewed by telephone for each survey. Residential telephone numbers across England and Wales are selected at random for the sample this removes the potential for any area bias which might occur if interviews took place in specified localities. The sample was designed to be representative of households across England and Wales, and the focus is on bill payers as they are more likely than non-bill payers to have had direct interaction with their water and/or sewerage service provider. It should be noted that for the first three years of the survey, findings were provided for England and Wales combined, and for each WASC region including a separate figure for Wales. In the 2009 survey for the first time, findings were provided separately for England as well which means we are now able to make a direct comparison between views of respondents in Wales, and those in England (which comprises nine WASC regions). The charts used in this section of the report show trends over three or four years for Wales compared to trends for England and Wales combined as data for England is not available before Observable trends for Wales (i.e. these have not been tested statistically) are noted for each chart to show improving, stable or deteriorating perceptions over the last two or more years. A trend of Uncertain is shown where there has been a change in the direction of perceptions (i.e. from improving, stable, or deteriorating) in last year s survey and it is too early to understand what the emerging trend from this is. Key findings from the 2009 survey, where a comparison can be made between England and Wales are also highlighted in the supporting text, along with any statistically significant differences. Most of the findings are based on sample sizes which exclude Don t Know responses in most cases the percentage of Don t Know responses is very small. Where a sub-sample is used which gives a much smaller sample size this is noted in the text. At 95%, the confidence intervals around the sample sizes are: Sample size 50% response 30% or 70% response 2000 (Full sample size for England and Wales) + or 2% + or 2% 1800 (England) + or 2.3% + or (Wales) + or 7% + or 6% This is interpreted as if 50% of 200 respondents in Wales thought X, then we can be 95% confident that had the whole population of Wales been asked this question, between 43% to 57% of them would have thought X i.e. + or 7 from 50%. The most recent survey took place between December and January 2010 i.e. after Ofwat had announced its Final Determination on prices from 2010 to

9 Welsh consumers views on the water industry Views on water supply service Satisfaction with overall water supply service remains high. Chart 1 shows net satisfaction findings (i.e. very and fairly satisfied percentages added together) from CCWater s tracking survey over the four years from 2006 to Findings are only available for England and for Wales separately for the most recent survey (2009) and these show no statistically significant difference in overall views between the two countries (England 93% satisfied, Wales 95% satisfied). Customers in Wales do however show significantly higher levels of overall satisfaction than those in the Thames and South West water and sewerage company regions. Chart 1: Satisfaction with overall water supply Observed trend for Wales: improving Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses. Net satisfaction is derived by adding the % responses for fairly and very satisfied together. Before asking respondents to give their satisfaction rating for their overall water supply, they are first asked a series of questions to find our how satisfied they are with various aspects of their water supply service. These cover the: Colour and appearance of tap water 2009 Wales 95% net satisfaction; Taste and smell of tap water 2009 Wales 94% net satisfaction; Hardness/softness of tap water 2009 Wales 94% net satisfaction; Safety of drinking water 2009 Wales 94% net satisfaction; Reliability of water supply 2009 Wales 98% net satisfaction; Water pressure 2009 Wales 89% net satisfaction. The 2009 tracking survey found that respondents in Wales are more satisfied with the taste and smell, and hardness/softness of their water than those in England this is a statistically significant difference. Satisfaction with the other water supply aspects is high, ranging from 89% to 98% and there are no significant differences in the views of Wales and England. 8

10 Charts 2 and 3 below show the trends in satisfaction with taste and smell, and hardness/softness of water supply since CCWater s the first tracking survey in Chart 2: Water supply taste and smell Observed trend for Wales: improving Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses. Net satisfaction is derived by adding the % responses for fairly and very satisfied together. Chart 3: Water supply hardness/softness Observed trend for Wales: uncertain Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses. Net satisfaction is derived by adding the % responses for fairly and very satisfied together. 9

11 Views on sewerage services Satisfaction with overall sewerage service remains high. Chart 4 shows findings from CCWater s tracking survey over the four years from 2006 to Separate findings for England and Wales are only available for the most recent survey (2009) and these show that satisfaction in Wales is significantly higher than that in the North West and Thames water and sewerage company regions, and also higher than in England as a whole (Table 1). Chart 4: Satisfaction with overall sewerage services Observed trend for Wales: improving Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses and respondents with septic tanks. Net satisfaction is derived by adding the % responses for fairly and very satisfied together. Table 1: Sewerage services - Statistically significant higher satisfaction levels in Wales CCWater s 2009 Tracking Survey Wales England North West Thames Satisfaction with overall sewerage services (net) 93% 87% 85% 83% Sample size (excludes Don t Know responses and respondents with septic tanks) Source: CCWater s Tracking Survey Before asking respondents to give their satisfaction rating for their overall sewerage service, they are first asked a series of questions to find our how satisfied they are with various aspects of this. These cover satisfaction with: Reducing smells from sewage treatment works 2009 Wales 85% net; The maintenance of sewerage pipes and treatment works 2009 Wales 85% net; The cleaning of waste water properly before releasing it back into the environment 2009 Wales 84% net; Minimising sewer flooding 2009 Wales 80% net. The 2009 Tracking Survey found no statistically significant differences in satisfaction levels across these aspects between respondents in Wales and those in England. 10

12 Views on customer service CCWater s Tracking Survey asks respondents who have contacted their water and/or sewerage service provider in the previous 12 months a series of questions to find our how satisfied they are with the customer service they received. These cover the: Ease of contacting someone able to help them; Quality/clarity of information provided; Knowledge and professionalism of staff; Feeling that respondents had that their call had been, or would be resolved; Way that the water/sewerage company kept respondents informed of the progress with their enquiry and/or claim. For the last three years, respondents have been asked to take all of these customer service aspects into account and indicate overall how satisfied or dissatisfied they were with their contact. This is shown in Chart 5. It should be noted that the numbers of respondents in Wales reporting that they had contacted their company in the previous 12 months is small 16 in 2007, 22 in 2008 and 23 in Therefore the percentages shown in Chart 5 are best considered as being indicative. They do however compare favourably with England and Wales as a whole, and suggest that overall satisfaction with company contact in Wales is high. The 2009 Tracking Survey gives a net satisfaction rating of 82% for Wales and 77% for England. These are not statistically significantly different. Chart 5: Satisfaction with overall company contact Observed trend for Wales: uncertain Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses. Net satisfaction is derived by adding the % responses for fairly and very satisfied together. Respondents were also asked Who would you contact if you had a problem with your water/water and sewerage services? In Wales, 87% of respondents said they would contact their water and sewerage company, compared to 89% in England. These figures are not statistically significantly different. 11

13 Affordability CCWater s Tracking Survey asks respondents How much do you agree or disagree that the water/water and sewerage charges that you pay are affordable to you? The 2009 Tracking Survey found that 75% of respondents in Wales agreed that their water and sewerage charges were affordable, compared to 74% in England. These figures are not statistically different. Chart 6 shows affordability trends over four years from 2006 to Chart 6: Affordability Observed trend for Wales: improving Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses. Net affordability is derived by adding together % figures for strongly and tend to agree. The 2009 trend across the water and sewerage company regions is shown in Map 1 on the following page. It can be seen from this that south west region of England is an outlier with a much lower proportion of 50% agreeing that their charges are affordable. All the other water and sewerage company regions have statistically significantly higher agreement that charges are affordable. These range from 71% to 77%. 12

