Chamber
Plenary, 06 Dec 2001
06 Dec 2001 · S1 · Plenary
Item of business
Water Industry (Scotland) Bill: Stage 1
After a wide-ranging inquiry, the Transport and the Environment Committee recommended the amalgamation of the three current water authorities into one Scotland-wide public water authority. That is the main purpose of the bill.
The reasons for creating a single authority are fourfold. First is the need for major capital investment because of lack of investment in the past and because of increasingly higher standards for drinking water quality and waste water treatment. Secondly, significant efficiency savings will be realised if water services are delivered by a single large body. Thirdly, a single and efficient Scottish water authority should be able to hold its own in what will become a competitive marketplace. Fourthly, the harmonisation of water charges across Scotland will deliver water services at charges that are calculated on the same basis for all Scots.
There has already been a great deal of rationalisation and co-operation among the existing authorities, but restructuring will be required. With the proposed vesting date a mere five months hence, the circumstances warrant the preliminary work that has been done to frame the new body in advance of the Parliament agreeing the general principles of the bill.
Some water industry issues will not be dealt with by the bill. Matters of competition and licensing will be included in the proposed water services and environment bill. Although the word "environment" might not be in the title of the Water Industry (Scotland) Bill, it does not mean that the issue has been ignored or that Scottish Water will not be required to operate in a sustainable way. People have asked whether the sustainability clause is strong enough or in the right place. I think that it is probably both those things, but those points will be argued more fully at stage 2. More wide-ranging environmental issues will be dealt with in the next bill when the requirements of the water framework directive are addressed.
In real life, efficiency savings inevitably translate into fewer employees. We are assured that voluntary severance packages and assistance in finding new employment are being offered. For those staff who transfer to Scottish Water, the bill provides that the Transfer of Undertakings (Protection of Employment) Regulations 1981 will apply. However, TUPE does not cover pension arrangements. We are assured that pension arrangements will be dealt with through regulation, ensuring that staff who transfer will remain in the same pension scheme and that their terms and conditions regarding continuing pension benefits are unaffected.
Proper accountability will have to be built into the public sector model. A key element will be the status of the non-executive directors who should form a majority on the board. That is not explicit in the bill as it stands.
The bill gives Scottish Water some commercial freedom, but it must be exercised in a way that meets the approval of Scottish ministers. It will be important to balance the ability to operate effectively in a competitive business environment and to guard against the organisation straying too far from its core functions.
There have been representations and considerable discussion about relief from water charges for charitable bodies. The committee's view is that a relief scheme for charities should continue. However, the issue is somewhat muddied by the range of bodies that have charitable status. Some are multimillion-pound businesses, while others are almost entirely voluntary and live hand to mouth.
The system that the water authorities inherited had grown up over the years in an unplanned fashion. The withdrawal of reduced charges was seriously damaging for some organisations. The transitional relief scheme is a muddle and not particularly satisfactory, but it should continue until a thought-through alternative can be proposed. Some rapid and thorough thinking has to be done on the matter.
Does our society think that no charitable body should have to pay the full whack for water services? Do we think that only certain charitable bodies should be exempted from the full charge? If the answer is yes, should that support be at the expense of the water services provider or should it be provided in some other way? If the water services providers pick up the tab, that in effect means that their customers pick up the tab. I am not comfortable with expecting all water users, including those on low incomes who may struggle to pay their water bills, to meet what seems to be a social obligation.
We should consider whether a suitable mechanism can be created under the social justice budget to pick up the tab. If we are to be selective about who should be exempt from charges, we need selection criteria for exemption. Some of Scottish Water's customers will pay reduced charges. What impact will that have on Scottish Water's ability to deal with competition from companies who can avoid that burden?
I welcome the creation of customer panels, which will give customers an independent and strong voice, but there are concerns about how they will be appointed and how they will be constituted to achieve broad representation.
The Parliament should agree to the general principles of the bill. I look forward to working with colleagues to address the various matters that remain to be addressed at stage 2.
