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		Briefings Home | Responses | PFI Index | Policy Guide WATER INDUSTRY BRIEFING   What's happening to Scotland's Water? A briefing paper prepared by UNISONScotland - Scotland's water industry union (see press release 12 Jan) We believe 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 backers. Competition Dangers 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 behind them. 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? Cuts risk safety 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. PFI creeps into water 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. Structures a distraction There is no merit in immediate wholesale reorganisation of water structures. This would distract from the key issues. Regulation 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 sewerage system. 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. What we should have UNISON is campaigning for: The exclusion or phased introduction of competition under the Competition Act regime. Comprehensive regulations which place safety before the promotion of competition. A realistic financial framework linked to investment, without artificial `efficiency' cuts. 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 future generations. For further information please contact Dave Watson, Scottish Organiser (Utilities), UNISONScotland, Tel 0141-332 0006, e-mail d.watson@unison.co.uk 24/01/01 Water Industry Links Page