Many people think their energy, water and other utility bills are too high. We have often examined the EU and UK policy background to some of the high prices, with many of you joining my criticisms of the carbon levies, renewables obligations and the rest that is pushing up our energy costs.
There is a further problem with our utility industries that the UK still has the power to fix. There is a lack of competition in several major areas. People claim these great utilities are natural monopolies. Government buttresses their strong market positions with statutory protections, and they rely on Regulators to avoid high monopoly prices.
Unfortunately the absence of competition means a lack of innovation, a complacent reliance on older methods of production and delivery, and a lack of market test on the cost base. In order to have better industries delivering more and cheaper water, more and cheaper power, and delivering more and cheaper public transport, we need to encourage or require more competition.
John Penrose MP has recently written an interesting paper entitled “We deserve better”. It helps us realise that there are two essentials we need to improve the performance of the large utility areas. The first is the simple ability for customers to switch easily between companies supplying water, or electricity or gas or train travel or banking services. The second is the easy ability of a challenger business to use parts of the existing pipe or cable or clearing network to link them to customers in their early days as they build up their customer base.
There are many good examples of pipes and cables being used as common carrier systems. The UK needs to get on with providing easier access, as the means to create more competition. Once you allow more competition you will get more capacity and plenty of new ideas. Just look at the way mobile phones took off once we broke the BT monopoly.