Exclusive research: What voters want from utilities

With a general election just around the corner, an exclusive Utility Week poll conducted by Harris Interactive reveals what the voters really think of utilities, and the political initiatives being aimed at them.

After one of the most tumultuous periods in UK politics, we now face one of the most unpredictable general elections in our history. Voters go to the polls in just under a month, after the Westminster showdown over Brexit convinced MPs that an election was the only way to end the impasse.

But what could all this mean for utilities? Most dramatically of course, the spectre of nationalisation under a Labour government now moves from political idealogy to a real possibility. However, the political exposure of the utilities sector means that all the major political parties have the industry in their sights as big parts of their campaigns.

Along with its bid to see public ownership of energy and water companies, Labour is calling for a fairer sharing of rewards and urgent action from the energy sector on decarbonisation, as well as demanding that the costs of net zero are not unduly borne by the poorest in society. All will be focal points of its campaign in the coming weeks.

Meanwhile, with attitudes towards the industry running high, public trust in utilities feels at an all-time low.

The public’s perception of the industry has not been helped in recent years by politicians making the sector a scapegoat for policy failures. The industry has also often been unfairly vilified by critics, with accusations of corporate greed, or that it has exploited consumers from a position of quasi-monopoly.

But what does the voting public think about the important issues thrown up by the utility market? And what do people think of the stance adopted by politicians on the big issues?

Research carried out for Utility Week by Harris Interactive, entitled Political Climate and Public Attitudes, before the election explored the attitudes of voters towards utilities and asked the question, what change if any should a new government make on the operation and activities of water and energy companies in the UK?

The online survey of 2,114 adults aged 18+ across England, Scotland and Wales, weighted to best reflect the size and shape of the population, took place between 2 and 9 September.

Nationalisation

In May, Labour outlined its plan to nationalise the energy networks as a central tenet of the party’s aims to address climate change, arguing that the profits generated from the infrastructure should be invested in the green economy, rather than given to shareholders through dividends.

Labour has also said that renationalising the water industry is necessary to make a meaningful attempt to decarbonise the country by 2030.

That pledge appears to have struck a chord with respondents to our survey, which highlights high levels of dissatisfaction with the current model of utility ownership. Just under one-quarter of respondents said they were satisfied with the current private company owner set-up, with men significantly more likely to favour private company ownership.

A third of those questioned said government would be better suited to provide the lifeline services of energy and water, with the same proportion of respondents favouring utilities being at least partly owned by local government, with profits going back into communities.

With both investors and the utilities taking the prospect of public ownership seriously, around half of respondents to our survey said they would welcome a pledge from prime minister Boris Johnson to pursue renationalisation of both the water and energy industries, with the over-55s significantly more likely to be against such proposals.

Yet industry enthusiasm for structural change is far from forthcoming. Lawrence Slade, chief executive of Energy UK, said private investment in energy, amounting to £13.1 billion in the past year alone, had revolutionised the industry. It has created a power sector that is world-leading in decarbonisation while creating green jobs, boosting economic growth and delivering increased choice and reducing costs for customers.

“Meeting net zero will require continuing investment by private markets and the danger is that a lengthy and complex reorganisation of the sector’s ownership structure will jeopardise the billions of investment required and put a check on our progress to net zero, at the very time we need to be stepping up the pace,” he says.

Trade association Water UK said its research suggests that taking essential utilities into government ownership is nowhere near as popular as some political commentators suggest: “It’s clear that people are concerned that nationalisation would risk turning back the clock to the days when service and quality failures were far more common, and cash-strapped governments wouldn’t pay for the improvements needed,” a Water UK spokesperson said.

Satisfaction

Customer satisfaction has taken centre-stage across the market, with moves to simplify switching and more visibility around customer gripes.

The long-awaited energy price cap, which came into force on 1 January this year, set out to protect customers on poor value default tariffs. Meanwhile, since July last year, suppliers have been required to submit complaints data to Ofgem on a monthly and quarterly basis. They also publish domestic complaints data on their websites, including their “top five” reasons for complaints and the measures they are taking to improve how they handle customer complaints.

Our survey certainly found that respondents would like to see the government take more action on bills, the cost of utility services and what are perceived to be excessive profits.

