Severn Trent ramps up support efforts in cost crunch

Water group Severn Trent has ramped up support efforts for those in poverty and financially struggling customers in the cost crisis as it posted a hike in half-year earnings.

The Coventry-headquartered firm said it has changed the income threshold for its support package to allow more customers to access savings of up to 90% on their water bills in the face of surging inflation.

Severn unveiled a £30 million fund in May to help another 100,000 customers on low incomes, adding to its existing scheme that supports 215,000 customers in need.

It said 20,000 customers had already applied for the extra support but that it has now increased the annual income cut-off to £18,300 from £16,000 previously to allow more people to access the scheme.

It also announced a programme to help address poverty across the Midlands, which will see it offer work experience to 300 children by the end of next August, rising to 500 by 2032.

The group – the UK’s second-biggest water firm – will also give 10,000 hours of free skills and employability training in communities and schools to support people into their first job, or back into work throughout the Midlands, which it said is home to a large number of high-deprivation postcodes.

It said the scheme – run in partnership with Birmingham City Council – would aim to help 100,000 people out of poverty by 2032 by supporting them into employment.

The details came as Severn Trent posted a 2.4% rise in underlying pre-tax profits to £261.7 million as turnover rose 10.8% to £1.1 billion thanks in part to inflation-linked hikes in water tariffs.

But it also revealed the impact of surging energy prices on its own business, with power costs soaring by 75.3% to £41.1 million in the first half – though it said this was less than the 121% hike in wholesale costs.

Severn Trent said it has not yet seen an increase in customers falling behind with their repayments, with bad debts down by £1.6 million, but it said it was retaining £8.5 million in money set aside to cover defaults due to the “expected pressure on household budgets from cost-of-living increases”.

Ms Garfield told the PA news agency that its support efforts should ensure defaults are kept low.

“What we’re finding is that because we’re looking to help people before they get into bad debts… we’re not seeing bad debts increase.

“We’re catching it early enough,” she said.

The firm serves 4.8 million homes and businesses in England and Wales, stretching from mid-Wales to Rutland and from north and mid-Wales south to the Bristol Channel and east to the Humber.

Liv Garfield, chief executive of Severn Trent, said: “The first half of this year has shown the benefits of the sustained investment we’ve made over many years in our people, region and environment.”

She added: “As well as delivering on our operational and environmental commitments, with around 85% of regulatory measures meeting or exceeding targets, we’re also committed to making a long-lasting positive impact in the communities we serve.”

Severn Trent was recently told by regulator Ofwat that it could increase customer payments by £63 million in the year ahead due to good performance.

But 11 other water suppliers were hit by fines from Ofwat for missing targets in areas such as water supply interruptions, pollution incidents and internal sewer flooding – meaning almost £150 million will be taken off their customers’ water bills.