WATER SERVICES BILL CONSULTATION
The Scottish Executive have issued a further
consultation paper which describes the developments that
make the forthcoming Water Services Bill necessary and the
provisions proposed for that Bill. This briefing outlines
the main issues covered by the consultation paper and UNISON's
initial concerns. (See
also Future of the Water Industry)
The Executive's proposals claim to have two
(i) to ensure competition works in the interests of
all customers and does not undermine arrangements to protect
public health, the environment and the Executive's social
(ii) to foster a sustainable public sector industry
which is able to compete on equal terms with other suppliers
and which customers actually choose to use.
The Executive have rejected the option of
seeking an exclusion from the provisions of the Competition
Act 1998. The reasons are primarily political in that the
Executive supports the principle of competition, believing
that it will deliver benefits to customers.
The Bill will establish a single water authority
called Scottish Water. It will manage an investment
programme in the order of £2billion which implies
the Executive's support for the central option in the Water
Quality and Standards consultation paper. It assumes efficiency
savings of up to £168million by 2005/06. This increase
from the Water Industry Commissioner's (WIC) £134million
cuts is presumably predicated on the additional efficiency
savings from the creation of a single authority. The paper
then sets out the arguments for and against a single authority,
concluding that disruption can be minimised through a short
transition period and local responsiveness can be improved
by strengthening Water Consultative Committees. The new
authority will have more Executive Directors and will "become
the employer of their current workforces who will transfer
to it". There is no detail as to how the staffing issues
are to be dealt with.
The Bill will give Scottish Water a
general power to pursue commercial opportunities subject
to ministerial direction and guidance. This will include
freedom to enter into PPP/PFI schemes and new powers to
make agreements with third parties, including the laying
of water mains and servicing pipes. In essence, Scottish
Water will be responsible for the infrastructure allowing
it to service the systems through ventures with third parties.
The licensing regime will become the responsibility
of the WIC including "promoting the interests of all
customers, whether of an authority or a new entrant".
There will be a new Drinking Water Quality Regulator, and
new entrants will be subject to criminal prosecution if
they supply water unfit for human consumption. Scottish
Water will be the supplier of last resort for domestic
purposes and they will have powers to deal with unlawful
connections and require developers to meet the cost of laying
sewers and mains to service a new development.
New entrants will have to have sufficient
financial strength and technical competence and charges
will include "a proper and reasonable contribution
towards the maintenance of the public system as a whole."
Charging policies will include the geographical averaging
of charges to ensure accessibility and affordability of
services in rural areas and continue the use of council
tax banding as a basis for domestic charging.
INITIAL UNISON CONCERNS
1. The policy basis for the Water Services
Bill is that the Executive " cannot and should not
control" the market and that competition should be
encouraged. UNISON rejects that view. There is no evidence
in this paper or elsewhere to support the contention that
competition delivers "efficiency, innovation and improved
services without compromising drinking water quality, social
or environmental objectives". Experience in other utilities
demonstrates that the opposite is true.
2. The paper claims to be establishing
a "public sector industry". However, the provisions
if enacted will result in a public shell, overseeing a largely
3. UNISON still has serious reservations
over the establishment of a single national water authority.
However, if it is to be established there needs to be greater
clarity over its mission, structure and role. The paper
is silent on these issues.
4. The proposed licensing machinery appears
to be inadequate to "safeguard the Executive's public
health, environmental protection and social policy objectives".
In particular, giving the WIC a general role to promote
the interests of new entrants means he will have to promote
competition. In other utilities, this has been to the detriment
of the Scottish economy and consumers, through the introduction
of expensive and bureaucratic systems.
5. The case against exclusions under the
Competition Act is extremely weak and the options are inadequately
explained in the paper. The Executive appears to have entirely
swallowed the outdated Tory competition mantra. UNISON believes
that the provisions of Schedule 3 (7) remain a sound basis
for an exclusion under the Competition Act.
6. There is little detail of the financial
framework for the new authority including the necessary
debt write off. The dangerous ‘efficiency' cuts have been
increased to £168million. This is likely to result
in job losses of around 2500 mostly experienced staff. On
the basis of experience in the gas and rail industries this
could fatally undermine safety and customer service.
7. While some of the commercial freedoms
are appropriate, others, including authority to allow third
parties to lay and maintain water pipes, highlights a hidden
agenda behind the proposals in this paper. An authority
in which the vertical integrated nature of the industry
will be replaced by an enabling authority with most services
provided by the private sector.
8. This is the third Scottish Executive
consultation paper with significant consequences for staff
working in the water industry. However, for the third time
in succession this paper makes virtually no reference to
the staffing consequences of the proposals. It would appear
that the Executive is blind to the legitimate concerns of
staff who have to actually deliver this vital public service.
This briefing sets out UNISON's initial thoughts on the
Executive's proposals for the Water Services Bill. Its
aim is to inform members and to seek their views which
will be incorporated into the final UNISON response. The
closing date for comments to the Scottish Executive is
Wednesday 13 June 2001.
UNISON Scottish Organiser (Utilities)
5 April 2001