The government does not know whether consumers can afford to pay for upgrades to utilities infrastructure, the government spending watchdog has said.
A report from the National Audit Office found that the government had not assessed whether the estimated £208bn to be spent on water, telecoms and energy infrastructure and paid for through consumers’ bills was affordable or by how much it would increase bills.
The report said recommended that the Treasury publish the anticipated effect of utilities infrastructure spending on consumer bills to promote transparency. It also said government departments and utilities regulators should consider the affordability and value of spending for consumers before making spending commitments or approving utility companies’ revenues and charges.
The report said the Treasury estimates that 67 per cent of the £310bn of planned infrastructure it had identified was for privatised utilities and would be paid for through consumers’ bills.
It said the department for energy and climate change expected energy bills to grow in real terms by 18 per cent by 2030.
It said energy and water bills rose by 44 and 21 per cent respectively while incomes remained static between 2002 and 2011. Telecoms bills fell 2 per cent over the same period, but the report pointed out that telecoms customers have greater choice in the type and level of service they buy.
The poorest 10 per cent of households were hit especially hard by prices rises as their incomes fell 11 per cent in real terms from 2002 to 2011, the report said. In 2011 15 per cent of their spending went on energy and water bills.
Amyas Morse, head of the National Audit Office, said: “Government and regulators do not know the overall impact of planned infrastructure on future consumer utility bills, or whether households, especially those on low incomes, will be able to afford to pay them. It seems critical to know ‘how much is too much’, based on reliable information.”