London (Parliament Politics Magazine) – Small businesses have blamed water suppliers for saddling them with the price of “historic errors” made by managers in the scandal-hit industry, as it appeared their bills will rise nearly 30% by 2030.
The water industry regulator, Ofwat, has informed businesses that it expects average wholesale costs for non-household customers – which include small businesses, charities and hospitals – to increase by approximately 27% before inflation over the next five years, outstripping the anticipated peak in household bills.
How will water bills impact small business sustainability?
In a letter to the Federation of Small Businesses (FSB), Ofwat stated water companies would be allowed to raise bills to enable a trebling of investment to ensure future water supplies and safeguard the environment, as the industry confronts continued anger over discharges of raw sewage into waterways.
Shaun Kent, the director for the business retail market at Ofwat, noted: “We have protected customers by keeping price increases fair for current and future customers, ensuring companies do not overcharge for this vital investment. Shareholders will also need to play their part and are expected to invest £7bn of new equity.”
Ofwat’s letter, first reported by the Financial Times, comes as the regulator reviews how much to allow water firms in England and Wales to set domestic customers over the next five years to pay for investment in everything from repairing leaks to new reservoirs.
In July, Ofwat stated it would allow average household bills to increase by 21%, or £94, to enable the investments. Water firms are moving to be allowed to charge more, with a final decision expected in December.
Campaigners have claimed that many customers have already paid for upgrades which have not been carried out, while some water companies have been loaded with debt and mined for dividends by owners.
What steps are regulators taking to address concerns?
Tina McKenzie, the policy chair at the FSB, stated: “Historic errors in management, decision-making and performance targets by water companies are now being shunted on to small business and domestic household bills, at a time when the costs of doing business are already high. While investment and reform are critical to creating a good water and wastewater system, there needs to be a better balance struck between how the necessary funds are raised, so unavoidable bills – like water – are affordable and the system works as it should.”