14 Map 1: Proportions who agree bills are affordable 13

15 Fairness of charges CCWater s Tracking Survey asks respondents How much do you agree of disagree that the water/water and sewerage charges that you pay are fair? The 2009 Tracking Survey found that 63% of respondents in Wales agreed that their water and sewerage charges were fair, compared to 62% in England. These figures are not statistically significantly different. Chart 7 shows views on fairness of charges over four years from 2006 to Chart 7: Fairness of charges Observed trend for Wales: improving Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses. Net fairness is derived by adding together % figures for strongly and tend to agree. The 2009 trend across the water and sewerage company regions is shown in Map 2 on the following page. It can be seen from this that there was a wide range of responses to this question, from a low of 32% agreement in the south west region of England to a high of 71% in the north east of England. Most water and sewerage company regions were in the low to mid- 60% range. 14

16 Map 2: Proportions who agree bills are fair 15

17 Liklihood of contacting the company if worried about being able to pay the bill A related question to affordability is How likely would you be to contact your water company if you were worried about paying your bill? The 2009 Tracking Survey found that respondents in Wales were the least likely to contact their company, with 65% saying they would be likely (very or fairly) and 31% saying they would be not very or not at all likely to contact their company. These differences are statistically significant when compared to England where 73% said they would be likely, and 23% not likely. This question was first included in the Tracking Survey in 2008 when responses for Wales and England and Wales together were more favourable and very similar (79% and 78% likely versus 19% and 18% unlikely). It is too soon to say whether 2009 is the start of a trend or a temporary dip in liklihood to contact the company. Value for money of water services CCWater s Tracking Survey asks respondents How satisfied or dissatisifed are you with the value for money of the water services in your areas? The 2009 Tracking Survey found that 70% of respondents in Wales agreed that their water services were value for money. This compares to 69% of respondents in England. These figures are not statistically significantly different. Chart 8 shows the trends in views on value for money of water services over the last four years. Chart 8: Value for money of water services Observed trend for Wales: uncertain Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses. Net satisfaction is derived by adding the % responses for fairly and very satisfied together. Value for money of sewerage services CCWater s Tracking Survey asks respondents How satisfied or dissatisifed are you with the value for money of the sewerage services in your areas? 16

18 The 2009 Tracking Survey found that 78% of respondents in Wales agreed that their sewerage services were value for money. This compares to 70% of respondents in England. Although these figures compare favourably for Wales, the difference with England is not statistically significant. Chart 9 shows the trends in views on value for money of sewerage services over the last four years. Chart 9: Value for money of sewerage services Observed trend for Wales: uncertain Source: CCWater s Tracking Surveys. Bases exclude Don t Know responses. Net satisfaction is derived by adding the % responses for fairly and very satisfied together. Water meters Table 2 shows the proportions of respondents in metered and unmetered households for England and Wales. The proportions of metered and unmetered respondents are significantly different. Table 2: Proportions of metered and unmetered households Metered % Unmetered % Don t Know Wales <1 England Source: CCWater s Tracking Survey Of the relatively small number of metered respondents in the sample for Wales, 48% had opted for meter, 44% had moved into a house which already had one, and 8% said it was through compulsory metering. Awareness of rights and responsibilities The level of awareness of rights and responsibilities varies considerably with the issue considered. However, the 2009 Tracking Survey did not find any statistically significant differences in these between England and Wales. Table 3 below sets out the current levels of awareness for each country. In England there are some considerable variations between WASC regions which are not detailed here. 17

19 Table 3: Awareness of rights and responsibilities Proportions aware that/of Wales England When requested water meters are fitted free of charge 61% 61% You can revert back to an unmeasured charge within 12 months & there are no costs for trialling the meter 35% 30% Welsh Water Assist/WaterSure 11% 9% Services for elderly and/or disabled customers 19% 25% GSS payments 45% 41% Source: CCWater s Tracking Survey Respondents were shown a list of items and asked which of them were acceptable to dispose of down the sink, toilet or drain. None of the things listed, such as e.g. sanitary items, medicines, motor oil or nappies were suitable for disposal in this way. In Wales, 76% of respondents said that none of them should be disposed of down the sink, toilet or drain, compared to 71% of respondents in England. However, the difference in these figures is not statistically significant. Views on tap water and bottled water Respondents were asked whether they thought tap or bottled water was better for you, or whether both were equally as good for you. In Wales, 37% thought that tap water was better for you, 15% that bottled water was better, and 45% that both were equally as good for you. There were no statistically significant differences with corresponding findings for England. Respondents were asked How much do you agree or disagree that you usually drink tap water rather than bottled water? The 2009 Tracking Survey found that 86% of respondents in Wales agreed with this statement compared to 78% in England. The difference in these proportions is statistically significant. This question was first asked in 2007 and the trends for the three years up to 2009 are shown in Chart 10. The views in Wales and in England were not statistically different for the first two years and so it is not possible to say whether 2009 is the start of a trend or is a shorter term fluctuation. 18

20 Chart 10: Agree that usually drink tap water rather than bottled water Observed trend for Wales: improving Source: CCWater s Tracking Surveys. Bases include Don t Know responses. Net agree is derived by adding together % figures for strongly and tend to agree. Respondents were asked If tap water was both widely and freely available in public spaces from taps and drinking fountains, how likely or unlikely do you think you would be to use them? In Wales, 54% of respondents thought they would be likely to use them the same figure as in England. Using water wisely CCWater s 2008 Tracking Survey found that 35% of respondents in Wales reported not taking any actions to save water in the home compared to 28% across England and Wales combined (figures not available for England only). The 2009 Tracking Survey asked the same question What actions, if any, have you and your household taken to reduce your use of water? This time, 30% of respondents in Wales indicated Nothing/Nothing in particular compared to 28% of respondents in England and 28% across England and Wales combined. The difference between Wales and England is not statistically significant. Map 3 on page 20 shows the proportions of respondents reporting that they have not taken any actions to reduce their use of water in the home. 19

21 Map 3: Proportions not taking any actions to reduce water use in the home 20

22 Awareness of water saving campaigns Over the four years from , the trend for awareness of water saving campaigns has been the same for Wales and for England and Wales. Awareness peaked in 2007 this likely to have been a related to the higher media profile on water usage which took place in when there was a drought in the south-east of England. This has been followed by a decline in awareness which coincides with a period where there were no drought or hosepipe bans put in place in either Wales or England (prior to summer 2010). The difference between percentage awareness figures for Wales and for England in the 2009 tracking survey is not statistically significant. Chart 11: Awareness of campaigns of use water wisely Observed trend for Wales: deteriorating Source: CCWater s Tracking Surveys. Bases: All respondents. Perception of utility providers as being caring and trustworthy In 2008 two new questions were included in the Tracking Survey to find out how people perceive their utility providers in terms of caring about the service they provide to people and how much they trust their utility providers. Caring Respondents were asked How much do you agree or disagree that your water and/or water and sewerage company cares about the service it gives to customers? The 2009 Tracking Survey found that in Wales, 73% of respondents agreed (strongly/tend to) that their company cares about the service they give to customers. This is the highest (by 1%) of all the WASC regions although it is not statistically significantly different to the finding for England (67%). The same question was asked about gas and electricity companies; 56% of respondents in Wales and 60% in England agreed. 21

23 Trustworthy The second question asked of respondents was: How much do you trust your water/water and sewerage company? Please give a score on a 1 10 scale where 10 means that you trust them completely and 1 means that you don t trust them at all. The responses to this question have been converted into mean scores ranging from 1 to 10. As an example of this, had all respondents rated their supplier as 10 then the mean score would be 10 i.e. they felt their supplier was completely trustworthy. As and when respondents give lower ratings, the mean score drops to reflect a lower level of trust in the supplier. Respondents in Wales gave their water/water and sewerage company a mean score of 7.46 compared to a mean score of 7.17 from respondents in England. These figures are significantly different. Scores across the English WASC regions range from a low of 6.50 to a high of The same question was asked about gas and electricity companies; respondents in Wales gave a mean score of 6.83, compared to 6.61 in England. These figures are not significantly different. Across the English WASC regions the scores range from a low of 6.37 to high of

