The Government has today announced details of an ambitious action to increase competition in the economy aimed at bringing down bills for families and firms – including the opening of the domestic water to competition after 2020.
Introducing the 25 page blueprint ‘A better deal: Boosting competition to bring down bills for families and firms’, the Chancellor George Osborne and the Secretary for Business, Sajid Javid said the concrete steps set out in the document will mean key markets – including energy, water, banking and telecoms – deliver choice and quality at lower prices. They would also ensure that government, regulators and local authorities all played their part in promoting competition and removing market distortions.
On water, the blueprint says that the government is already driving water market competition, with business and other non-household customers able to switch suppliers from 2017. Opening up retail competition in the non-household market from 2017 will create the largest retail water market in the world and deliver £200 million in benefits across the UK, according to the government.
Government to work with water companies to start transition to household retail competition
Water industry regulator Ofwat is due to provide an assessment by summer 2016 of the costs and benefits of extending retail competition to household water customers. Following this, the blueprint says the government will work with water companies to begin the transition to household retail competition before the end of this Parliament.
The blueprint also says that competition in upstream water markets will be facilitated by the government’s planned modernisation of the way water abstraction is regulated to enable trading and competition, reduce water waste, cut red tape and help businesses to focus on investment and growth.
Future action to reduce regulation and foster innovation
The blueprint goes on to explain that economic regulators’ core functions are to protect the interest of consumers through price controls that make sure that network monopolies set prices fairly and are run efficiently; and ensure that competition is promoted wherever possible for the benefit of consumers. However, since regulators were created, their functions have grown, which can take away from this focus on consumers, the blueprint says.
To address this, the government will hold “Star Chamber sessions” to challenge whether the functions of the economic regulators could be slimmed down to enable a greater focus on their core functions, how they can reduce unnecessary red tape and how they can be as lean as possible in their operations.
The government wants regulators to give businesses the space to innovate and build on existing innovation programmes to develop new approaches to support innovation and the safe testing of new products and services, which will form part of regulators’ Innovation Plans at Budget 2016, according to the blueprint.
- Approaches for safe regulatory spaces allowing innovation include:
- regulatory sandboxes, which the FCA is opening to proposals from firms in spring 2016; and
- innovation spaces, where new models can be trialled within existing regulatory arrangements.
In addition, the blueprint points out that the UK Regulators Network has committed to produce firm plans in spring 2016 for identifying and delivering business improvements on a bilateral or multilateral basis, including sharing expertise and specialist skills in policy areas such as price controls, support functions, services and facilities, and to put these improvements in place by April 2017.
Commenting on the proposals, Richard Lloyd, executive director of consumer champion Which? said:
“We warmly welcome the government’s plan to help consumers get a better deal through more competitive markets. Hidden charges, confusing contracts running to dozens of pages, and complicated switching are still too common in markets we all rely on. By making it easier for consumers to save time and money, these reforms are good for people, businesses and growth in the economy.”
Click here to download the blueprint ‘A better deal: Boosting competition to bring down bills for families and firms’
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