Although 41 per cent of respondents said they would like more government action on poor service, our survey suggests high levels of satisfaction among customers. Just 16 per cent of respondents said they did not feel they received good performance and value for money from their water company, with 17 per cent saying the same about their energy supplier.

Votes and complaints

Respondents who claimed they would vote Conservative were significantly more likely than those who said they’d vote Labour to be satisfied with their energy companies’ performance and offer of value for money.

A Water UK spokesperson said services provided by water companies had improved dramatically in the past 30 years thanks to nearly £160 billion of investment, with customers now five times less likely to experience supply interruptions, eight times less likely to suffer from sewer flooding, and 100 times less likely to have low water pressure.

Nonetheless, the Consumer Council for Water received 11,000 complaints, a rise of 17 per cent compared with the previous year, and complaints about retailers were up 45 per cent year on year, according to its annual review published in August. Complaints have risen sharply since non-household customers in England was given the option to switch supplier in 2017.

“As a sector, we recognise the need to go further to achieve the high standards expected of the industry, which is why we have bold plans to drive down bills, reduce leakage and increase investment,” the Water UK spokesperson said. “In addition, through our Public Interest Commitment, the industry will prevent the equivalent of four billion plastic bottles ending up as waste and achieve net zero carbon emissions for the sector by 2030.”

The environment

As environmental issues continue to climb the political agenda, the current government is certainly talking the talk; prime minister Boris Johnson is to chair a new Cabinet committee on climate change that will bring together ministers responsible for domestic and international climate change policy and provide a forum to hold departments to account for their actions to combat climate change.

With Brexit poised to remove the stick of EU environmental rules, an independent watchdog – the Office for Environmental Protection – is being created to hold the government to account. Meanwhile, a new environment bill will set out to tackle the biggest environmental priorities of our time.

Voters clearly hold environmental issues close to their hearts and survey findings suggest some underlying frustration with the pace of change and a lack of genuine commitment to the environmental cause.

In total, 78 per cent of respondents supported the government’s commitment to tackle climate change and reduce greenhouse gases to net zero emissions by 2050, with 53 per cent wanting the sector to continue the rollout of smart meters to all households by 2020.

Of those, 41 per cent didn’t think the 2050 net zero deadline was soon enough. A further 47 per cent said they supported bringing forward by eight years the ban on the sale of new petrol cars, to 2032. And over half of respondents said they thought sustainability and the environment would slip down the agenda under Boris Johnson’s leadership.

Paying for net zero

Meanwhile, a big debate remains about who should foot the bill – estimated by government at £1 trillion – for the charges associated with the shift to low-carbon energy.

Currently, the cost of transition is being passed on to consumers via their bills. However, our research finds that almost half of respondents would favour paying the costs of decarbonisation through direct taxation, as a fairer method to those on lower incomes. This compares with 30 per cent of our sample who would be happy to retain the status quo.

Slade said it is vital the transition to net zero is a fair one, and central to that is how we fund this transformation.

“It’s interesting to see the support for direct taxation in this survey, because we need to look at alternatives to the standard practice of levying policy costs on to bills, which takes no account of ability to pay and can lead to those on the lowest incomes carrying a disproportionate burden,” he said.

As the focus on clean energy continues, two out of five respondents said they supported the construction of new nuclear power stations, with men significantly more likely to support this direction of travel.

Britain’s old nuclear power stations are a key part of the energy system, supplying about a fifth of electricity supplies, according to Energy UK. However, their share has been gradually shrinking as renewables have grown. Seven of Britain’s eight nuclear sites will have shut by the end of the 2020s as they reach the end of their lifetime, with only Sizewell B in Suffolk continuing to operate.

But with a quarter of respondents unsure about whether they supported more nuclear power, it’s clear that parties supporting the nuclear power option have a significant education challenge on their hands.

What is clear is that the utility sector faces unprecedented pressures on several fronts and the outcome of this general election could have massive ramifications for the sector as a whole.

And the intentions of voters are proving harder to read than ever.

The online survey of 2,114 adults aged 18+ across England, Scotland and Wales, weighted to best reflect the size and shape of the population, took place between 2 and 9 September.