24 Living with Water Poverty, Creative Research, published June 2009; These findings are qualitative and based on people who are in, or close to, water poverty and who can be considered to be vulnerable. These findings may not be applicable to the wider public. The sample comprised of 42 people who were living in or very close to being in water poverty as defined by spending more than 3% of household disposable income on water and sewerage charges. In depth interviews were carried out with each person. respondents in Colwyn Bay and Abergavenny. This included interviews with There were no differences in the views and experiences of respondents in Wales to those in England. Key findings (See Annex 1 for more detail on the methodology, sample, findings and quotes from respondents in Wales) The priority of water and perceptions of affordability especially with regard to utility and water bills Water is viewed as a priority, something that is essential to live, along with food, a roof over one s head, electricity and gas. But it is often the bill that respondents let slip when they have to make very real choices about payment. Water is often seen as less affordable than other outgoings. This is because of the size of the bill and the relative infrequency of the bill if half yearly or annual. For some there is also a perceived lack of control over the bill. This is due to price rises, variable billing periods, being metered with a variable bill, or increasing arrears despite regular payments. Perceptions of unfairness may also play a role in this view of water being less affordable. For example, it may be known that water bills are lower in other regions, respondents may feel they are paying too much for their level of consumption or there is sometimes a lack of understanding of, or disputes about, the service provided by water companies. Where low income means that difficult choices have to be made over what can be paid, respondents focus on those bills where non-payment could have immediate or rapid and dramatic consequences such as court action, the arrival of debt collectors, or loss of supply. The assumption that water debt is caused by customers knowing they can not be disconnected is not supported. Most respondents did not know whether they can be cut off and had not thought a great deal about this. But when prompted, most assumed that their water could be disconnected though it might be a protracted process. Payment method also affects whether water bills are paid. For those struggling to keep up with weekly payments, payments can be missed for a few weeks to cover other, more pressing bills or the book might be lost, while those with health conditions often find it difficult to make the regular trip into town to make the payment. In this way, bills that are allowed to slip may turn into unintended arrears. Explore the issue of debt and how consumers deal with and manage this including the impact on their wellbeing Out of fourteen items of household expenditure, respondents were most likely to be sometimes or always in debt with water. 23

25 But they were also keen to be able to budget and pay their bills. The idea that people adopt a won t pay attitude towards their water bill (and their bills in general) is not supported by the findings as those who are in arrears with their water bill genuinely can t pay at the level of payment expected by their water company. Just two respondents in the sample could be described as a can t pay, won t pay - they rationalised the non-payment of their water bill as a protest against the companies involved 1. No one fell into the won t pay category (that is, they could have afforded to meet their payments but were choosing not to). The problem for many is that it is easy for arrears to build up and they move from struggling to meet bills to being unable to meet them. There is a perception that help is only available once in debt rather than when trying to avoid falling into arrears. Most are willing to pay; however, this willingness is related to a perception that they should only be made to pay what they can realistically afford. A range of negative emotions are experienced by respondents as a result of struggling to meet outgoings or being in arrears such as powerlessness, feeling worn down, hopelessness, anger and guilt. Determine the range of coping strategies employed by those living in water poverty and the effect of these at both a practical and emotional level Some make cut backs (often to items they consider little luxuries ) and fall back on what they already have, those who are struggling return to the basics, while those in arrears regularly trade off the basics (including essential items such as food). Turning to alternative sources of money is common, for example savings, family members, and high interest loans. Taken together, there is an impact on families and individuals in terms of their emotional, and potentially in some cases, their physical wellbeing. Only those with a water meter are in a position to change their behaviour i.e. use less water in order to reduce their bills. For those who have tried this, it is felt that these behaviours do not seem to make any noticeable difference water bills and engaging in water reducing behaviours that seemingly have no impact on bills only serves to raise stress and anxiety levels. Assess people s experiences of approaching their water company for information, advice and help with payment difficulties Some were pleased to have been offered help via a payment programme. But experiences (particularly of gas and water suppliers) were often viewed negatively, for example, in having to pay for sometimes lengthy calls, or being met with inflexibility and a lack of understanding etc. There was evidence that one poor experience would put respondents off contacting companies subsequently. Overall, there was a sense of frustration with water companies and a feeling that their lack of helpfulness and flexibility could turn people who are in arrears or struggling but willing to pay what they can, into people who cannot pay what is demanded of them. Some respondents are simply not comfortable about contacting their water (or other utility) company. They are often very aware of their poor money management skills and lack of understanding of their bill and are reluctant to put themselves in a situation where they may be pressured to accept a solution that makes their situation worse. 24

26 Awareness of schemes that might help, such as Welsh Water Assist/WaterSure and Water Direct (as well as of Charitable Trust Funds and the Restart programme) is also very low so that they do not appreciate that there are ways in which they might be helped. Everyone supported reduced tariffs or more manageable ways of paying for water consumption (such as Water Direct or WaterSure) for those who had difficulty paying their water bill. However, there was broad agreement that other customers should not have to bear the cost of such schemes and the majority of respondents also considered it unreasonable that the government should meet the cost of the schemes as it was anticipated that ultimately this would come out of taxes and therefore be paid for by the public. In the context of a lack of understanding about water companies and what they do, and an assumption that they are making large profits, there was a general feeling that water companies should take responsibility for meeting the costs of such schemes. 25

27 Customer Views on Restorative Justice, Fines and Enforcement in the Water Industry, FDS International, published July 2009; Findings are based on eight focus groups, two of these were held in Dŵr Cymru Welsh Water supply area. The effect of Dŵr Cymru Welsh Water s business model on views towards restorative justice, fines and enforcement was explored in this research. There were mixed views as to whether their status justified different treatment to other companies but people did not want customers to suffer from Dŵr Cymru Welsh Water s mistakes. Spontaneous awareness of Dŵr Cymru Welsh Water s business model was quite low, and so this was explored by asking: What if the water company is not for profit with no shareholders? This means any profit is invested to benefit customers or given back to customers via lower bills. If they are fined the money is diverted away from customers. Should they be treated the same way in principle as companies with shareholders? Respondents in focus groups in Wales showed some scepticism about the status of Dŵr Cymru Welsh Water and whether it really was beneficial to its customers. Respondents in focus groups in England were asked the same question and views were mixed as to how a company with this model should be treated some thought no differently to other companies, and others thought that they wouldn t like to see customers suffering as a result of any action taken. In terms of the other objectives of the research, there were no distinctive views between Wales and England. Key findings (See Annex 1 for more detail on the methodology, sample, findings and quotes from focus groups held in Wales) Most participants displayed little initial knowledge of or interest in the workings of the water and sewerage industry, but most engaged well with a complex subject especially after being given more information and their responses were coherent and reasoned. On assessing the seriousness of examples of possible water company misdemeanours, five were initially classified as the most serious and these were still rated the most serious at the end of the discussions:- company providing drinking water unfit for human consumption flooding of properties by sewage pollution of local streams and rivers mistakes on bills leading to overcharging misreporting of statistics to Ofwat. People felt that companies who transgressed should be punished, especially where the transgression was serious or deliberate. 26

28 For some, hefty punishment was seen as an essential deterrent against companies looking after their own interests. Customers did not want to see problems recur and believed such companies should be punished on principle. For most failures or misdemeanours, further investment in the company s networks was first or second preference although for some their support of this option was conditional upon investment being paid for through company profits rather than increased bills. Most did not want resulting fines to go to the Treasury and were able to judge issues on a case by case basis to establish the most appropriate solution for each. Where individual customers could be identified as suffering from a company s error, most felt those customers should be compensated. Some favoured caps on prices as appropriate punishment, especially where a company had given its associates generous contracts. There was only muted support for the money from fines being directed to charities/community groups and widespread suspicion of this proposed action, although some favoured help for their local area. Most were also against the principle of fines being used exclusively for the benefit of low income households believing all customers should be treated the same. There was little awareness in Wales of the not-for-profit status of Dŵr Cymru Welsh Water:- there were mixed views as to whether a not-for-profit status justifies different treatment from other companies, but people did not want customers to suffer for Welsh Water s mistakes. Most customers were able to express preferences for how money resulting from fines should be used especially after additional briefing information was provided. Most concluded that there was not a one size fits all solution but that each misdemeanour should be judged individually to find the most appropriate solution. 27

