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Freedom of choice

Competition to supply water to business users is set to spread from Scotland to England says Mark Powles, chief executive of Business Stream, Scotland’s largest non-domestic water supplier.

In the process of running a business in a difficult climate, you could be forgiven for having missed an important development in Scotland which has created a ripple effect starting to be felt throughout the UK.

The development in question is the introduction of the world’s first competitive water retail market. This will not have been top of the agenda for many people over the last few years. But in certain circles in England, this is causing a stir, and for good reason.

Since 2008, every business, public sector body, voluntary group, and charity in Scotland has been able to choose its water supplier. By its nature, any competitive market should encourage its participants to sharpen their pencils on pricing, tighten up on customer service and create more innovative, leaner, higher-performing organisations.

So has that been successfully achieved in Scotland? We certainly think so. Since competition began, more than 40% of the market has gone out to tender, and we know our customers have cut £25M from their bills by reducing their water use. In addition, more than 60% of customers are paying less than they would have without competition.

The key to this is that water providers have had to up their games when it comes to customers. In many ways, that’s quite a difficult thing to do, since customers often don’t understand the impact of water on their businesses.

Water plays a role in every organisation, either directly or indirectly, and can have a significant financial and environmental impact. One of the benefits of competition in Scotland has been the environmental saving - at last count Business Stream customers had reduced their water-related carbon emissions by over 16,000t just through
better water management.

“Experience in Scotland comprehensively shows what competition can achieve”

Mark Powles, Business Stream

Innovation has gone hand-in-hand with and has been instrumental in delivering these benefits. Customers in Scotland can now more easily access experts who have a vested interest in helping them to use water more efficiently - whether it’s cutting water use or improving controls over trade effluent.

In England, non-domestic customers will soon have more say over these and other water
services, following a White Paper published by the government at the end of last year. It proposed introducing full competition to the English market, meaning every business, from small sole traders to multi-national plcs, would be able to choose their water supplier. For businesses with sites throughout the UK, that provides the opportunity to use one supplier across all their sites rather than having to deal with up to 22 different suppliers.

Before the White Paper’s publication, there was energetic opposition to competition from some quarters who claimed a deregulated market wouldn’t provide sufficient benefit against the cost of establishing the new market.

Our view, though, is the experience in Scotland comprehensively shows what competition can achieve for customers - whose needs must be at the forefront of any changes. Now the wheels have been set in motion, the momentum has to be maintained. Only with decisive leadership and the customer voice being heard will the full benefits of competition be realised within a reasonable timescale.

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