A briefing paper
prepared by UNISONScotland - Scotland's water industry union (see
press release 12 Jan)
Scotland's publicly owned water and sewerage services are at risk.
The threats include:
- Opening up of
the industry to competition
- Adoption of a
weak regulatory regime
- Imposition of
dangerous efficiency cuts
- Creeping privatisation
of the industry through PFI
The Scottish Executive
says it wants to safeguard the benefits of Scotland's public water
and sewerage systems. Benefits like lower charges and accessibility
help promote social inclusion, maintain public health, protect
the environment and underpin economic development. Despite
this the Scottish Executives support for competition will open
up Scotland's water and sewerage system to private interests.
This means English privatised water companies and their multinational
Competition will not
safeguard the benefits currently provided by Scotland's water
and sewerage services. All the available evidence - both in
the privatised water industry in England and Wales, and in other
privatised utilities - shows that higher charges, asset stripping,
and `fat cat' salary increases are the usual outcome. Shareholders
come before public service.
Scottish water authorities
will not be competing on a level playing field.
English water companies have had 25 years of increased investment
(including higher charges) and had their debt written off at privatisation.
They have greater freedom to operate outside regulated activities
and often have the resources of massive multinational companies
New entrants will inevitably
want to `cherry pick' the most profitable customers. Due to
the fixed costs of the system the cost of the loss of any current
customers will have to be met by the rest of us: the poorer domestic
and small business customers.
The Scottish Executive
can safeguard Scotland's water, if it wants to. What appears to
be missing is the political will to recognise that competition
is not appropriate. Within the Competition Act (Schedule 3)
there are provisions that would allow water and sewerage services
in Scotland to be excluded from competition, either in perpetuity
or for a protected period. Other EU nations, eg France have
done this with their utilities, why don't we?
Experience in the gas
and railway industries has shown that massive cuts of the scale
proposed by the Water Industry Commissioner (£134m over
5 years) result in a dislocation of the service and a real risk
to safety. If you take out more than 2000 experienced workers
(a third of the workforce) levels of customer service inevitably
drop and water and sewerage safety will be compromised.
Private English water
companies have already been awarded significant new water and
waste water facilities in Scotland through PFI and other `partnerships'.
When Strathclyde residents voted overwhelmingly against the
last government's privatisation plans, they did not expect the
promotion of privatisation through PFI. The costs of PFI are
escalating and there is an almost complete absence of transparency
in the approved schemes.
There is no merit
in immediate wholesale reorganisation of water structures.
This would distract from the key issues.
should put safety first
If the Scottish Executive
will not halt the introduction of competition, it should implement
a robust statutory framework to protect the current water and
Public safety is the
first priority - not making effective competition possible. The
strictest practicable arrangements should be put in place to identify
the source of any contaminatio
Water authorities should
have full powers to cut off supplies when they believe it is necessary
to safeguard the system.
New entrants must be
charged the full cost of access to each part of the water and
wastewater system based on their share of the total cost of providing
the asset. They should also meet all the costs incurred by the
water authorities on a basis that discourages `cherry picking'
Performance bonds should underpin a system of penalty and compensation
payments. The costs of introducing competition should fall on
companies who wish to compete.
If the Water Industry Commissioner is to administer the licensing
regime his remit must not also involve the promotion of competition.
Charges should continue to be set by the publicly accountable
Scottish Executive. And there should be devolution of some powers
of the Director-General of Fair Trading to the Scottish Executive.
A London-based agency is unlikely to understand or reflect the
needs of Scotland.
we should have
UNISON is campaigning
- The exclusion
or phased introduction of competition under the Competition
regulations which place safety before the promotion of competition.
- A realistic financial
framework linked to investment, without artificial `efficiency'
- A halt to the
gradual privatisation of the Scottish water industry.
It's Scotland's water
and we look to Scotland's MSP's to safeguard that heritage for
For further information please contact Dave Watson,
Tel 0141-332 0006, e-mail email@example.com
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