29 Customers Views on Ofwat s Draft Determinations, Accent, published October 2009; The Draft Determination (DD) research surveyed 4694 customers, i.e. bill payers across 10 Water and Sewerage Companies (WaSCs) and 12 Water only Companies (WoCs) in England and Wales. 247 interviews were carried out in Dŵr Cymru Welsh Water and 200 in Dee Valley Water. The objective was to find out what customers of the water industry in England and in Wales thought about the DD figures that were published by Ofwat on 23 July Key findings (See Annex 1 for more detail on the methodology, sample and findings) Table 4 shows Findings for Wales are very similar to those for England. Table 4: Acceptability and value for money of Draft Determinations DVW DCWW Wales England DD proposals are acceptable 91% 79% 85% 84% DD proposals are value for money 67% 46% 56% 55% Source: CCWater s Draft Determination research It should be noted that water only companies tended to have higher/better scores over a range of variables. The reasons behind this weren t explored within this research but it is an interesting trend to note that there seems to be a more positive perception of the water only companies than there is of the water and sewerage companies. The range of acceptability and value for money findings are shown in Maps 4 and 5. 28

30 Map 4: Acceptability of Draft Determinations across England and Wales 29

31 Map 5: Value for money of Draft Determinations across England and Wales 30

32 Small and Medium Business Customer Views on Competition in the Water and Sewerage Industry, Accent, published June 2010; The research consisted of two stages. Firstly, five deliberative mini focus groups were held between 2 nd and 8 th February 2010 to explore the views of SMEs about competition in the water and sewerage industry. This helped inform the focus of the subsequent second stage quantitative survey which sought to measure attitudes of SMEs towards competition. Key conclusion qualitative phase (See Annex 1 for more detail on the methodology, sample, findings and quotes) whilst all respondents hold the belief that competition in the water industry is a good thing for businesses, fewer agree that its introduction would be beneficial in terms of offering them a substantive saving on their already modest bills. Therefore, more respondents feel that on balance the effort of trying to find the best supplier will dwarf the eventual cost savings. The researchers report that there were no differences in the views on key issues of the participants of the Cardiff and England focus groups. However, participants of the Cardiff focus group were asked about their awareness of the business model of Dŵr Cymru Welsh Water, and when this was explained to them they were asked if this made any difference in their views towards competition. Specific findings from the Cardiff Group There is limited awareness of the business model of Dŵr Cymru Welsh Water. When informed as to how this works (i.e. no shareholders) this is a catalyst for respondents once again to query the benefit of introducing competition into the water industry. Whilst respondents were aware that their water and sewerage services are provided by Dŵr Cymru Welsh Water, there is little understanding of its business model. Only one respondent was aware that its customers are its shareholders. When informed of this, some query what the benefits of introducing competition would be. Respondents with sites in both England and Wales would not seek to differentiate their water provider by location. Key findings quantitative phase (See Annex 1 for more detail on the methodology, sample, and findings) A quantitative telephone survey of 1515 SME respondents, again with responsibility for utility switching decisions on behalf of their organisation took place between 26 February and 19 March These interviews took place across England and Wales and give statistically robust research findings at England and Wales level. The sample included 155 respondents who were customers of Dŵr Cymru Welsh water, 61 respondents who were customers of Dee Valley Water and 31 respondents from businesses with a site or sites in both England and Wales. The key objectives of the research were find out what SMEs think about the principle of competition in the water industry, likelihood of switching if given the opportunity and drivers and barriers to switching. 31

33 Specific findings for Wales there would not seem to be an issue with multi-site operators with sites in both England and Wales, if competition was not introduced in Wales. Almost three quarters think they would still switch suppliers in England, even if they couldn t in Wales; of the 178 SMEs with sites supplied by Dŵr Cymru Welsh Water, three quarters of them are unaware of their business model. Once explained¹, 38% said that it makes a difference on their views towards competition. Understanding Dŵr Cymru Welsh Water s status seems to create the impression that they would provide a cheaper and better quality of service than other suppliers or it promotes a positive view of them; ¹ The company does not have any shareholders, and the profits made are re-invested in the business for the benefit of their customers and consumers. Businesses with sites in England and Wales Competition in the water and sewerage industry may not be extended to SMEs in Wales, and this may have particular implications for SMEs with sites in both England and Wales. Thirty one businesses had sites in both England and Wales, with none having more than 5 in total: 2 sites: 35% 3 sites: 15% 4 sites: 4% 5 sites: 46%. Among the 31 businesses that have sites in both England and Wales, 22 (71%) state that the absence of competition in Wales for SMEs would not stop them from switching their English sites. These 22 were asked to give their reasons for why they would still switch. Five respondents chose not to answer this question, but the reasons given by the remaining 17 (some of whom gave more than one reason), are as follows: 11 could still make savings for their English sites 2 could still achieve improvements in services for their English sites 4 would make decisions on a site by site basis 1 say they are used to having multiple suppliers, so it would not make a massive difference to them 1 that their site in England is bigger 1 that it would result in less invoicing and management for them. Not for Profit Status of Dŵr Cymru Welsh Water The 178 SMEs either based in, or with sites in, Dŵr Cymru Welsh Water s area, were asked a series of questions about the implications of Dŵr Cymru Welsh Water operating on a non profit making ¹ basis. The findings are: ¹ Respondents were given the following explanation of this: Dŵr Cymru Welsh Water is a not for profit company which means that it has no shareholders. Any financial surpluses are retained for the benefit of Welsh Water s customers. 75% do not know that Dŵr Cymru Welsh Water is a non profit making organisation when this was explained¹, 57% state that the not for profit status of the organisation does not make a difference to their views on the potential for competition, 38% state that it does make a difference and 6% do not know; 32

34 among the 38% (67 respondents) who say that the status of Dŵr Cymru Welsh Water does make a difference to their views towards the potential for competition, there are two key reasons for this: 30% feel that this should mean that Dŵr Cymru Welsh Water should always be cheaper than other water and sewerage companies where profits are used to pay dividends to shareholders. Being cheaper negates the main perceived benefit of introducing competition (access to cheaper prices) 27% thinks it promotes a positive view of the company (e.g. service orientated, gives better quality generally, provides value for money and higher levels of reinvestment); 10% think that competition/privatisation may result in higher prices / poorer services; 10% think that their non-profit status is generally good; 7% said that they were now opposed/more opposed to competition in the water industry; 4% thought it promoted a negative view of Dŵr Cymru Welsh Water (too expensive, poor water quality, inefficiently run); 3% said that they were happy with Dŵr Cymru Welsh water s price/services. Annex 1 contains a table with the scores achieved in the survey for England and Wales for the main indicators and where the scores on other questions differ. In most instances the differences are not statistically significant, so on balance there is little difference in the perceptions and attitudes of SMEs in each country. The main areas where there are significant differences are in the level of switching in the energy market and expectations about competition in the water and sewerage industry: 40% of respondents in Wales have never switched energy supplier, compared with 29% in England. 90% of respondents in Wales can see no new or improved services that would come about as a result of competition, compared with 81% in England. This shows that if water and sewerage competition were to be introduced in Wales, fewer would feel they know what to expect. More, therefore, would need information about switching. 33

