Households let down by their water company will get greater rights to claim compensation and a doubling of the minimum payment to £40.
The net effect of the changes is that a household that loses its supply for two-and-a-half days would see compensation rise from a paltry £40 to £250.
While the total compensation bill payable by a water firm involving a small town of 4,000 people with 10,000 residents would rise from £160,000 to £1 million.
Environment Secretary Steve Reed said households and businesses have been let down by water companies.
He said: “Our water industry is broken. After years of failure, households and businesses have been let down by water companies time and time again. The new Government will clean up the water industry and turn the tide on the destruction of our waterways ensuring water companies protect the interests of their customers and the environment.”
The proposals will double payments for all existing standards to £40 and will more than double the payments for certain highly disruptive incidents, such as failing to provide notice of supply interruptions and missing arranged appointments with customers.
They will also expand the list of circumstances that can trigger compensation, including automatic payments for boil notices when drinking water standards drop, or when water companies fail to conduct meter readings or installations as promised.
A boil notice means you must boil your water before you drink it, cook with it, or brush your teeth.
Customers who suffer unusually low pressure would also get compensation under what is known as the Guaranteed Service Standards scheme.
The changes would mean that disruption in Brixham and Bramley earlier this year, which left thousands of homes with contaminated tap water, would have automatically received compensation where there was no entitlement before.
Chief executive at the Consumer Council for Water (CCW), Dr Mike Keil, said water companies that let customers down in the past without paying compensation will now be forced to do so.
“These changes are long overdue, so we are really pleased to see this announcement,” he said.
The compensation payments should be paid automatically when there are service failures. There is a separate redress regime for people made ill by contaminated water, who may suffer loss of earnings.
Dr Keil said: “If you were interrupted for two and half days, currently you would get a £40 payment, but under the new arrangements you would get £250. That is quite a big change.
“If there was a town with 4,000 properties and 10,000 people whose supply was interrupted for two and a half days, currently the company would have to pay out around £160,000. Under the new arrangements it would be around £1million.
“That hits the company’s bottom line and offers that incentive to try and avoid the problem in the first place. People want a service that is reliable and they can trust.”
Jenny Suggate, Director of Policy, Research and Campaigns at the CCW, said: “Demanding higher standards of service and improving levels of compensation when things go wrong will incentivise water companies to get things right the first time for all customers.”
You can find out more about what help is available to consumers here.
