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Water deregulation: why London businesses will miss out on savings as they return to work today

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Here is what you need to know

This weekend, the landscape shifted for businesses across London with the launch of water deregulation from 1 April. The deregulation of English water means thousands of local businesses will have access to ‘choice’ in supplier for the first time, and able to change from their incumbent. However, we’ve discovered that average savings could be as low as just £80 for the capital.

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

The regulator then had to intervene after three years, widening the retail margin to allow savings of 20 per cent + 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 in Scotland which would result in a more vibrant market from day one of deregulation in London.

Given the increasing pressure on many small businesses in London following increases in business rates, rising energy costs and an uncertain post-Brexit future, Brendan Flattery, CEO of leading energy and utilities consultancy Utilitywise, has called on the Government to do more to make water deregulation work for London small business owners.

Statement from Brendan Flattery, CEO of Utilitywise, following water deregulation: “Small business owners provide the backbone to our economy but are being hit by a combination of rising energy costs, increased business rates and burdensome regulation as well as an uncertain post- ‘Brexit’ future, especially in London.” 

“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 meaning that there is next to no price-saving incentive to switch.”  

“This is a missed opportunity by the government to introduce real competition into a new utility market and provide material cost-saving benefits to around 1.2 million businesses.” 

“The Scottish Water market deregulated in 2008 with similar low margins. The regulator then had to intervene after three years, widening the retail margin to allow savings of more than 20 per cent for all businesses. Since the intervention, around 50 per cent of businesses have switched. Disappointingly for small business owners, Ofwat has decided not to apply the lessons learned in Scotland which would result in a more vibrant market from day one of deregulation in England.”

“The Government must not overlook the pressure that is being brought to bear on London business owners. 

Utilitywise is the leading utilities consultancy in the UK offering independent, impartial advice and expertise to businesses whatever the size.




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