35 Cross Subsidies and Social Tariffs The Consumer Perspective, Creative Research, published June 2010 Four sets of reconvened workshops, each with people were held. One set of workshops was held in Cardiff. Participants were selected to be broadly representative of household water customers in England and in Wales i.e. a mix of men and women, age, socio-economic groups and lifestages. This was a small qualitative sample and whilst their views cannot be extrapolated to the wider population, they give a valuable insight into why people think what they think. The views of participants of the workshops held in Cardiff were consistent with those held in England. Participants discussed their views on cross subsidies and social tariffs, concessionary charges for community groups with premises transferring to a site area based drainage charge, and help to offset higher than average water and sewerage charges in the south west of England. Differences between England and Wales During the course of the research, the moderators looked for any differences in the views of the Cardiff participants and, in particular, if these might be driven by the business model particular to Dŵr Cymru Welsh Water. At the end of the second workshop, the moderators explicitly raised this as a point for discussion. Prior to reading the relevant fact sheet that outlined the Dŵr Cymru Welsh Water business model, only two or three participants had known that their water company operated any differently. Moreover, other than the fact that one or two participants felt more positive about being customers of such an organisation, participants said that this had not had any bearing on how they had responded to the issues. The moderators did not find anything that could be said to be a Wales effect. They found the same range of views and opinions amongst the Cardiff participants as were found in all other locations. Key findings (See Annex 1 for more detail on the methodology, sample, findings and quotes from participants in Wales) As the researchers found the same range of views and opinions amongst the Cardiff participants as were found in all other locations the findings below apply to both Wales and England. There was support for all three issues to be tackled and the main reason underpinning this was a sense of fairness. This also accounts for why many participants felt that whatever solutions were adopted to address the issues, they should be national solutions i.e. the same criteria being used the length and breadth of England and Wales in terms of deciding who should receive help and who should be making a contribution towards the cost. For this reason, Government funded solutions which take account of ability to pay appealed to many participants. Most participants were prepared to make some contribution themselves via their water bills to help resolve the issues, however they also want to see contributions being made by other parties, in particular, the water companies and Governments. They are also very aware that it is one thing to agree to support issues on an individual basis, but account has to be taken of the cumulative effect of all the different cross subsidies and social tariffs they are being asked to support not just in relation to water but in terms of all their bills. This, in turn, throws up questions about transparency both in relation to knowing exactly what it is one is being asked to contribute to, and in terms of schemes designed to help certain customers being adequately publicised. 34

36 Helping those on Low Incomes This was considered to be the most important of the three issues. Despite the concerns of many that it is too easy for people to take advantage of the benefits system, there was almost universal agreement this issue needs addressing. Increasing benefit rates was seen to tick many of the right boxes. However, unless it was possible for the extra payments to go directly to the water companies, this method did not address the main concern, namely that there was no guarantee that any extra money would be used for the intended purpose. Given how many people felt about the benefits system, this was perceived to be a major disadvantage of this approach. For this reason, social tariffs were preferred to benefit payments as the best mechanism for delivering this help but not necessarily via a customer cross subsidy. Participants felt that other methods of meeting the cost should be used either instead of, or in addition to, any customer cross subsidy. Participants found it very difficult to decide on the relative merits of the different social tariff options. A key issue here is how to provide assistance to unmetered customers. Concessionary Charging This was considered to be the second most important issue. Almost no one felt that community groups should not be helped in this way. The key reason for supporting the idea of a cross subsidy was to ensure that essential elements of the local community are not put under undue financial stress. The main criteria in terms of which organisations to help and how to help them were: charities, not for profit and volunteer organisations that provide a clear benefit to the local community either on an equal basis (easiest) or in proportion to their financial circumstances (harder) potentially on a permanent basis (subject to regular review). Participants felt that concessions should be directly linked to measures to encourage community groups to reduce their hard standing footprint by adopting environmentally friendly initiatives. The South West Legacy Although not surprisingly a key issue for customers of South West Water, it was the least important of the three issues for customers in other parts of the country. Nevertheless, most do believe the issue needs to be addressed. The main argument in favour was again about fairness but this can be offset against perceptions that the problem stems from a lack of due diligence at the time of privatisation. There was no clear consensus in terms of how best to tackle the problem although a one off cross subsidy from Government ticks most of the right boxes. Meeting the Cost of the New Measures Customer cross subsidy Most participants were willing to make some contribution via their water bills providing the total amount was affordable for most people, this was less than 5 pa. However, in the view of the researchers, the most appropriate interpretation of the findings is not to read customers willingness to pay up to 5 a year on top of their current water bills too literally. Instead, what the research shows is that when they understand the arguments for and against the three initiatives, there is a willingness among most customers to make a contribution towards meeting the cost. For most customers, this is limited to paying, at most, a few pounds extra per year. Moreover, this willingness is likely to vary depending on the prevailing economic conditions; if bills in general are increasing while incomes are largely static or even falling, then the size of 35

37 any contribution people would be prepared to make is likely to fall. Participants were also very aware that it is one thing to agree to support issues on an individual basis, but account has to be taken of the cumulative effect of all the different cross subsidies and social tariffs they are being asked to support not just in relation to water but in terms of all their bills. Customers are more likely to consider a cross subsidy to be fair if they can see that other parties, especially the water companies, are also making their contribution. Government funding Effectively this means tax payers; nevertheless this method does offer some clear advantages especially in relation to fairness: the burden is shared more widely and takes into account ability to pay it operates at a national level rather than having different criteria being applied in different regions. Self financing through reduced debt costs to water companies This was seen as potentially offering a win - win outcome but it may not be sufficient by itself in terms of the amount of money it gives rise to and it will probably require other methods to be introduced alongside it. Water Company profits This would definitely strike a chord with most customers, and might help make any customer cross subsidy more palatable. The issue of water company profits and the implications of using these to fund affordability schemes is clearly one that needs explaining. However, there is a strong and enduring perception that water companies are making excessive profits out of their customers and it will be a challenge to change this view. 36

38 SECTION 2: VIEWS ON DWR CYMRU WELSH WATER S BUSINESS MODEL CCWater has now commissioned several projects where awareness and reactions to this (once informed) have been tested. Most of these projects have been qualitative i.e. based on small sample sizes and on this basis the findings are not statistically representative of the general population of Wales. However there is a trend in the findings which suggests that in Wales awareness of the business model and what this means for customers is generally low. Deliberative Fair Charging Research, published February 2007, Corr Willbourn Research Views on value for money and its relationship to fairness (industry structure/bills) Page 7 In Aberystwyth, a minority were aware, and appreciative, of Welsh Water s structure (without shareholders). When the idea of this model was introduced elsewhere (i.e. in workshops held in England) it was seen as attractive and a possible way of delivering better value for money. Household customers views on competition in the water and sewerage industry Ofwat and CCWater, report by FDS International published October 2008 In two (focus) groups, having a not-for-profit supplier would be a motivator for changing (supplier). However in Wales where the incumbent supplier is a not-for-profit organisation there was no awareness that this was the case, and perceptions of the water company were still that shareholders were benefiting from imposing high bills on the customers. They re all profit making companies so they want to make as much profit as possible (Female, Wales, 40-59) Deliberative research concerning consumers priorities for PR09 for the water industry stakeholder steering group, published June 2008, Corr Willbourn Research From the section on Dŵr Cymru Welsh Water Some respondents knew that Dŵr Cymru, although profit-making, does not have shareholders like English water companies and is run for the benefit of its customers. All respondents were informed that Dwr Cymru has no shareholders and is a not-for-profit company and during the deliberative period many visited the Dwr Cymru website. However confusion about the precise structure of the business persisted. A few in Cardiff had noted the dividend discount on their bills. The Dwr Cymru form of ownership was, on the whole, felt to be a good thing, but it did not eliminate criticism from those who felt their bills were too high, or that leakage rates were too high. Customer Views on Restorative Justice, Fines and Enforcement in the Water Industry, FDS International, published July 2009 There was little awareness in Wales of the not-for-profit status of Dŵr Cymru Welsh Water:- there were mixed views as to whether a not-for-profit status justifies different treatment from other companies, but people did not want customers to suffer for Welsh Water s mistakes. ( Page 2 ) Small and Medium Business Customer Views on Competition in the Water and Sewerage Industry, Accent, published June 2010 The 178 SMEs either based in, or with sites in, Dŵr Cymru Welsh Water s area, were asked a series of questions about the implications of Dŵr Cymru Welsh Water operating on a non profit making basis. The findings are: 75% do not know that Dŵr Cymru Welsh Water is a non profit making organisation (Page 55) 37

