Former Minister launches utility market reform proposals

Posted: Thursday 9th May 2013

Former Minister John Penrose is publishing his first major policy intervention since last autumnís reshuffle.

Johnís policy document ĎWe Deserve Betterí asks why Britainís utilities (gas, electricity, water, high street banking etc) are so unpopular and distrusted by their customers while other industries which provide day-to-day necessities, like food or clothing, do better. It concludes there is nothing inherent in the products themselves; the difference is that most of them used to be state-run bureaucracies which have turned into heavily regulated industries that donít (or canít) put their customers first.

Johnís proposals are for a menu of consumer-friendly reforms in each industry, designed to put customers first. He calls it switching from "Big Regulators" to "Big Consumers" instead, so that customers who are fed up with their gas, electricity or water supplier will be able to do something about it in future, rather than getting frustrated or suffering in silence at the moment.

The measures include making it easier to compare competing offers clearly, so consumers understand whether switching to a different package or supplier would be worthwhile; making switching a quicker, easier and hassle-free process; and splitting up or changing the way any remaining monopolies are run at the heart of each industry, so that new competitors can take on the established firms without being blocked or frozen out.

Once these reforms had been introduced, the existing competition regulators (the Office of Fair Trading and the Monopolies & Mergers Commission, soon to become the Competition & Markets Authority) would take over responsibility for most of the utility industries, leaving shrunk or merged utility regulators (Ofgem, Ofwat, etc) to manage any unreformable monopolies which were still left.

"For far too long consumers have been ripped off" John said. "It's time to put them first. Putting you and I as consumers in charge, by making it easier to compare deals and take our business elsewhere if we arenít happy, is what we do in every other part of our lives, so why should it be so hard for our gas, electricity or water? The utility companies will be forced to put customers first, which should drive down prices, improve service and increase efficiency.

ďThese ideas could either be picked up by coalition Government Ministers, or they could form part of any Party Manifesto for the next election. Either way, showing how we can cut the cost of living when moneyís tight, stop consumer rip-offs on essentials like energy and water, and boost growth and jobs by cutting business costs as well, will all be key political battlegrounds for everyone from now until 2015.Ē

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