Projects
Water charging
80% of households in England and Wales are still charged for their water based on the rateable value of their property. People in bigger houses pay more, and charges are independent of usage. But the other 20% of households have water meters, and are charged on the basis of how much water they use, independent of the nature of their property. It is this sharp difference in charging structures, without any apparent philosophical basis or overt plan, that first brought the subject of water charging to our attention at the New Policy Institute.
Moving to metering particularly suits small households in large properties, who will mainly have relatively high disposable incomes. As the number of metered households rises, most cutting their bills in the process, the burden of charges rises for those still without meters. These will include most poorer and larger households.
The heart of the problem is that, unlike the system of rateable values, metering is currently associated with a tariff structure which bears no account of 'ability to pay'.
Our first report on water charging, in 1997, analysed these and other problems and made recommendations about future tariffs such that they struck an appropriate balance between economic, environmental and social objectives. It concluded that it was perfectly possible to construct metered tariffs based on ability to pay, whilst still retaining the necessary incentives for environmental conservation.
View/download the executive summary.
View/download the full report.
Our second report, in 2000, examined the potential application of Council Tax bands to future water tariff structures, the motivation being to modernise whilst still retaining some element of the progressivity in charging structure. The authors of the various papers in the pamphlet Keith Harris (Director of Finance and Regulation at Wessex Water), Peter Vass (Director of the Centre for the Study of Regulated Industries at the University of Bath School of Management) and Janet Wright (Oxford Economic Research Associates Ltd).