Prices changes during the next regulatory period 2021 – 2027 may have a bearing on paying customers, particularly those on low income. CAS recently conducted research using Fraser of Allander Institute to understand how potential price change scenarios may affect aspects of affordability. Research sought to identify what proportion of Scottish households would be likely to spend more than 3% of income on water and sewerage under four charge scenarios between 2021/22 and 2027/28 (2%, 2.5%, 3% and 3.5%).
Key findings concluded that:
- Fewer households are projected to spend more than 3% for water costs p/w, than the 12% finding of 2016
- Income is by far the most effective determinant of whether or not a household is likely to struggle to afford their water charges
- Council Tax bands are a less reliable proxy for affordability with less than a fifth of households spending above 3% actually receiving Council Tax Reduction and therefore reduced water charges
- Lowest income decile households will be significantly affected by increases in water charges (7 out of 10 consumers within the lowest decile), and this percentage could rise to 76% in 2027/28 after applying the four pricing scenarios.
- There is no significant margin between a 2% increase and a 3.5% increase in terms of impact on consumers.