Select Committee on Public Accounts Thirtieth Report


2  Compensation for sewer flooding incidents

12. Water companies are required to provide effective drainage of waste water from homes and properties. They recover the costs through the sewerage component of the water and sewerage bills they charge consumers. The sewerage element varies from company to company, ranging from £95 to £225 per property in 2003-04 depending on the company. It does not, however, vary for consumers within each company's region.[19]

13. A small minority of consumers suffer from sewer flooding. Since 1994, the number of sewer flooding incidents has fluctuated between 5,000 and 7,000 per annum (Figure 2 above), which represents less than 0.03% of the total number of properties in England and Wales.[20]

14. Ofwat must strike a balance between the interests of these two groups of consumers. It pointed out that sewer assets effectively provide a public service. It is not, however, possible to do all the capital works to remove properties from the risk of sewer flooding at once. Water companies therefore prioritised sewer flooding remedial works.[21]

15. In some cases, consumers suffer repeated incidents. In one case, a consumer in the Thames Water region suffered numerous incidents of external flooding. In response, he brought an action against Thames Water on the grounds of nuisance, and that the company had breached human rights legislation as regards respect for family life and home and protection of property. The High Court found in favour of Thames Water, arguing that Parliament had (through the Water Industry Act 1991) established arrangements to provide redress for customers, and had created Ofwat in order to balance the interests of those customers affected by sewer flooding, against those of all other customers. The High Court judgement added, however, that the present modest compensation arrangements were a matter of concern, and that Ofwat should reconsider current compensation policy in the light of the case, even if this meant a slight increase in the average water bill paid by all consumers. This was because "if it was not practical for reasons of expense to carry out remedial works for the time being, then those who enjoy the benefit of effective drainage should bear the cost of paying some compensation to those who have to endure intolerable sewer flooding, internal or external".[22]

16. The statutory arrangements for compensating customers who suffer sewer flooding are limited. The statutory Guaranteed Standards Scheme (GSS) provides for payments to be made to customers for service failures, including internal sewer flooding. It does not cover external flooding. Under the scheme, customers receive a rebate of their annual sewerage payment. The scheme is not supposed to compensate customers for damage or losses incurred, and merely reflects the service failure they have suffered. It does not vary in proportion to the damage caused by sewer flooding or the severity of the incident - in some cases victims may have to vacate their property whilst it is properly cleaned and repaired.[23]

17. Companies can also make further compensation or ad hoc payments to victims of flooding, and Ofwat and WaterVoice (which represents the interests of consumers) encourage them to do so. For example, some companies give a partial rebate for external sewer flooding, and companies can also provide help with uninsured losses. In 2002-03, companies made voluntary payments under circumstances not covered by the GSS of just over £1.2 million.[24]

18. Ofwat expected householders to obtain insurance that covered incidents such as sewer flooding. It also recognised the need to protect the sewer-flooded consumer, who might not be well off and might not be able to obtain full insurance cover, and to ensure that poorer consumers were not driven further into poverty by an event that was no fault of theirs. There was now a general recognition among all parties, including Ofwat, the water companies, consumer representatives and insurers, that customers should not be out of pocket as a consequence of sewer flooding.[25]


19   Charges for water services can however vary where consumers have elected to use a water meter, which charges them for water actually used. Back

20   C&AG's Report, para 1.18 Back

21   Qq 28, 30 Back

22   Peter Marcic v Thames Water Utilities Limited (2002 EWCACiv 65)  Back

23   C&AG's Report, para 2.4 Back

24   ibid Back

25   Q 45 Back


 
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