There is a clear body of evidence that non-household customers have benefitted from the introduction of retail competition. We produced a definitive analysis of the reduction in costs achieved by Business Stream since it separated from Scottish Water. This was backed up by a detailed audit trail. We have also explained how this improvement actually came about from a lower observed level of costs than the average in England and Wales – admitting quickly, of course, that the baseline level of service offered to customers in Scotland was not as good as that available south of the border.
Separately, retailers, Policy Exchange and others have noted the benefits that have become available to non-household customers.
But what about the household customer? Should they be brought into the competitive market? Or are they simply going to have to settle for second best? It will not surprise you to know that I do not think that household customers should have to settle for second best. You may be a little surprised that I would not advocate adding households to the competitive retail market. But this does not mean that households will not benefit from competition – indeed, quite the contrary!
Greater focus within the wholesale business on meeting the needs of non-household customers reduces costs and leads to improved services across the board. Scottish Water's continued relative improvement in its wholesale business is a testament to what can be achieved when there is clarity in deliverables and in the regulatory and monitoring framework. This is a good start!
More important, again, is the facilitation of innovation in the industry that is brought about by the changed dynamic of a wholesaler working with a retailer. Such innovation will be critical in meeting the environmental challenges that lie ahead. It is also the best hope for all of us who want to see bills remain affordable.