Chamber
Plenary, 01 Feb 2007
01 Feb 2007 · S2 · Plenary
Item of business
Scottish Water
I argue that the regulatory system is at fault. We can trade figures throughout the debate, but South West Water's charges for the coming year will be 40 per cent higher than those of Scottish Water's charges. The Tories' amendment mentions the Welsh Water model, but its annual charges are 15 per cent higher than those of Scottish Water.
There is considerable room for improvement, and this morning's debate is a chance to expose where the weaknesses lie in regulation of the public utility. Those weaknesses mean that the vultures are circling, waiting for the pressure for further privatisation to mount before they move in. We must be mindful of the pressures as we enter a new programme of investment that will place new challenges on the industry.
The debate also gives us a chance to discuss the Welsh model of mutualisation, which looks and smells like public ownership but will lead to an inevitable drift towards full privatisation. Why would the Tories push such a Trojan horse into the debate, other than to tempt waverers such as Christine May?
The Greens reluctantly supported the Water Services etc (Scotland) Bill. We understood the context whereby the neo-liberal pressure of the World Trade Organization led to pressure on the European Union, which eventually led to a United Kingdom competition act. That left the Scottish Executive with no option. A limited form of privatisation of the handling of business customers was the least bad option and was better than the prospect of multinational corporations carving up the Scottish water industry in the courts to suit themselves.
However, we voiced concerns then—we voice them again now—about the remit of the water industry regulator and the methods that are used to regulate our industry economically. A public utility is being regulated as if it were a private corporation. The primary functions of Scottish Water must be sustainable development in its three strands: the delivery of an enhanced environment, a fair price to citizens for a basic need and the delivery of economic health to the country as a whole.
Although Scottish Water has a duty to deliver sustainable development, the Water Industry Commission for Scotland does not view the world through the same lens. There is a mismatch. Ministers are clear about objectives and Scottish Water plans what it has to do to meet them. The Scottish Environment Protection Agency and the drinking water quality regulator for Scotland are focused on the objectives too, but the WIC makes the final determination on the grounds of market economics and efficiency. Its primary focus is the delivery of the lowest cost. The arbitration of any determination that the WIC makes goes not to ministers but to the Competition Commission—a body whose world view is also narrowly focused on issues of market efficiency rather than on the delivery of long-term public objectives.
In recent months, a new role emerged for the WIC. As a champion of privatisation, its chair, Sir Ian Byatt, talked on 5 June last year about leakage and the "dilemma" that regulators face. He said:
"should they act as agents of ministers, or should they have a role in protecting customers against policies that are cost ineffective?"
There is a thought—let us protect the voters from the crazy policies of the Government that the voters elected.
There is considerable room for improvement, and this morning's debate is a chance to expose where the weaknesses lie in regulation of the public utility. Those weaknesses mean that the vultures are circling, waiting for the pressure for further privatisation to mount before they move in. We must be mindful of the pressures as we enter a new programme of investment that will place new challenges on the industry.
The debate also gives us a chance to discuss the Welsh model of mutualisation, which looks and smells like public ownership but will lead to an inevitable drift towards full privatisation. Why would the Tories push such a Trojan horse into the debate, other than to tempt waverers such as Christine May?
The Greens reluctantly supported the Water Services etc (Scotland) Bill. We understood the context whereby the neo-liberal pressure of the World Trade Organization led to pressure on the European Union, which eventually led to a United Kingdom competition act. That left the Scottish Executive with no option. A limited form of privatisation of the handling of business customers was the least bad option and was better than the prospect of multinational corporations carving up the Scottish water industry in the courts to suit themselves.
However, we voiced concerns then—we voice them again now—about the remit of the water industry regulator and the methods that are used to regulate our industry economically. A public utility is being regulated as if it were a private corporation. The primary functions of Scottish Water must be sustainable development in its three strands: the delivery of an enhanced environment, a fair price to citizens for a basic need and the delivery of economic health to the country as a whole.
Although Scottish Water has a duty to deliver sustainable development, the Water Industry Commission for Scotland does not view the world through the same lens. There is a mismatch. Ministers are clear about objectives and Scottish Water plans what it has to do to meet them. The Scottish Environment Protection Agency and the drinking water quality regulator for Scotland are focused on the objectives too, but the WIC makes the final determination on the grounds of market economics and efficiency. Its primary focus is the delivery of the lowest cost. The arbitration of any determination that the WIC makes goes not to ministers but to the Competition Commission—a body whose world view is also narrowly focused on issues of market efficiency rather than on the delivery of long-term public objectives.
