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Water Industry (Scotland) Bill Stage 1 Briefing

The Transport & Environment Committee have considered the Water Industry (Scotland) Bill at Stage 1. The committee has recommended the general principles of the Bill to Parliament with a number of amendments. This briefing outlines UNISON Scotland's view of the Bill at this stage, supplementing our introductory briefing.

Water Industry Commissioner

The committee considered the arguments for extending the powers of the WIC in line with other economic regulators such as Ofwat. They concluded that this was not appropriate, as Scottish Water is a public corporation accountable to Ministers and to Parliament. UNISON continues to support this view. However, it is important that robust mechanisms are in place to ensure real accountability and we remain unconvinced that such mechanisms are provided for in the Bill (see below).

The committee is also critical of the appointment process of members of the Customer Panels. UNISON described the proposed powers of Convenor as 'extraordinary' and therefore we support the committee's criticism.

Scottish Water

Public Sector Model

A key issue in the bill is the public sector model for Scottish Water as defined by its powers and accountability to Parliament.

We welcome the committee's recognition of the need for a "substantial majority" of non-executive directors on the board and revisions to schedule 3 on appointments. However, this alone will not ensure accountability. The corporate governance provisions of the bill and Schedule 3 are very limited. For example there are no provisions for the publication of minutes, public access to meetings etc. S50 simply requires two reports a year to Ministers.

The powers of Scottish Water as set out in s25 are very widely drawn and we argued for tighter controls on major organisational change, such as the privatisation of the delivery of services. UNISON believes the committee has read too much into the assurances given by the Minister on this point (see report para 12). Scottish Water would not have to "alter its functions" to privatise the 'delivery' of services. This section of the report is contradicted by para 33 which recognises that the commercial freedoms would enable Scottish Water to 'deliver its core functions' through various types of commercial contracts.

UNISON therefore remains of the view that Scottish Water could turn itself into an enabling authority with the 'delivery' of services to the public privatised using the powers in s25. Nothing in s60(2) could halt this. UNISON therefore believes that the powers of Scottish Water need to be drawn more tightly and the line of accountability to Parliament needs to be more robust.

Employment Issues

UNISON welcomes the assurances now given on pension transfer, although we will wish to study carefully the proposed regulations and would have preferred these provisions in primary legislation. Whilst we recognise the necessity for the powers to establish pension schemes, we remain concerned that they will be used to downgrade pension provision for staff at some future date. "TUPE protection" does not allay this concern.

UNISON is disappointed that the committee makes no reference to our proposal for a comprehensive staff transfer order in addition to s23. Whilst the committee's expression of concern over compulsory redundancy is welcome, it ignores an important point. The loss of large numbers of experienced staff will impact on customer service and safety as happened in other utilities. The lessons of the rail and gas industries apparently need to be learned all over again in Scotland.


We understand the committee's support for reduced charges and the recognition that this could be at the expense of jobs in the industry. We therefore remain of the view that Scottish Ministers should finance charge reductions for public policy purposes.

On inherited debt we would submit that however 'sanguine' Scottish Water officials may be, the issue is not as complex as claimed. The issue is one of simple equity. Existing debt should be cancelled as happened in England and Wales at privatisation in 1989.


UNISON welcomes most of the committee's recommendations and if enacted will considerably improve the Bill.

However, the Bill will still establish a public corporation that will have extensive powers to operate Scotland's water and sewerage services with minimal democratic control. Whilst UNISON supports some commercial freedoms this should not enable Scottish Water to change the essential structure of the public service provision without the approval of the Scottish Parliament.

The staffing provisions of the Bill are still inadequate and the finances of Scottish Water should provide something closer to a level playing field, given Ministers support for competition.

There remains a real concern amongst staff and the public that Scottish Water could become a public façade for a largely privatised industry. We call upon the Scottish Parliament to ensure that the Bill is amended to stop the gradual privatisation of Scotland's water.

December 2001

For further details contact:

Dave Watson, Scottish Organiser (Utilities), UNISON House, 14 West Campbell Street, Glasgow G2 6RX. Tel: 0141 332 0006 e.mail: or visit our website at


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