Will Scotland’s water industry ever be privatised?

Norrie Hunter asks Scottish environment and transport minister Sarah Boyack to explain her position on the future of the country's public sector water industry, which has been dominated by PFI projects in a drive to improve performance.

Scotland’s water industry remains in public hands, mainly because of objections to privatisation by the Scottish people under the Conservative administration, four years ago.

The PFI system is still commonly used in Scotland by the three water authorities, West, East and North of Scotland Water (WoSW, EoSW, NoSW), as a means of funding large infrastructure projects.

Norrie Hunter asks Sarah Boyack, environment minister at the new Scottish Parliament, to explain the Labour government’s position on the future of Scotland’s water industry:

Minister: “Currently, £1.7Bn is being allocated to Scotland’s water industry over the next three years. The main objective is to improve the quality of discharges from STWs to meet European standards.

“We have now, of course, the new water legislation which went through Westminster in July, receiving its Royal Assent, and which sets out a new regulatory framework including the post of a Water Commissioner* who will act in the interest of both domestic and industrial consumers.”

NH : What benefits will the water commissioner deliver to the people of Scotland over the (now disbanded) Water and Sewerage Customers Council?

Minister: “The Commissioner will have a more professional overview on the water industry and also of each of the three water authorities, which will be distinctive and hopefully provide a high degree of scrutiny.

“It is important to point out that here we still have a public sector water industry. One of the Commissioner’s key functions will be on pricing and charging.”

NH:Will PFI gain greater emphasis in future water industry funding programmes?

Minister: “We are looking to the three water authorities to identify what is the most appropriate way to structure their investment and PFI is part of that – but the Scottish Parliament will continue to supporting the investment needs of the three authorities.

“What we are looking for is best value for money, and how best to direct resources to meet the directives coming in from Europe.

“Effectively, I will set the standards we expect the water authorities to meet but it will be up to the Water Commissioner to oversee these.”

NH: It has been suggested that there is no need for three water authorities and that a single executive could control the whole industry. Is this in the government’s thinking?

Minister : “Not at the moment; I know it is always an issue whether to re-organise or whether you just get on with the job. We are looking at the three water authorities to see how things go.

“The urban wastewater treatment directive and drinking water standards are their two key priorities. My concern is that they get on and deliver on those targets.

“We see a dramatic improvement coming in the impact of sewage discharges into rivers, seas and beaches, and, in Scotland’s drinking water quality.

NH: In your opinion, how have the three water authorities performed since their formation over three years ago?

Minister: “Being new to this industry, I am not really able to comment on performance. I have yet to meet all the water authorities formally and I will be doing that this autumn.

“However, I am aware of the authorities making effective progress in engaging the attention of businesses and customers. There is still a basic lack of public knowledge of some important environmental issues relating to water.”

NH: Has the new Scottish Parliament any intentions of privatising Scotland’s water industry?

Minister: “We are not interested in privatising this industry. What we are interested in is getting the best value for money for domestic and business customers and raising standards generally.

” I see it is my job, along with the new Water Commissioner coming in November, to do just that.”

NH: What will be the main task of the new Water Commissioner?

Minister: “The Commissioner must be a good regulator; able to engage with the water industry, go through the accounts and understand them.

“He must also be able to engage with members of the public and the business community who come forward with complaints. New arrangements will be introduced for consultation with customers and the Commissioner will chair these.

“The objective will be to enable each of the water authorities to have a practical relationship with consumers in their area and to use the commissioner as the one who has the overview. Customers in each area must have a voice.”

NH: European legislation has become progressively tighter; to the extent where the industry wonders whether investment now will be sufficient for the future. Can you give the water industry any comfort?

Minister: “Europe has been progressively driving up environmental standards. I think whatever industry people are in, they must think about the standards we have now, and are they going to be adequate in five or ten years time?

“This is happening in all sorts of industries but there is a heavy focus in the water industry because they have to meet very demanding standards.

“It is our job in the Scottish Executive to understand and anticipate what is happening next in Europe. We shall be attending the European Council of environment ministers’ meetings so that we are aware of debates happening in Europe and communicate back to industry what is coming next.”

NH: Will the Scottish environment have more money and resources allocated to it for its protection and enhancement?

Minister: “We use existing budgets through the Scottish Environment Protection Agency (SEPA) and Scottish Natural Heritage (SNH).

“We also have a ”national waste strategy’ for Scotland, which will be in place by the end of the year.

“The key elements of this strategy will be to minimise the waste of natural resources – and the amount of waste we generate. We will also be looking at ways in which to further promote and encourage the recycling of waste.”

*Former managing director Alan Sutherland, 37, has now been appointed as Scotland’s new ‘water industry watchdog’.

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