39 Cross Subsidies and Social Tariffs The Consumer Perspective, Creative Research, published June 2010 In fact, prior to reading the relevant fact sheet that outlined the Dŵr Cymru Welsh Water business model, only two or three participants had known that their water company operated any differently. Moreover, other than the fact that one or two participants felt more positive about being customers of such an organisation, participants said that this had not had any bearing on how they had responded to the issues. Page 91 38

40 SECTION 3: SUMMARY OF THE DIFFERENCES IN VIEWS BETWEEN WALES AND ENGLAND These are the differences in views for each project once objectives relating to Dŵr Cymru Welsh Water s business model have been taken into consideration (see preceding summary). CCWater s Annual Tracking Survey 2009 Respondents in Wales are statistically significantly: More satisfied with the taste and smell, and hardness/softness of their water supply; More satisfied with their overall sewerage service; Less likely to contact their company if worried about paying their bill; More likely to agree with the statement that they usually drink tap water instead of bottled water; More likely to rate their company as being trustworthy. Living with Water Poverty The researchers report there are no differences findings apply equally to Wales and England although they are not representative of general populations as based on a small qualitative sample. Customer Views on Restorative Justice, Fines and Enforcement in the Water Industry The researchers report there are no differences findings apply equally to Wales and England although they are not representative of general populations as based on a small qualitative sample. Customers Views on Ofwat s Draft Determinations No differences in views on the key aspects of acceptability and value for money of Draft Determination proposals. Small and Medium Business Customer Views on Competition in the Water and Sewerage Industry Respondents in Wales are statistically significantly: Less likely to have switched energy supply; Less likely to think of any new or improved services which might come about as a result of competition. The researchers report there are no differences in views on other objectives. Cross Subsidies and Social Tariffs The Consumer Perspective The researchers report there are no differences findings apply equally to Wales and England although they are not representative of general populations as based on a small qualitative sample. 39

41 ANNEX 1: DETAILED RESEARCH FINDINGS BY PROJECT JUNE 2009-JUNE 2010 Research report: Living with Water Poverty, Creative Research, published June 2009 Methodology: one to one in-depth interviews (qualitative). This enables participants to give considered thought to discussion on matters which may be sensitive to them. Forty-two in depth interviews of around an hour each were conducted with a cross-section of vulnerable, low income water customers living in England and Wales. Low income households containing children, older people and people with disabilities or long term illnesses were the particular focus of the sample. All respondents had a water and sewerage bill representing % of income. All respondents were on below average disposable incomes (typically under 18k p.a.) and met one or more definitions of vulnerability. Interviews in Wales took place in Abergavenny and Colwyn Bay. Key findings Typology of respondents Respondents had different abilities in terms of making bill payments and managing their finances. They fell into three broad categories making ends meet, struggling to stay out of debt or in arrears. Within these groups there were good money managers, those with some money management skills and those who lacked money management skills or who were chaotic in their money management. Those making ends meet generally had the following characteristicsthey were older or in later lifestages (nine were post-family or retired); some had paid off their mortgage and therefore did not have significant housing costs; the highest proportion of good money managers were found in this group as shown by regular payment arrangements for set amounts, frequently by direct debit; they were very debt averse and did not live beyond their means unlike younger people today ; for some, the fact that they managed to pay their bills while on very low incomes gave them a sense of pride and satisfaction: It s always been a family thing where you do without or you save up until you can afford it. (Post-family, Colwyn Bay) It s [getting into debt] not worth it to us, because you ve got peace of mind. Although things are tricky at the moment, we know we don t owe people, apart from the regular bills. (Post-family, Colwyn Bay) the few among those making ends meet with poor money management skills seemed to have avoided getting into debt more by luck than any deliberate action. Those struggling generally had the following characteristicsmore likely to be families (7 of the 11 households having at least one dependent child; one such household had a single parent); ability to manage finances was more mixed within this group but most showed good money management skills; they often had similar characteristics to those who were making ends meet, such as an aversion to debt; the reason that apparently good money managers found themselves struggling was because of a change in their current circumstances e.g. job loss due to redundancy or illness It s not a good place to be, I m not in my comfort zone at all, because I was used to working and living according to what I had to spend. (Post-family, Disabled, Colwyn Bay); 40

42 Strugglers used a variety of coping mechanisms e.g. reducing spending to the basics and were keen to seek out information and/or advice from suppliers; those who were struggling but less able to manage their finances often ignored payment demands until non-payment was no longer a viable option;. they were uncomfortable with contacting suppliers even if it might be to their advantage because of their lack of understanding and confidence in financial matters I was pretty angry about it because I was all confused at the time really. It wasn t my fault, I didn't know anything about it, I should have wrote [a letter] and sent it to them, but like, it was always a big amount. (Post-family, Disabled, Abergavenny); their reluctance was also based on fear that any solution offered by a supplier might be to their disadvantage and in particular, they might end up paying even more. Those in arrears generally had the following characteristics more likely to be in the younger lifestages, including single parents (seven) and prefamily adults (four); these predominantly single adult households contrasted with the mainly two adult households found among struggling respondents; a higher proportion of those with limited or no management skills fell into this group; however, around a third of those in arrears had quite good money management skills and had prepayment plans to clear arrears; a few that they were striving clear their arrears as quickly as possible; often used to dealing with suppliers through juggling their bill payments so more confident and less susceptible to the extreme emotional impacts felt by those who were less in control; those who were less in control and lacked money management abilities often experienced high levels of stress and anxiety; some said that they wanted the constant stress of worrying about budgeting taken away from them, and for someone to help them work out a payment plan. Managing finances The main income streams for respondents were benefits, tax credits and for a few, salaries (mainly for part-time work). Older respondents were drawing a pension and there was very limited evidence of savings; Well, it's [benefits] been going up steadily over the last couple of years. I've been on the sick 19 years now and it's gone up and up a little bit. (Post-family, Disabled, Abergavenny) I get a small pension from when my wife worked, she s deceased now, but her pension is paid into TSB and that is used generally for paying the monthly bills. (Retired, Abergavenny) It [our income] has changed, because I was working full-time and I m now off sick with an erratic heartbeat that they re investigating, and my husband s on disability. So as it sits now, I get 78 a week, which is statutory sick pay, although we are trying to claim for things. (Post-family, Disabled, Colwyn Bay) No, we haven t got any savings. We ve got about 2,000 of premium bonds which we re not touching unless the house is about to fall down. (Post-family, Disabled, Colwyn Bay) A number were in receipt of housing and council tax benefit, and often did not know how much this was as it was paid direct to their landlord, housing association etc.; 41

