Water companies taking Universal Credit are entrenching poverty

Water companies preying on benefits through the Department for Work and Pensions (DWP) deductions regime are compounding poverty amongst their most vulnerable customers.

Amid soaring bills, rampant pollution, and rank profiteering, privatised water firms are getting away with this at welfare claimants’ expense.

And notably, it’s all within the context of layers of DWP-facilitated debt deductions that are leaving claimants unable to afford the bare necessities.

DWP and water companies entrenching destitution

The DWP enables private companies to chase people who owe them money via the welfare system. In August 2025 for instance, the department facilitated £24m in ‘third party’ deductions. These so-called third parties include landlords, energy companies, and local authorities (for council tax).

Water and sewerage companies can also do this. When an individual is in arrears to their water supplier, the company can apply to the DWP to deduct directly from their welfare payments. And as it stands, despite their appalling performance and rampant pollution, there are no restrictions on this.

Research has shown that the majority of Universal Credit claimants experiencing debt are in arrears with multiple parties. Notably, a report the previous Conservative government suppressed revealed in 2024 that nine in ten claimants with debt have more than one source of it. On average, they have four sources of debt. As many as half owe money to five or more different sources.

This is significant — because water bills are low on the pecking order for deductions. Notably, the DWP operates third party deductions on a priority list. It’s based on what the department determines poses a greater risk to claimants when they’re unable to pay. It puts water bills sixth, behind payments like rent arrears and gas and electricity bills.

Compounding layers of debt

As the Canary previously revealed, across an 18-month period, water companies have preyed on £32.4m in claimants’ Universal Credit. For the most recent twelve months (between September 2024 to August 2025), they’d nabbed £21.7m.

In that same 12-month period, the DWP and government were also making deductions to around three-quarters of households with third party deductions.

DWP data doesn’t provide an indication of how many households have multiple third party deductions. However, it’s safe to say that water company deductions would rarely come in isolation.

In other words, water firms are stripping vital social security from people who are likely among those with multiple oppressive debts.

Pilfering profits from the welfare system

The same suppressed DWP report also identified that more than two-thirds of Universal Credit claimants with debt had gone without food and essential items. Some claimants felt “so helpless” that they had considered suicide.

And water poverty statistics from Citizens Advice in September 2025 chimed with this. It found that companies had forced 42% of households to forego groceries and reduce their energy usage within the last year. Skyrocketing water costs caused more than a third to ration water during this time.

Of course, water firms continuing to ratchet up customer bills is driving all this. The report identified that more than a fifth got into debt with their supplier. Obviously, for welfare claimants, this is when the DWP’s relentless debt chasing mechanism can kick into gear.

So in applying Universal Credit deductions, water companies will only be making all this worse. However, it’s a cycle greedy utility firms are only too happy to maintain. Because at the end of the day, pilfering profits out of a public good is the privatised water industry in a nutshell.

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