CEO view: Mark Powles, chief executive of Business Stream

Predicting future success: lessons from the Scottish water market.

With the first weekend of the Premier League season passing, everyone has predictions for the year ahead.  I’m predicting (or perhaps simply hoping) that my team, Aston Villa, will beat the drop again this season.

Some might consider that a brave prediction, but back in 2010 a report on the Scottish non-domestic water market by Grant Thornton appeared to make some bold claims about the savings that would be made by customers over a 15-year period.

Among its predictions, the report said Scotland’s businesses and public sector organisations would have £110 million cut from their water bills by 2021, with an overall benefit-to-cost ratio of 3:1. That’s money which can be better used by companies to invest in core activities and by public sector institutions to fund much-needed services.

The report came shortly after the introduction of competition in Scotland, which was the first water market of its kind in the world. That, perhaps, makes it difficult to predict form. With no precedent, it can be a tall order to suggest what might happen in the years to come.

Four years since the report, and about six since the creation of the Scottish non-domestic water market, our customers alone have saved more than £100 million.

The total for the entire market will be more than the £110 million figure predicted, in just above a third of the time than expected. The market is delivering tangible benefits to customers, way beyond what the policymakers and market operators anticipated.

However, Scotland has shown that a successful market is about more than pricing.

Since the introduction of competition we’ve seen customer satisfaction increase, water consumption reduce, and more than 60 new services have been brought to the market. It’s also created a market that includes a range of suppliers, from niche operators to multi-purpose retailers; all of which aim to fulfil different customer needs.

The savings realised in Scotland shows that competition works. That bodes well for the introduction of a competitive market in England. Our experience north of the border hints at the potential for a liberalised market to deliver even more on cost reduction, water efficiency and innovation.  But the key lesson is that they can only be realised if customers are placed at the heart of the market; they will be the real influencers (and deciders) of success.