Small businesses have accused water suppliers of saddling them with the cost of “historic errors” made by bosses in the scandal-hit industry, as it emerged their prices could rise nearly 30% by 2030.
Ofwat, the regulator of the water industry regulator, has told businesses that it expects average wholesale charges for non-household customers – which include small firms, charities and hospitals – to increase by about 27% before inflation over the next five years, outstripping the anticipated rise in household bills.
In a letter to the Federation of Small Businesses (FSB), reported in both the Guardian and Financial Times, Ofwat said water companies would be allowed to increase costs to enable a trebling of investment to ensure future water supplies and protect the environment, as the industry faces continued anger over discharges of raw sewage into waterways.
Shaun Kent, the director for the business retail market at Ofwat, wrote: “We have protected customers by keeping price increases fair for current and future customers [sorry Shaun – they are the same people], 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.” And again Shaun, perhaps they could stop taking sizeable dividends we hear people cry.
In July, Ofwat said it would allow average household bills to rise by 21%, or £94, to enable the investments. Water firms are pushing to be allowed to charge more, with a final decision expected in December after the release of a draft view in July. Campaigners have argued that many customers have already paid for upgrades which have not been carried out, while some water firms have been loaded with debt whilst dividends were paid to shareholders as sewage flowed untreated where it really shouldn’t.
Tina McKenzie, the policy chair at the FSB, said: “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 absolutely critical to create 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.”
Non-household customers use about 30% of the water supply in England. The increase in bills is expected to be felt harder by smaller businesses, as some larger companies are able to negotiate cheaper rates for using greater volumes.
Further details from the letter show water suppliers had been tasked by Ofwat with reducing consumption by non-household users in England by 7.7% by 2030, compared with 2019-20 levels, although how this is to happen is not clear.
An Ofwat spokesperson said the 27% rise represented “an estimated increase in wholesale charges, not actual business customer bills”. But who do you think whose charges will be passed onto Ofwat?
