Procurement · 3 August 2017

Small business reluctant to switch water supplier after market deregulation 

Plumber doing repair work on a drain.
Deregulation of England’s water supply was alleged to represent savings worth £200m for small business owners

Just 36,000 small business owners in England have switched water supplier since the market was deregulated in April 2017, according to a new study, despite over a million able to shop around for the best deal.

Since April 2017, deregulation of the water market saw over 1.2m owners of small firms given the right to seek better rates and take further control of their water supply. Deregulation, in place in Scotland since 2008, was designed to boost competition via new entrants and put pressure on bigger suppliers to improve services and rates.

In its first quarterly review since non-household water supplies were deregulated, Market Operator Services LTD (MOSL), the firm responsible for the new water supply market, published findings to highlight changes seen so far.

Out of the 36,000 small business owners to have taken advantage of deregulation, 58 per cent used less than 1,000 litres of water a day.

However, market entrants have experienced good business so far. In the first three months, new water retailers gained 15,000 supply points – over 40 per cent of the total switches.

The findings also showed that customers preferred to keep a single water supplier for both their water and wastewater services. Some 95 per cent of all switches kept or combined services with one retailer.

Commenting on the paper, Chris Scoggins, MOSL CEO, accepted that water deregulation was a long-term strategy, but commended current progress.

“While it is early days, we are already seeing some positive developments, with customers of all sizes engaging in the market,” Scoggins said.

“That’s great news, but there’s still much to do.”

Meanwhile, Cathryn Ross, chief executive of British water regulator Ofwat, said: “In addition to those who have switched, we have heard that many others have agreed new deals with their current retailer.

“There have been more than 36,000 switches and around 60 per cent of those have come from low water users – more likely to be SMEs. That is significant, because we want to make sure this market works for all customers, not just the very large companies with specialist procurement divisions.

“More needs to be done however; comparing offers is still not as easy as it needs to be and we have told retailers they must remedy this.”

Scoggins added that MOSL would continue to “promote transparency and confidence in the new market” for the benefit of small business owners.

Broadband, mobile and energy – Tell us whether you like your business suppliers or not

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

From the top

Find out how KPMG Small Business Accounting can really work for you

FIND OUT MORE