43 Outgoings The average income across the sample was 10,776 and the average expenditure was 9,890; For a third of respondents, their outgoings exceeded their income and even where income exceeded expenditure, the gap was very narrow, leaving little scope for manoeuvre should circumstances change; Energy and water poverty Over half of respondents (24) were in water and energy poverty, 11 were water poor only and two were energy poor only. Just five were neither water nor energy poor, however, they were very near the borderline; On average, respondents were spending just under a fifth (18.8%) on their utility bills with an average spend of 4.6% on their water bill; Those who were making ends meet were spending less of their income on water and energy bills, whilst those who were in arrears were spending the same as the sample average. Those who were struggling were on average spending more of their income on their water and energy bills; Priorities in spending difference in priorities The highest priority items were those considered essential to live (rent/housing, food, gas electricity) and sometimes water; Well I suppose it is just you know, I don t know with gas and electric, I suppose it is something you ve got to think about every day, whereas water is just in the tap. If you run out of gas, or run out of electric, you ain t being switched back on [until you pay more] - with water, it is constantly there. (Single Parent, Abergavenny) Some items were ranked as a high priority by some respondents and as a low priority by others. These included outgoings such as private transport (important if it was a means of getting to work) and the telephone (important if there was a need to keep in touch with elderly family members, for example); I don t go far in it, just backwards and forwards to the doctors or hospital, no long journeys. The insurance is 25 per month, I would say 5 a week with petrol and obviously there s tax. (Post-family, Disabled, Abergavenny) Insurance, if I could get away without insuring the property, I d just trust to fate, but unfortunately the mortgage company won t let me get away without insuring it. (Post-family, Disabled, Colwyn Bay) I ve got to because all the stuff here is worth a hell of a lot of money and it was my wife s. (Retired, Abergavenny) The telephone landline, as I say, we have a 93 year old mother who lives in Manchester, it s a lifeline, it s essential, we have to have that. (Retired, Colwyn Bay) Telephone, well yes it would be a little bit [important] because I ring my sister in Australia. (Retired, Abergavenny) The telephone, [is a priority] just because of people changing and booking appointments or just contacting people. (Post-family, Colwyn Bay) Items of low priority were those that respondents felt they could do without including leisure, clothing and public transport; It s not desperate. I like my pint of beer and I like to go and have a chat with the boys, but I needn t have it, I wouldn t have it. (Retired, Abergavenny) 42

44 Well, I ve tried to cut down. I go into town obviously on a Saturday, shopping and I go to town on a Wednesday, again shopping, so I m spending about 12 a week on taxis. (Retired, Abergavenny) Priority given to water Although the water bill was sometimes ranked as the same level as the other utilities, its average rank was slightly lower. This was reflected in respondents reasoning that the water bill was often the bill they let slip when a real choice about what to pay had to be made; The assumption that water could be cut off was widespread (although it was not something that respondents had thought about a great deal) and most assumed that the water company could cut the household supply even if this might take a while and involve the company going through various procedures first; Those in arrears were generally not aware that water could not be cut off and this was not the reason for their non-payment. It was more the case that they had fallen into arrears for a variety of other reasons; Affordability Differences in affordability Respondents were asked to sort items as affordable, less affordable or unaffordable. Some items were classed as affordable because the sums of money involved in paying them (sometimes in instalments) tended to be small e.g. the TV licence, telephone bills (especially pay as you go mobiles) and public transport; Essential items including housing and rent (if applicable) and food and household shopping were considered relatively affordable. The priority assigned to rent and housing costs meant that these had to be afforded while the affordability of food was attributable to the control that the respondents could exercise over how much they chose to spend. In the main, the utility bills (gas, electric and water) and council tax were considered less affordable; Definitions of affordability Respondents found the concept of affordability difficult to grasp and although at a superficial level they often related it to cost and whether they could comfortably pay for something, it became evident that when thinking about their own circumstances, the picture was more complex; Those who were making ends meet were more likely to consider an item affordable if it was important that it was paid; for example, although expensive, housing costs were often considered affordable as they were also considered essential. In contrast, those who were in arrears were more likely to base their decisions about affordability on cost, a cheaper outgoing would be considered more affordable than an expensive one, for example, the TV licence. Those who were struggling fell somewhere in the middle, perhaps indicating the conflict between paying for the essential items and the actual (often more expensive) cost of that item; I mean the utility bills, quite honestly they are not really affordable, but I don t see how you could live without them. (Post-family, Disabled, Colwyn Bay) Other factors also impacted on whether a particular item of expenditure was perceived as affordable or not. These included, the extend of perceived control over the amount they needed to pay including whether respondents could pay in regular fixed instalments, price increases and the extent to which it was possible to plan for these, and whether they felt the cost of an item was justified. It [affordable] means more or less that the prices are static. If it s affordable, it means that it s not going to fluctuate and you re not going to go into a place and 43

45 find like house insurance 15 [a month last year] and 29 a month this year and that s where it becomes not as affordable because it s jumped. (Retired, Colwyn Bay) All the basic things like water, TV licensing, council tax have all gone up by 3 or 4% but nothing s gone down gas has gone up, electricity has gone up. (Family, Abergavenny) Perceived affordability of water In the main, the water bill was considered a less affordable or unaffordable outgoing; Various factors contributed to this including a perceived lack of control over the bill, perceptions of unfairness and/or overcharging, an inability to pay off accumulating arrears, resentment towards price rises and a lack of understanding about what water companies actually do to justify these; Every time I get a bill or a letter, it [water arrears] just seems to be going up and not down. (Post-family, Disabled, Abergavenny) Coping strategies Various tactics were adopted across the sample to cope with financial shortfalls and debt. Different strategies were associated with different types of respondent; Those who were making ends meet had outgoings that they considered non-essential that they could cut back on without too much detrimental effect (although for some it was emotionally uncomfortable); As I say, I would estimate 20 to 25 a week but as I said, if I haven t got it, I don t have it and that s it. (Retired, Abergavenny) Clothing spend has dropped completely because we wouldn t even consider going out and looking at the sales or looking at the shops and buying things we only buy what we need. If these shoes wear out, then I ll go to the wardrobe and see if we ve got another pair that ll do for now, or I ll wear my boots and if they wear out, then I ll go get a pair of shoes, I won t just go to the shop and buy shoes. (Post-family, Disabled, Colwyn Bay) Food, you start to reduce, you re more selective about what you buy I mean that s one of the first things you d do make your own food rather than buy processed we re growing a few veg and things. (Post-family, Colwyn Bay) Those who were struggling were focusing on the essentials and, in some cases, beginning to use savings to pay for bills; The telephone s about to go, as is the broadband, because I can t afford those now, so s BT. The landline was costing me a month, and the broadband was a month, so we re having to get rid of those. (Post-family, Disabled, Colwyn Bay) [We] used to go off on a day trip or something like that, but it s a waste of petrol. (Family, Abergavenny) We can shop around, we do the cheap shops, we see what s on offer. If I can get four tins of baked beans for 1, then I ll buy two packs and that ll last us a month we now, instead of shopping at Asda and doing the weekly shop, we go to Home Bargains and Aldi, anywhere that has got offers and just take advantage of the offers. (Post-family, Disabled, Colwyn Bay) Those in arrears found coping difficult they had little to fall back on in the form of 44

