Allowing UK to choose their own water supplier would 'generate almost £3bn and cut bills for customers'

Ofwat said new competition could lead to improved customer service but would save customers only £8 initially

UK households currently have no choice in which water company supplies them (Getty)

Opening the water market in the UK could be worth billions, boost innovation and cut bills, UK water regulator has said.

UK households currently have no choice in which water company supplies them.

But in a government sanctioned report, The Water Services Regulation Authority (Ofwat), said that opening up the market to competition could be worth £2.9 billion over 30 years, a modest saving of £8 per customer per year, and boost innovation.

“The result is the creation of new and innovative products and services at lower costs, which benefits consumers across the UK. The government is taking action to open up markets to new entrants, driving greater competition and providing consumers with more choice,” Ofwat said.

In theory, the new plan means that banks, supermarkets or phone companies could also sell water.

Companies could also offer other services such as selling gas, electricity or broadband alongside water.

Cathryn Ross, Ofwat chief executive, said: "We are living in an age of retail revolution, but water customers are being left behind. Customers tell us they think they should have the freedom to choose and don't understand why water is the only retail market in which there isn't some form of competition.

"But, of course, this isn't a one-way street. There are significant costs to be considered, and it will be important to ensure that customers are treated fairly in a competitive market and that vulnerable customers are protected."

Alex Neill, director of policy and campaigns at Which?, said consumers might benefit from the competition.

"Giving people a choice over who supplies their water could lead to a better experience for consumers but any plan to open up the water market must learn the lessons of other utility markets,” Neill said.

The regulator said it has submitted its assessment of the costs and benefits of deregulating the market to the Government. It has yet to approve any proposals before the market is opened up.