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Applied Spatial Analysis and Policy

, Volume 6, Issue 1, pp 47–68 | Cite as

Examining the Relationship Between Debt and Deprivation in the UK Water Industry

  • Martin Clarke
  • Adrian McDonald
  • Peter Boden
Article

Abstract

The level of consumer debt or ‘revenue outstanding’ in the UK Water Industry has increased substantially in recent years, from £785 m in 2004 to £1,225 m in 2008 (Ofwat, 2009). It is anticipated that with increasing energy bills and the effect of the credit crunch upon customers’ ability and willingness to pay, the debt position will get worse over the next few years. It has been argued that there is a relationship between levels of customer indebtedness and levels of household deprivation. Previous studies of this relationship have been restricted to analysis at the overall Water Company level. In this paper we examine this relationship at the small area level linking individual household data on debt with the Index of Multiple Deprivation at the Lower Super Output Area level. We have developed 2 new measures of debt: debt intensity (the average level of debt per indebted property) and debt penetration (the percentage of households that are in debt). We found strong correlations between these indicators and the IMD although the picture varies around the country. These findings refute earlier work of Ofwat, demonstrate the importance of undertaking analysis at the small geographical scale and have important policy implications

Keywords

Water industry Consumer debt Deprivation Small areas 

Notes

Acknowledgements

We appreciate the support of UKWIR to help undertake this research and to the 13 participating Water Companies for supplying the relevant data

References

  1. Clarke, M, Boden, P, Mcdonald, A. (2012). DEBTOR: A Debt Evaluation, Benchmarking and Tracking Tool, Water and Environment, forthcomingGoogle Scholar
  2. CLG (2008b) The English Indices of Deprivation 2007 http://www.communities.gov.uk/documents/communities/pdf/733520.pdf
  3. CLG (2008c) The English Indices of Deprivation 2007. Summary http://www.communities.gov.uk/documents/communities/pdf/576659.pdf
  4. CLG (2008d) Using the English Indices of Deprivation 2007: Guidance http://www.communities.gov.uk/documents/communities/doc/615986.doc
  5. Consumer Council for Water (2008) Affordability and bills. Policy note. http://www.ccwater.org.uk/server.php?show=ConWebDoc.1779
  6. Ofwat (2009) Water Company June Returns 2008 http://www.ofwat.gov.uk/regulating/junereturn/jrlatestdata/
  7. Ofwat (2011) Water Company June Returns 2010 http://www.ofwat.gov.uk/regulating/junereturn/jrlatestdata/
  8. UKWIR (2003) Water Industry Debt—Current Trends and Good Practice Approaches. Report Ref. No. 03/CU/04/1, ISBN: 1 84257 312 0 (2003)Google Scholar
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  10. UKWIR (2004b) Water Industry Debt—Minimising the Problem of non-Payers. Report Ref. No. 04/CU/04/2, ISBN: 1 84057 326 0 (2004)Google Scholar
  11. Water UK (2008) Debt and affordability: briefing note. http://www.water.org.uk/home/policy/positions/debt-and-affordability

Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.School of GeographyUniversity of LeedsLeedsUK

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