Water Deregulation: why London businesses will miss out

4th April 2017 | Water

The landscape for businesses moved at the weekend with the launch of water deregulation from April 1. The deregulation of English water means thousands of local businesses will have access to “choice” in supplier for the first time. This means they will be able to change from their incumbent, usually their local monopoly supplier. Average savings could be as low as just £80 for London.

The Government has made a big error by not learning the lessons from Scotland, which deregulated its water market in 2008 with similar low margins.

The regulator had to intervene after three years widening the retail margin to allow savings of twenty per cent or more for all businesses. Since the intervention, around 50 per cent of businesses have switched. Disappointingly for small businesses, Ofwat has decided not to apply the lessons learned from Scotland.  This would result in a more vibrant market from day one of water deregulation in London.

Water Deregulation

There is increasing pressure on many small businesses following increases in business rates, rising energy costs.  And the future is uncertain post-Brexit.  There have been calls on the Government to do more to make water deregulation work for London’s small business owners.

A statement from Brendan Flattery, CEO of Utilitywise, following water deregulation, is as follows. “Small business owners provided the backbone to our economy.  But they are being hit by a combination of rising energy costs, increased business rates and burdensome regulation. Water deregulation which came into force in England this weekend is a welcome step. But local businesses are set to miss out almost completely. SMEs will be able to save an average of only £80 by switching water supplier post deregulation.  This means that there is next to no price-saving incentive to switch.”

So, although water deregulation makes little difference to businesses today, it could provide them with significant savings in the future.

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