Water companies to increase compensation payments for service failures
Water customers across England and Wales will receive significantly higher compensation payments when water companies fail to deliver proper service, under new government rules effective from 2 July 2025.
The Guaranteed Service Standard Scheme has been updated to increase payments by up to ten times in some cases, marking the first uplift in compensation levels in 25 years.
Severe issues such as sewer flooding will now see payments double, with compensation rising from £1,000 to up to £2,000.
Customers suffering ongoing low water pressure will be automatically eligible for payments up to £250 per year, a substantial increase from the previous £25.
Compensation will also be extended to cover additional triggers, including failures to conduct timely water meter readings and installations.
Environment Secretary Steve Reed said: “Too many water companies are letting down their customers – with leaking pipes, poor water supply and low water pressure. The Government is holding water companies to account by making them put money back into people’s pockets when they fail their customers.”
Payments will be made automatically to eligible customers, without the need for them to take action.
The government is also expanding the list of circumstances triggering payments, with compensation for boil water notices due to contaminated supply to come into effect later this year.
These reforms come alongside broader government efforts to cut sewage pollution and modernise the water sector, including tougher penalties for polluting companies and increased investment in infrastructure.
David Black, Chief Executive of Ofwat, said: “We welcome these improvements to guaranteed standards and payments for customers. When customers suffer from problems like low pressure, disruptions to supply or sewer flooding they can experience major stress and inconvenience, and payment amounts must recognise the disruption to their lives when standards are not met.”
Mike Keil, Chief Executive of the Consumer Council for Water, added:
“This should give people peace of mind they now have far stronger protection from a much broader range of water company service failures.”
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