46 savings or anything else, and there was little they could realistically cut back on. They had to resort to making trade-offs in terms of what they would pay first and were often surviving at the most basic level; The dilemmas associated with cutting back Respondents faced a number of dilemmas when making decisions about what to cut back on. Those with certain medical conditions had to take into account the possibility of their condition worsening if they did not eat the right food or did not have sufficient heating; He s diabetic so we have to eat reasonably healthy, whatever happens. (Postfamily, Disabled, Colwyn Bay) When my husband s sat there with his gloves on and his hat on and his coat on of an evening, and it s perishing cold, what do I do? I have to put the heating on and whilst I would be more likely to switch the heating off and put two jumpers on, I really can t do it for him because he has a heart condition. If his temperature drops too low, he will have serious difficulties so I m kind of in a Catch 22. (Post-family, Disabled, Colwyn Bay) Those with children found they had to make sacrifices in terms of the quality of food and there were difficulties associated with asking children to limit their use of certain appliances to reduce energy consumption; Leisure was perceived as something that could be cut back on but it was difficult for those who smoked or saw watching television as their only social activity; A couple had turned to high interest loans to meet immediate payments; Coping strategies relating to water usage Only those with water meters were in a position to try to control the size of their bill and those who attempted to do this generally found it stressful and thought it had little impact; Various strategies for reducing the amount of water used were employed around the house and garden. Many impacted on cleaning and hygiene routines and were particularly resented; And we use the shower, I don t have as many baths now. I used to enjoy lying in the bath, but I don t do that. (Post-family, Disabled, Colwyn Bay) Yeah, we weren t really aware of using the water before, not that we wasted it but I don t put the washing machine on as often, I m more careful with it. (Post-family, Colwyn Bay) I don t wash my windows, I know it sounds stupid but plastic windows, they cost a lot of money, I think twice about water now. (Post-family, Disabled, Colwyn Bay) Neither of us like to spend money. When it wasn t metered, there was no stress associated with it. Now there is some degree of stress, no, you can t go out and water the garden, you re spending money. (Post-family, Colwyn Bay) I ve even suggested, and we haven t quite agreed on it yet, getting a pump pot by the sink so that - because we have a combi boiler, the first few moments of water I run is cold and then the hot kicks in and I m saying we re wasting water. If I put that water in a pump pot you can wash your hands with that, sort of squirt out the water and wash your hands, then we wouldn t have to run the tap but he [her husband] thinks I m taking it to extremes. (Post-family, Disabled, Colwyn Bay) 45

47 Several were angry about being put in the position of having a water meter (very few had one by choice) and the notion that being in control of something is a good thing clearly falls down in relation to water usage for them, the control appeared to be illusory; I ve now become quite paranoid about it, because we can t see it. You know we need water to drink, okay maybe we should only have one cup of tea. I quite often put stuff in a flask which is stupid, if the kettle is boiled I ll put water in a flask but it s having no effect. (Post-family, Disabled, Colwyn Bay) Getting into debt where debt builds up Across each of the 14 items of household expenditure, at least one respondent reported that they either sometimes, or always, found themselves in arrears. The item mentioned most often as the one where some respondents were always in arrears was the water bill; (N.B. This may reflect the purposive nature of the sample. Care should be taken in generalising this finding to a wider audience.) A distinction can be made between those who can t pay and those who won t pay and nearly all respondents who were in arrears fell into the can t pay category they wanted to pay, but could not meet the amounts being asked of them; Everything goes out on a fixed standing order direct debit, so therefore we know exactly what is going out, which is why when the gas board wanted to put it [the monthly gas direct debit] up from 60 to 185, there s no way I could do that, there wasn t enough money to do that. (Post-family, Disabled, Colwyn Bay) You get a choice, you pay the bills or you don t and obviously, if you don t, then there is usually a good reason behind it if you know what I mean. (Single Parent, Abergavenny) The emotional impact of debt Respondents across all types experienced negative emotional consequences as a result of struggling or not being able to pay their bills; Common emotional responses included a sense of frustration and powerlessness, feeling fed up and worn down by the constant struggle and pressure to keep on top of payments; [I feel] fed up, stressed, horrible not being able to pay your bills, wondering whether or not somebody is going to come knocking at your door. (Single Parent, Abergavenny) I mean I m not going to kill myself over it, put it like that, because there are far more important things in life. If I can t pay my bills, I can t pay my bills. It s not a nice place to be, but hey, there are loads of people who don t pay their bills. (Post-family, Disabled, Colwyn Bay) Those in arrears talked about feelings of helplessness and hopelessness as well as anger and guilt at not being able to pay their bills. Together these feelings added to the day to day stresses of life and, for a few, seemed to impact on their mental wellbeing; Getting into debt with water Respondents had ended up in arrears with their water bill in a number of ways and the problem for many was that they were no longer struggling to meet their bill, they were unable to do so; Some moved briefly in and then out of arrears; if they paid in weekly or fortnightly instalments, these might sometimes be missed but then they aimed to catch up. It was when they found this difficult (perhaps when other outgoings took priority) that arrears with water built up; Firstly it went over a year so back to 2006, I m not really sure, but they kept sending 46

48 me letters. (Post-family, Disabled, Abergavenny) 2007, that s when it started off and 12 th September, your bill will be 704, so now I owe. And do you know why? Well, if I d been paying the arrears off, it should be lower than that on the 6 th March it s 998, now how confusing is that to anybody, and I m not a very clever person. (Post-family, Disabled, Abergavenny) Those who were in long term arrears with water genuinely could not pay at the level of payment often expected by their water company ( can t pay ). No one was withholding payment even though they could afford to meet their bills ( won t pay ). Two respondents in the sample fell into what could be considered a can t pay, won t pay category and they rationalised their non-payment as a protest against the companies involved; I shall be ringing them up and saying, right, you can t have it, simple as that, I haven t got it, can we agree some sort of payment? (Post-family, Disabled, Colwyn Bay) There was nothing to suggest that the majority of those in arrears were in that situation by choice or intention and were unwilling to pay back the money they owed if they were able; And water is about 30 a month, but I have had to make substantial payments to them over the last few years and I still don t know how and why, but I ve kept paying, it has to be settled every time at the end of every whatever. Every time I owe them money and I pay it and I can t work out why it goes up like that. (Post-family, Disabled, Colwyn Bay) The assumption that water debt is caused by customers knowing they can not be disconnected is not supported by this research and it was evident that they had not thought a great deal about this; Feelings about the water bill Respondents who were struggling to pay or who could not pay their water bill experienced a variety of negative feelings; Some felt they were getting nowhere as no matter how much they paid, the bill and/or arrears continued to rise. Others were worried, despondent and sad about the bill, while some felt continually trapped by their arrears and the amount they had to pay. There was also a sense of frustration and anger both at the perceived unfairness of the bill and at the water companies themselves; I just feel like I m on some kind of escalator that I m running the wrong way up. (Post-family, Disabled, Colwyn Bay) This guy there like, it s going downhill, it s probably because every time I get a bill or a letter, it just seems to be going up, not down. (Post-family, Disabled, Abergavenny) 47

49 I m very concerned about it because it s not a set amount and it really bothers me, doesn t it? It s psychological because you can t see the gas and the electric you use but you can see the amount of water that s running through the taps and the bath and things like that you can see the volume being washed away and thinking, all that money. (Post-family, Colwyn Bay) Those who were not struggling with their bill so much were more relaxed, even though many still perceived the bill as unfair or too high; The effect of threats from the water company The few respondents who had received CCJs from their water companies found the situation frustrating and stressful. However, one thought a court appearance might go some way to help her water company understand that she could only pay what she could afford, not what was demanded; The threat of disconnection of customers water supply was not something that could be tested in the interviews, however, respondent reactions to potential disconnection of (or being denied access to) gas and electricity did affect whether these were paid for or not. Therefore, it might be expected that such sanctions on water could have an effect on payment based on findings related to other utilities; Seeking help from utilities and water companies There was a marked difference between respondents who had sought help with their debt and those who were in difficulties but had not yet done so; I spoke to one of their advisors and they said that I needed to go and see so and so, like a debt company or Citizens Advice because they said I would end up in trouble if I kept ignoring their letters They explained to me what I had to do, they gave me a package and a form where I filled it in that I promised to pay and put my outgoings and income like, and expenses and sent them off and they agreed with it. (Family, Abergavenny) Those who were making ends meet had typically not had to contact suppliers but were optimistic that help would be available should they need it; All who were struggling had contacted a supplier at some point and were generally disappointed with the inflexibility and unhelpfulness of the response and the lack of help they had subsequently received; Some respondents in arrears were better able to juggle their finances than others who were often overwhelmed by their situation. Those who juggled were often experienced with dealing with suppliers and well aware who they needed to pay first, while those who were overwhelmed were often at their wits end from the perceived intransigence of suppliers; Negative experiences with suppliers often deterred respondents from contacting the same or a different supplier in the future as they assumed the response would be the same; 48