Government reforms to encourage UK businesses to switch water providers fall flat
Ofwat shake-up will take at least five years to have effect experts warn.
A Government shake up of the UK water market designed to encourage both consumers and businesses to switch providers has failed to work, and could take at least five years to take effect.
Experts warn that new regulations introduced by regulator Ofwat last April have failed to inspire the market or motivate users to change suppliers.
Only 25,000 of a potential 2.7 million users have switched water suppliers despite being encouraged to shop around for better deals.
The April shake-up was the biggest to be seen in the sector since privatization – allowing businesses, charities and public sector groups to purchase water from firms other than their local supplier.
Energy and utilities consultant Utilitywise told the Express that deregulation was falling flat because not enough people had been made aware that they could switch suppliers. Pricing systems were also too complex, it said.
The Competition & Market Authority (CMA) wants to protect competition and consumers and says people are struggling to find valid comparisons for suppliers.
Chief executive Brendan Flattery said that even if Ofwat steps in and takes effective action to publicise and encourage businesses to switch suppliers it will still take “three to five years” before it becomes common practise.
Meanwhile challenger power group Bulb has called on the CMA to block the merger of Big Six energy firms SSE and Npower which would give the new company 22.5% of the market, and see it nipping at the heels of British Gas, which currently has 27% of UK business.
Bulb co-founder Hayden Wood said: “The CMA needs to protect competition and consumers.”
When Ofwat introduced the changes to the water market it had hoped it would encourage users to find the best available deals.
The changes meant eligible users could choose to have one retailer for their water supply and another for wastewater services – or just one supplier for both.
Ofwat wanted consumers to check bills and payments, read their meters and consider a range of customer services and advice on how to save water.
It offered a guide to retailers and wholesalers in the open water market so users could become fully informed about their options.
By having the freedom to choose, Ofwat argued, businesses could save water, spend less and get other benefits. But too few people have apparently investigated the options.
Find out more about The Energy Deal with our useful guide.
- British broadband is the eighth cheapest in Europe
- British Budget airline easyJet benefits from collapse of rivals
- Generation Z fear they won’t be able to afford a home as property prices rise
- Brits will spend less on the high street but more online this Christmas
- British Gas to scrap standard bills which could save customers £2 billion