Ex-Ofwat boss wants water regulation watered down

By Alex Stevenson

Businesses and public sector organisations would benefit from a deregulated water services market in England and Wales, a former Ofwat director has claimed.

Simon Less, now head of environment at thinktank Policy Exchange, argued in a study published today that large net benefits of up to £2.5 billion could be achieved by larger organisations in England and Wales.

He argued that improved customer services, lower prices and water savings would all spring from reduced regulation.

"Relying on regulation of monopoly water retail services suppliers cannot reflect the complexity, dynamism or demand-driven nature of water services," Dr Less said.

"Under regulation, incentives for good customer services are limited because companies cannot lose customers."

The ability for large users with more than one site to receive just one bill, rather than invoices for every site they occupy, would enable more real-time information on how much water is being used, whether through consumption or leaks.

Greater incentives for retailers to help customers save water, and invest more in new water and sewerage infrastructure, are other potential benefits.

Dr Less took his inspiration from Scotland, where over a third of business and public sector customers have tendered their water and sewerage contracts since the market was opened up in 2008.

"Scotland has enabled business customers to choose their supplier, and our research found that business customers were more positive about the customer-focus of Scottish water retail companies, and valued their ability to switch supplier," he added.

"This is an innovation which has been shown to work in Scotland and which English and Welsh customers also deserve to benefit from."