Committee
Infrastructure and Capital Investment Committee 17 December 2014
17 Dec 2014 · S4 · Infrastructure and Capital Investment Committee
Item of business
Scottish Water “Annual Report and Accounts 2013/14”
Good morning everyone, and welcome to the 29th meeting in 2014 of the Infrastructure and Capital Investment Committee. Everyone present is reminded to switch off mobile phones, as they affect the broadcasting system. Some committee members may consult tablets during the meeting, as meeting papers are provided in digital format. We have received apologies from James Dornan, who will not be joining us this morning. The only item on today’s agenda is evidence from representatives of Scottish Water, focusing on its performance over the 12 months covered in its “Annual Report and Accounts 2013/14”, as well as looking ahead to the 2015 to 2021 regulatory period. I welcome Ronnie Mercer, the chair of Scottish Water; Douglas Millican, the chief executive; Peter Farrer, Scottish Water’s chief operating officer; and Johanna Dow, the chief executive of Scottish Water Business Stream. I invite Mr Mercer to make an opening statement.
In the same item of business
The Convener (Jim Eadie)
SNP
Good morning everyone, and welcome to the 29th meeting in 2014 of the Infrastructure and Capital Investment Committee. Everyone present is reminded to switch...
Ronnie Mercer (Scottish Water)
Thank you for inviting us along to give evidence. We had another quite strong year, with continued investment in Scotland’s water and waste water infrastruct...
The Convener
SNP
Thank you, Mr Mercer. We will crack on with some questions from Adam Ingram, who will ask about water and sewerage charges and Scottish Water International.
Adam Ingram (Carrick, Cumnock and Doon Valley) (SNP)
SNP
Good morning, everyone. Mr Mercer, you mentioned previous sessions or meetings in the Parliament. It is fair to say that, over the past couple of years, you ...
Ronnie Mercer
Sure. In effect, we drive ourselves to have among the lowest bills in the United Kingdom, with the highest level of customer service. At any given moment, we...
Douglas Millican (Scottish Water)
There are several parts to this. First, over the past two or three years, one of the water companies in England whose charges were very similar to ours was r...
Adam Ingram
SNP
How are you able to hold down your charges below the average in England and Wales?
Douglas Millican
A number of factors affect companies’ relative charge levels. Geography plays a part and can place an upward cost pressure on us, because we cover a third of...
Adam Ingram
SNP
It is interesting that the first point you mentioned was public ownership. The fact that a public body can outperform the private sector is encouraging. Perh...
Ronnie Mercer
The fact is that the regulator in England has looked up here and said, “That’s a pretty good working model.” He is maybe trying to prevent the dividend flow ...
Douglas Millican
We have tried to make that dimension work for us, particularly in the way that we engage our people in the challenge, which is inspiring and encouraging. All...
Adam Ingram
SNP
I move on to one of your subsidiaries, if that is the right expression; I refer to Scottish Water International, which you made some play of in previous evid...
Douglas Millican
It will be down in the roundings, but it will be slightly less than £200,000, because in effect Scottish Water International gets a tax credit back. I will ...
Adam Ingram
SNP
How do you see the business developing?
Douglas Millican
We have recognised that there are two types of skill that we can sell to and deploy in the target market, which is other publicly owned businesses that are l...
Adam Ingram
SNP
So it is a mixture of consultancy and technical advice.
Douglas Millican
It is very much about advisory and consultancy work, looking at where we can bring to bear the skills and expertise to help other public bodies. There is als...
Ronnie Mercer
We are not going to build, own and operate anything anywhere else. It is about expertise and people. We are not risking our customers’ money in that way; tha...
Adam Ingram
SNP
Ronnie Mercer mentioned that Peter Farrer had been out in Malawi. Was he there as part of such a scheme?
Ronnie Mercer
It was Zambia, and he was there for Water Aid. To elaborate on what Douglas Millican said, the Republic of Ireland Government people phoned me last week to ...
The Convener
SNP
Mr Farrer, did you want to come in on that?
Peter Farrer (Scottish Water)
No.
The Convener
SNP
I thought that you were champing at the bit. Alex Johnstone has some questions on Scottish Water Horizons.
Alex Johnstone (North East Scotland) (Con)
Con
I note that Scottish Water Horizons has turned around in the 12 months to the date of the report that we are considering, and it has reported a profit of £70...
Douglas Millican
Scottish Water is subject to corporation tax. The position of Scottish Water as a whole is that we have never yet been in a taxpaying position for our main a...
Alex Johnstone
Con
Would it be fair to say that a profit in one part of the group will ultimately be set against losses in other parts?
Douglas Millican
Absolutely. We optimise our tax position across the group, but customers get the benefit of that through bills being lower than would otherwise be the case.
Alex Johnstone
Con
Will you provide an overview of the strategic review of Scottish Water Horizons and the contents of the business recovery plan?
Douglas Millican
We have undertaken quite a review of the key areas of focus for Horizons, and we will continue to develop that as we see how the economy and the market recov...
Alex Johnstone
Con
As you have pointed out, commercial operators work in the sectors covered by Scottish Water Horizons. Is it appropriate for you to continue with those activi...