UK water providers fail to pass savings onto customers
14/10/2015
UK water providers have pocketed a £800 million windfall instead of passing the savings onto customers, according to spending watchdog The National Audit Office (NAO).
Research from the NAO has revealed that water companies in the UK have benefited from cheaper finance costs and tax cuts over the past five years, but none of these savings have been passed onto consumers. Customer’s bills have not fallen because industry regulator Ofwat had not properly "balanced the risks" between water companies and consumers, the NAO said.
The NAO has estimated that the water companies have gained £410 million from lower corporation tax rates and a further £840m from lower than expected interest payments over the last five years. The companies then passed savings onto their customers in total of £435m, leaving them with a net gain of £800m.
Ofwat has rejected the accusations, and claims its approach had given customers "certainty about the cost of their water bills". Cathryn Ross, chief executive of Ofwat, told the BBC that it would not have been right to pass on to customers the risk of changes in financing costs, and they gave consumers more certainty about the cost of their water bills. She said:
“Had interest rates gone up between 2009 and 2014, that amount of money would have gone straight on customers' bills. I don't think that was the right thing to do."
Water bills have risen in price by 40% since 1989, with the biggest increases coming between 1990 and 1995.
Need financial advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
UK Family Disposable Income Falls 15% In 12 Months
News that the average UK family now has only £14,520 of disposable income per annum perfectly illustrates the increase in the cost of living in the UK. This is a fall of some 15% from the 2007 figure of £17,102 and there are suggestions that the current figure is set to fall further as the cost of living moves higher.
The disposable income figure is vital to fuel growth in the ec...
Simple ways to save money : Insurance premiums
The average home in the UK is likely to have a number of insurance policies in place including home insurance and car insurance to name but two. It is also well known that the vast majority of people throughout the UK tend to pay their premiums monthly rather than one-off payments at the start of every year. However, while there are upsides to paying monthly premiums there are also significant dow...
Read MoreSSE freezes energy prices until 2016
26/03/2014 Energy supplier SSE has announced plans to freeze gas and electricity prices until 2016. The move which holds similarities to the Labour energy policy, which promises to freeze energy prices for 20 months if they are elected, is likely to lower profits according to the company. However, the company has said it will offset this loss in profits as much as possible by “streamlin...
Read MoreUK authorities cracking down on misleading debt adverts
The UK authorities have launched a major crackdown against misleading debt adverts which have caught the eye of many UK consumers only to turn out to be substantially different in reality. There are growing concerns that some rogue debt management companies are using the current financial crisis to increase panic and concern amongst UK consumers and take advantage of their worsening financial posi...
Read MoreIs The Broadband Market As Competitive As It Should Be?
On the day that OFCOM announce that they have removed regulation from around 70% of the UK broadband market many people are starting to ask if competition is really as tough as it should be. Is the market ready to be let loose? While the likes of BT, which still dominates a massive percentage of the UK broadband market, and local companies such as KCOM, which dominates the Hull area, will stil...
Read More