The reasons for creating a single authority are fourfold. First is the need for major capital investment because of lack of investment in the past and because of increasingly higher standards for drinking water quality and waste water treatment. Secondly, significant efficiency savings will be realised if water services are delivered by a single large body. Thirdly, a single and efficient Scottish water authority should be able to hold its own in what will become a competitive marketplace. Fourthly, the harmonisation of water charges across Scotland will deliver water services at charges that are calculated on the same basis for all Scots.
There has already been a great deal of rationalisation and co-operation among the existing authorities, but restructuring will be required. With the proposed vesting date a mere five months hence, the circumstances warrant the preliminary work that has been done to frame the new body in advance of the Parliament agreeing the general principles of the bill.
Some water industry issues will not be dealt with by the bill. Matters of competition and licensing will be included in the proposed water services and environment bill. Although the word "environment" might not be in the title of the Water Industry (Scotland) Bill, it does not mean that the issue has been ignored or that Scottish Water will not be required to operate in a sustainable way. People have asked whether the sustainability clause is strong enough or in the right place. I think that it is probably both those things, but those points will be argued more fully at stage 2. More wide-ranging environmental issues will be dealt with in the next bill when the requirements of the water framework directive are addressed.
In real life, efficiency savings inevitably translate into fewer employees. We are assured that voluntary severance packages and assistance in finding new employment are being offered. For those staff who transfer to Scottish Water, the bill provides that the Transfer of Undertakings (Protection of Employment) Regulations 1981 will apply. However, TUPE does not cover pension arrangements. We are assured that pension arrangements will be dealt with through regulation, ensuring that staff who transfer will remain in the same pension scheme and that their terms and conditions regarding continuing pension benefits are unaffected.
Proper accountability will have to be built into the public sector model. A key element will be the status of the non-executive directors who should form a majority on the board. That is not explicit in the bill as it stands.
The bill gives Scottish Water some commercial freedom, but it must be exercised in a way that meets the approval of Scottish ministers. It will be important to balance the ability to operate effectively in a competitive business environment and to guard against the organisation straying too far from its core functions.
There have been representations and considerable discussion about relief from water charges for charitable bodies. The committee's view is that a relief scheme for charities should continue. However, the issue is somewhat muddied by the range of bodies that have charitable status. Some are multimillion-pound businesses, while others are almost entirely voluntary and live hand to mouth.
The system that the water authorities inherited had grown up over the years in an unplanned fashion. The withdrawal of reduced charges was seriously damaging for some organisations. The transitional relief scheme is a muddle and not particularly satisfactory, but it should continue until a thought-through alternative can be proposed. Some rapid and thorough thinking has to be done on the matter.
Does our society think that no charitable body should have to pay the full whack for water services? Do we think that only certain charitable bodies should be exempted from the full charge? If the answer is yes, should that support be at the expense of the water services provider or should it be provided in some other way? If the water services providers pick up the tab, that in effect means that their customers pick up the tab. I am not comfortable with expecting all water users, including those on low incomes who may struggle to pay their water bills, to meet what seems to be a social obligation.
We should consider whether a suitable mechanism can be created under the social justice budget to pick up the tab. If we are to be selective about who should be exempt from charges, we need selection criteria for exemption. Some of Scottish Water's customers will pay reduced charges. What impact will that have on Scottish Water's ability to deal with competition from companies who can avoid that burden?
I welcome the creation of customer panels, which will give customers an independent and strong voice, but there are concerns about how they will be appointed and how they will be constituted to achieve broad representation.
The Parliament should agree to the general principles of the bill. I look forward to working with colleagues to address the various matters that remain to be addressed at stage 2.
In the same item of business
The Deputy Presiding Officer (Mr Murray Tosh):
Con
The first item of business this morning is a stage 1 debate on motion S1M-2276, in the name of Ross Finnie, on the general principles of the Water Industry (...
Tommy Sheridan (Glasgow) (SSP):
SSP
On a point of order, Presiding Officer—it is unfortunate that you happen to be in the chair, Mr Tosh. Several times I have raised the issue of the non-select...
The Deputy Presiding Officer:
Con
I confirm that no other amendments to the motion were lodged. As Mr Sheridan is aware from previous experience, the selection of amendments is a matter entir...
