Rising Water Bills Could Have Ripple Effect on SMEs

Water companies in England and Wales are seeking approval for a significant increase in water bills to fund crucial upgrades and reduce the amount of sewage discharges. A proposed £156 annual increase by 2030 would almost double national infrastructure spending to £96 billion.

While the industry claims this investment is essential to secure a long-term water supply, it has sparked public anger and concerns about its impact on the cost of living. In this article, we explore these proposed rises and how they might affect SMEs in the UK.

Suppliers in Deep Water

The UK's water industry has dealt with a series of scandals in recent times, from a long list of customer service grievances, highly-publicised sewage leaks and staggering debts. Industry regulator Ofwat recently dished out its latest round of fines against water suppliers, revealing that the majority had fallen short of expectations.

The sector now faces the daunting prospect of repaying £114 million to customers due to their poor performance in recent assessments. None of the evaluated suppliers achieved a 'leading' rating in their performance, with ten being classified as ‘average’ and seven as 'lagging’.

Nine of the biggest water and wastewater companies are shouldering an eye-watering £54 billion debt, a burden that has built up over years of underinvestment and dividend payouts to shareholders. Last year, Ofwat disclosed that 14 suppliers had underspent their budgets for enhancing the water network, and eight had failed to meet their budget targets for wastewater network improvements between 2020 and 2022.

Under new proposals, water bills will gradually rise, starting with an increase of £84 in 2025 and escalating to an additional £156 by 2030. When taking inflation into account, customers are likely to experience even higher bill increases than this.

While water suppliers argue that these investments are essential for improving infrastructure, critics have pointed out that they haven’t invested adequately since privatisation, with profits going to shareholders instead. Regulatory decisions in favour of the bill rises could lead to increased scrutiny of the water industry and potentially tighter regulations.

Ripple Effect for SMEs

One of the most immediate concerns for SMEs is the increased financial burden. Rising operational costs, including water bills, can easily eat into profit margins and put additional pressure on already tight budgets.

The broader economic impacts of the cost of living crisis also affect SMEs. When consumers face higher water bills, they may reduce spending on products and services, impacting revenue for businesses. Additionally, employees facing increased living costs may need to seek higher wages.

On a more positive note, the proposal suggests that more households may qualify for support with their water bills, with the number tripling from one million to over three million. SMEs might also benefit from this support, easing the pressure.

Sink or Swim

While the water industry argues that the investment is necessary to ensure long-term water supply and reduce pollution, SMEs fear the immediate impact on their finances. We'll have to wait to see how water regulator Ofwat will evaluate these proposals and whether businesses will get adequate support to mitigate the impact.

In the face of these challenges, SMEs should carefully manage their budgets and explore opportunities for cost savings in other areas of their operations.

How to Switch Water Supplier

Your business must operate within a property designated for business purposes only if you want to switch business water contracts, because residential properties are not eligible to change water suppliers.

While not essential, providing your Supply Point Identification Number (SPID) can speed up switching providers. You can find your SPID, which consists of eight digits, on your water invoices. Your new supplier will use this number to contact your previous provider and facilitate the transfer.

The transition to a new business water supplier typically takes approximately 28 days to complete. This process can vary depending on factors such as the number of properties you want to transfer, your location and the terms of your previous contract.

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