At the end of 2024, Ofwat revealed its decision to allow water companies to increase small firms’ water bills.
While a rise was anticipated, SMEs were not expecting a 42% increase in water bills over the next five years.
Commenting on the news, Tina McKenzie, Policy Chair at the Federation of Small Businesses (FSB), said, “The news just before Christmas that small firms will see a far greater rise in their water bills than expected over the next five years is the kind of stocking filler the small business community really did not want to receive.
“Small firms had been bracing for a rise in water bills of over a quarter, so news that the rise will in fact be significantly higher than that, at 42 per cent, is deeply concerning, and very hard to swallow.
“Small firms are already facing a grim financial landscape moving into the new year. Our research found that nearly half of small firms pointed to the cost of utilities as one of the main drivers of operating cost increases.”
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Tina added, “Decisions like today’s show that the system as it stands is not currently working for small firms, and for other customers. The Government has set up an independent commission on the water sector regulatory system, to make the regulation of water more cohesive and less fragmented – something small firms believe is desperately needed, after years of rising bills and worsening water quality.
“We also welcome the Environment, Food and Rural Affairs Committee’s new inquiry, announced today, on reforming the water sector.
“Ofwat and the water companies say that the rises in bills for domestic and non-domestic customers are needed to fix the country’s creaking water infrastructure.
“It is unacceptable for Ofwat to acquiesce to using small firms as a cash cow. Small firms are hard-pressed on all fronts in terms of margins, and the proposed rises could leave many of them underwater.”
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