The Minister for Environment and Rural Development (Ross Finnie):
LD
I am very pleased to debate this issue. This is the first opportunity that the Parliament has had to debate the Water Industry (Scotland) Bill.Before I set o...
Tavish Scott (Shetland) (LD):
LD
Will the minister confirm that if the merger did not take place water charges for consumers in the North of Scotland Water Authority area would rise by somet...
Ross Finnie:
LD
I confirm that charges would rise across the piece. In the north they would rise by some 35 per cent, whereas in the east and west they would rise by between...
Tommy Sheridan:
SSP
As the minister will be aware, since 1996-97, water industry revenue has increased by 57.2 per cent. The problem is that domestic customers have had to fund ...
Ross Finnie:
LD
Tommy Sheridan raises two important issues. First, the water industry commissioner uncovered clear evidence that there was a cross-subsidy from non-domestic ...
Bruce Crawford (Mid Scotland and Fife) (SNP):
SNP
I will address the issue of primary legislation later.Section 60(2) talks quite clearly about the functions of Scottish Water. In a letter to the convener of...
Ross Finnie:
LD
The core functions of Scottish Water as defined in section 60(2) include the whole gamut of what Scottish Water does. Most outsourcing in the current water a...
Bruce Crawford rose—
SNP
Ross Finnie:
LD
I must move on.As I undertook to do, at stage 2 I will present to the Transport and the Environment Committee a draft of the directions that I intend to issu...
Richard Lochhead (North-East Scotland) (SNP):
SNP
In light of the minister's comments—which will be extremely unpopular on his benches and throughout Parliament and the country—will he confirm whether he has...
Ross Finnie:
LD
There is a legitimate argument for charitable relief, but I sustain that a particular industry should not provide that relief. We must remember that the issu...
The Deputy Presiding Officer:
Con
I invite any members who wish to speak in the debate and who have not so far pressed their request-to-speak buttons to do so.
Bruce Crawford (Mid Scotland and Fife) (SNP):
SNP
On a personal note—because I was not here yesterday afternoon—it is good to see you in the chair, Mr Tosh.Today is an important day for the future of Scotlan...
Tommy Sheridan:
SSP
Will the member confirm that, if it were in power, the SNP would use schedule 3 to the Competition Act 1998 to exclude the water industry from competition?
Bruce Crawford:
SNP
I will deal with that matter in a minute.Determination alone will not keep the private sector out of the water industry and no minister—unless very foolhardy...
Ross Finnie:
LD
Does Mr Crawford accept that the basic thrust of the bill is that Scottish Water is a company—I mean, not a company, but a public corporation and that the po...
Bruce Crawford:
SNP
I do not accept the minister's premise and I will explain why. Unison does not accept that premise either. Yesterday evening, all members received a briefing...
Fergus Ewing (Inverness East, Nairn and Lochaber) (SNP):
SNP
The Conservatives would sell off the industry.
Bruce Crawford:
SNP
Exactly.The Executive will not have carte blanche from the SNP to privatise Scottish Water by simply issuing a ministerial direction under section 49. If the...
Mr David Davidson (North-East Scotland) (Con):
Con
To save time in the chamber, I ask Mr Crawford to explain his fears about privatisation, the use of limited companies or the input of new finance.
Tommy Sheridan:
SSP
Railtrack.
Mr Davidson:
Con
Surely if the water is delivered in the correct form, efficiently, to the right quality and at the right price, the manner of delivery is irrelevant.
Bruce Crawford:
SNP
That is the same old story trotted out again. We heard Railtrack mentioned. What do we want in Scotland? Do we want a Railtrack of the water mains? The water...
John Scott (Ayr) (Con) rose—
Con
Bruce Crawford:
SNP
Sit down, please.When profit is put before the public's interests, problems arise, as we have seen in the rail industry.If the minister wants to secure SNP s...
Ross Finnie:
LD
Does Mr Crawford accept that, at the time of the write-off of the debt to which he has referred, customers in England received a benefit of £50 per customer?...
Bruce Crawford:
SNP
Perhaps the minister should read more deeply the report from which he is so fond of quoting. On page 175 of his strategic review, when discussing the debt, t...