Keith Aitken in Edinburgh | 1 August 2011
The Scottish Government has shrugged aside a plea from the outgoing water industry regulator to move Scottish Water out of public ownership and control.
Sir Ian Byatt warned ministers as he left office last month that he thought the industry might soon have to suspend its investment programme due to lack of funds. It echoed a memo, which only recently surfaced, in which Byatt warned Scottish Finance Secretary John Swinney two years ago that the repairs programme was at risk.
In contrast to the position south of the border, water and sewerage remains in public ownership in Scotland, run by Scottish Water, a government agency. Although Scottish ministers are promising measures soon to make the agency more dynamic, they have always ruled out any suggestion of privatisation.
Scottish Water’s status debars it from raising capital in the marketplace. This leaves it dependent on public funds to finance an investment programme estimated at £700m over the next four years. The result, according to critics, has been a stop-start approach to investment, and growing uncertainly in the face of budgetary constraints.
Sir Ian, who chaired the Water Industry Commission for Scotland, suggested that it might be either handed over to the Scottish Futures Trust to run, or transformed into an arm’s-length public benefit company on the model of Network Rail, a route also favoured by Scottish Conservatives and Liberal Democrats.
But that option was given short shrift by a Scottish Government spokesman He said Byatt’s ideas had ‘long since been overtaken by events’, citing the consistent poll evidence that most Scots want to keep their water industry in public ownership.
Scottish Water was outperforming its ‘challenging’ targets, he added. This was reflected to the benefit of consumers in an average household charge frozen at £324 per annum, £32 less than the equivalent average in England and Wales.
‘The position of the Scottish Government and people of Scotland is clear,’ the spokesman said. ‘Scottish Water will remain in public ownership, operating for the benefit of all the people of Scotland and making the most of a valuable natural resource.’
