The change is marked and reflects, primarily, rapidly rising water and sewerage charges over the period following restructuring of the industry in 1996. Table 2 analyses the same period by household composition, whilst Table 3 focuses only on households in the lowest income decile. A similar pattern of increased proportions of household income spent on these services is observed.
Changes in charge levels are, of course, only one aspect of affordability. Another is the changes in income levels which, for households in the lowest income decile, are bound up with changes in social security benefit arrangements. Without describing current social security arrangements in detail it is sufficient to note that there is currently no dedicated benefit relating to water and sewerage charges. Simplifying somewhat, the primary benefit that may be applied by households to their water charges is the personal allowance element of income support, a means tested benefit which is increased annually according to an index – the Rossi index – applied by the Government. Whilst indexation of benefits does seek to mitigate the effect of inflation on the purchasing power of households it does not, indeed cannot, do that perfectly. More problematic from the point of view of water affordability however is the extent to which this indexation has lagged behind increases in water and sewerage charges. Table 4 sets this out clearly by recording annual average water and sewerage charge increases alongside a measure of inflation and the Rossi index used for benefits uprating.
To analyse the extent to which benefits indexation has lagged water and sewerage charge increases in Scotland over the last decade, Table 5 records the notional benefit element within the income support personal allowance attributable to water as a percentage of the average charge. As is clear from the Table from the claimant’s point of view the position has deteriorated markedly during this period.
Affordability and increasing water scarcity
So much for the recent past: what of the near future?
Clearly social and economic concerns will continue to influence the evolution of public policy towards water. More significantly, however, we might anticipate that greater priority will be given to environmental objectives as the Government seeks to implement the European Union’s Water Framework Directive against a backdrop of increasing water scarcity.
Already political debate over new charging structures to support environmental objectives such as species preservation and environmental protection is well advanced in the UK. As this debate matures it will be important not only to track its development, but to undertake research into the impact of environmentally inspired initiatives on low income and economically vulnerable households. Without this, the chance of building a lasting public policy consensus over water and sewerage service delivery over the next decade – one of the key underpinnings of civic society – seems remote.