In recent months, a new role emerged for the WIC. As a champion of privatisation, its chair, Sir Ian Byatt, talked on 5 June last year about leakage and the "dilemma" that regulators face. He said:
"should they act as agents of ministers, or should they have a role in protecting customers against policies that are cost ineffective?"
There is a thought—let us protect the voters from the crazy policies of the Government that the voters elected.
In the same item of business
The Deputy Presiding Officer (Murray Tosh):
Con
The next item of business is a debate on motion S2M-5510, in the name of Mark Ruskell, on Scottish Water.
Mr Mark Ruskell (Mid Scotland and Fife) (Green):
Green
This debate is an opportunity for all of us in the chamber—apart from the Tories—to restate our commitment to public ownership and control of Scottish Water ...
Dave Petrie (Highlands and Islands) (Con):
Con
Does the member agree with the water industry commissioner's report that, for every million gallons of expensively treated water that is produced, half a mil...
Mr Ruskell:
Green
I argue that the regulatory system is at fault. We can trade figures throughout the debate, but South West Water's charges for the coming year will be 40 per...
Alex Johnstone (North East Scotland) (Con):
Con
Hear, hear.
Mr Ruskell:
Green
A blow for democracy over there.The view was also reported that Scottish Water should be freed from state ownership, but that was apparently a misrepresentat...
The Deputy Minister for Environment and Rural Development (Sarah Boyack):
Lab
I very much welcome the debate. We have systems of managing our water networks in Scotland that are different from those in the rest of the United Kingdom. T...
Mark Ballard (Lothians) (Green):
Green
Will the minister take an intervention.
Sarah Boyack:
Lab
No thanks. I want to get started.We have a unique model: it is a third way that provides a public sector company that is directed by ministerial policy, that...
Dave Petrie:
Con
Does the minister accept that in all Scottish Water's new works it is in partnership with private companies such as Miller Group, Babtie Group and so on and ...
Sarah Boyack:
Lab
No. Scottish Water is using private companies to deliver our investment programme, which is set by Scottish ministers. It is using the best system of deliver...
Jim Mather (Highlands and Islands) (SNP):
SNP
Will the minister take an intervention?
Sarah Boyack:
Lab
No, thank you. I want to get on.That means that Scottish Water is delivering more for less. Our constituents are benefiting from lower charges, Scotland is b...
Murdo Fraser (Mid Scotland and Fife) (Con):
Con
We started this morning with a consensual debate on procurement from the Greens. I am disappointed that this debate will not produce the same cross-party con...
Stewart Stevenson (Banff and Buchan) (SNP):
SNP
Is the member aware that Banff and Buchan College's Peterhead centre, which is in my constituency, has just received a bill for £39,000, which represents use...
Murdo Fraser:
Con
I am sure that the private sector will make errors in many cases.I was going to talk about the Welsh Water model, which of course has support from Mr Stevens...
Rob Gibson (Highlands and Islands) (SNP):
SNP
If we are to believe Murdo Fraser, privatisation is built into the model that has been delivered by the Scottish Executive. He also wants us to believe that ...
Sarah Boyack:
Lab
Would Rob Gibson like to explain specifically what model the SNP supports and how it would deliver that?
Rob Gibson:
SNP
Certainly.
The Deputy Presiding Officer:
Con
You have one minute.
Rob Gibson:
SNP
We need a Government that is prepared to direct the process to the WIC and Scottish Water and which sets priorities that can be achieved by the accountancy m...
The Deputy Presiding Officer:
Con
Your time is up.
Rob Gibson:
SNP
There is a large sewage plant at Seafield that affects 30,000 people because of the unbearable smells that come from it in the summer.
The Deputy Presiding Officer:
Con
Mr Gibson, you must wind up.
Rob Gibson:
SNP
I am winding up.The Green party motion suggests that it is possible to have the current model and, with direction, ensure that it works.
The Deputy Presiding Officer:
Con
I am sorry, Mr Gibson, but you must stop now. You are way over time.
Mr Andrew Arbuckle (Mid Scotland and Fife) (LD):
LD
On the way to Parliament today, I was, for a short time, critical of Scottish Water. There was a hold-up in the traffic, and it was only when I read the expl...
Mr Ruskell:
Green
Will the member give way?
Mr Arbuckle:
LD
No. I have only four minutes; otherwise, I would.Twenty years ago, the total proposed capital spend on water services and sewage works in Fife was some £5 mi...
Stewart Stevenson:
SNP
Will the member take a 10-word intervention?