| 3 October 2003
Water Customer Consultation Panels
Principles of Charging for Water and Wastewater
Thank you for forwarding copies of the above report. As
you will be aware UNISON is Scotland's largest trade union and
our members have a direct interest in this issue both as users
of this essential public service as well as the main union representing
staff in the industry.
We welcome the publication of this report as an important contribution
to the debate over water charges. As your introduction makes clear
there is real ignorance of the policy context and the regimes
that determine prices. We would therefore support the main recommendation
of the report that a public consultation exercise should be conducted
on the principles of charging for water and wastewater services
I would make some initial observations on the contents of the
report as follows:
- Comparisons with the water industry in England are at best
misleading and at worst specious. The structure of the industry
in Scotland, the significant technical differences in water
provision and our coastline and environment are significantly
different. Most importantly regarding charges, we are at a different
stage in the investment cycle. I trust that the recent announcements
of proposed price increases in England have highlighted this
factor to many ill-informed critics of Scottish Water. In addition
England does not enjoy a uniform approach to water services,
a point that the excessive use of averages and economic models
can sometimes hide.
- We agree with a number of your initial responders that there
is a democratic deficit, a point UNISON Scotland made forcibly
during the debate over the Water (S) Act. However, it is not
quite as wide as some think. Minister's have wide ranging powers
under the Act, if they choose to exercise them.
- In terms of cross subsidy the report probably underplays the
role regional cross subsidy played in the creation of Scottish
Water. Had it not been for the projected increases in water
charges in the North of Scotland, it is highly unlikely that
Scottish Water would even have been created.
- The report does a great service in highlighting the very different
application of standing charges in Scotland. Something that
was given very little explanation at the time the Strategic
Review of Charges was published. It has been a major cause of
the headline increases that have caused much of the ill-informed
debate around water charges. Similarly, there is a case for
an open debate on the issue of separate surface water charges.
- The report's analysis of charging systems against objectives
is an interesting but somewhat academic debate. It is very subjective
and I wonder how valuable it is in taking the debate forward.
- The debate around metered charges is a valuable one and introduces
an environmental aspect to the debate often missing in Scotland
with our natural abundance of water. However, it does have to
be recognised that this is primarily an issue for business users,
given the marginal application of metering in the domestic sector.
UNISON has serious reservations over the extension of metering
on social and health policy grounds, not to mention the economic
efficiency of establishing expensive metering systems.
- A major omission in the report is any discussion of the treatment
of debt. I would suggest that this is essential to the question
of future charges. Particularly given the WICs views on the
application of debt funding to customers between 2006 and 2016.
UNISON believes that this could be restructured more efficiently,
placing less burden on today's customers for what is a long
term investment in Scotland's water and sewerage infrastructure.
- I would also suggest that any debate over water charges needs
to be informed about the need for investment in our crumbling
water and sewerage infrastructure. This has not been helped
by the loss of large numbers of experienced staff whose expertise
will now have to be replaced by expensive private sector provision
in a competitive labour market.
- There is also the question of declining government financial
support for the industry in recent years. UNISON recognises
that this is not simply a case of asking the Scottish Executive
for more support as that would have to be at the expense of
other public services. Closely linked to this is the impact
of potential changes to the EU internal market rules and the
GATS negotiations, not to mention the Executive's response to
the Competition Act in the forthcoming bill.
- In conclusion, I have to say that there is a growing concern
that the way water charges have been structured (and the consequent
public outcry) together with the treatment of debt and the wider
competition environment has been a deliberate strategy to promote
the case for privatisation. This view may well be the triumph
of conspiracy over incompetence, but it is none the less a strongly
I hope the above is helpful and UNISON will be happy to contribute
the debate as it unfolds.
Scottish Organiser (Utilities)