| This charter
is presented as a draft - the STUC welcomes views and comments
from other interested parties. See also...
STUC charter for Scotland's water industry
Scottish Water should remain publicly owned
and accountable. The challenges facing a publicly owned
industry are considerable but not impossible to overcome
given time. The key requirement for creating a safe, efficient
and effective water industry will be the implementation
of a more realistic financial framework rooted in the realities
of the water and sewage infrastructure in Scotland, not
economic theory or false comparisons with England.
A public water industry should be focussed
on the following objectives:
- Providing an effective and accessible public service;
- Maintaining public health;
- Protecting the environment; and,
- Underpinning economic development.
In this Charter, we highlight some key
principles which, if followed, will help to ensure that
these objectives are achieved.
Structure
The regulator, some business groups and
elements of the Scottish media have sought to exploit dissatisfaction
over water charges to undermine Scottish Water and pursue
a privatisation agenda. Ongoing EU internal market reforms
and GATS negotiations are also likely to increase pressure
on the public corporation model.
The STUC remains of the view that privatisation
offers no solution to the challenges facing the industry.
That view is supported by the experience of water workers
and water users in England and Wales. It is the partial
privatisation of Scotland's water through PPP/PFI schemes
that has led to higher costs and a fragmented service. Mutualisation
is also rejected by the trade unions on the grounds that
a mutual solution in a capital-intensive industry like water
is simply privatisation with the facade of public involvement.
The STUC does not believe that there are
any viable alternatives to Scottish Water nor does it believe
that the pursuit of alternatives is justified by the performance
of the corporation. Scottish Water remains the only practical
way forward and it is essential that the corporation is
afforded the opportunity to build on its improving performance.
A further reorganisation would only cause damage to the
industry and further reduce the pace of investment.
The public corporation model provides democratic
accountability and acknowledges that the treatment and supply
of water must be treated as an important element of social
policy
Finance
A major upgrading of water and sewage systems
is necessary to meet the objectives listed in paragraph
2. The cost of upgrading the infrastructure is significant
and can only be met by water charges or from the block grant.
The financing of Scottish Water is highly complex and not
helped by the availability and presentation of published
data. This is reflected in public understanding, particularly
when charges increase. This understanding is not helped
by exaggerated claims by special interest groups many of
whom have benefited from years of very low charges.
Public Private Partnerships (PPP) are poor
value for money and contribute to the gradual privatisation
of the industry.
Charges
The reason for the recent very large increase
in charges is the necessary and long overdue capital investment
programme now being undertaken by Scottish Water. Rising
charges can be attributed to the cost of these capital projects
being financed out of annual revenue. The problems with
water charges have largely resulted form the pace of harmonisation
and the structure of charges recommended by the WIC.
The STUC believes it is wrong to seek to
recover the cost of long-term capital investment programmes
from today's water customers when the greatest benefit from
these will accrue to future generations.
Regulation
An effective regulatory regime should be
focused on helping achieve the objectives listed at paragraph
2. The public provision of a safe and environmentally sustainable
water and sewage system has broad political support but
is put at risk if regulation focuses, without regard to
quality of service, on crude, short term efficiency measures
more appropriate to a private setting.
Regulators must pay due heed to the wider
social and economic ramifications of their decisions. Analysis
must be based on evidence and not unhelpful comparisons
with water industries in other countries with major structural
differences.
The current regulatory structure is unacceptable.
A board, including representatives of the workforce and
accountable to Scottish ministers, should be established
to oversee regulation of the industry. It is also essential
that the regulators adopt an open consultative approach
and are duty bound to fully explain the reasoning behind
their decisions.
Employment
The STUC and its affiliates always recognised
that the introduction of more efficient plant and equipment
together with new methods of working and the economies of
scale Scottish Water brings, would result in job losses.
However, we continue to have serious concerns about the
scale of job losses and the pace of change.
Apart from the economic and social impact
of job losses to date, often in small rural communities,
there are very real implications for safety and customer
service. Most of the staffing changes have happened before
capital investment has been introduced and therefore it
is inevitable that safety is compromised and customer service
reduced.
Employment levels in the water industry
should be linked to the completion of new facilities and
safe systems - not financial targets. The loss of experienced
staff could fatally undermine safety and customer service.
Employees within the industry should be
recognised as its strongest asset. Good employment practice
is at the heart of high quality public services. High quality,
efficient and effective water and sewage services, will
best be achieved by a well resourced, motivated, trained
and rewarded workforce, with extensive opportunities to
influence decisions about the development of the industry.
Scottish Trades Union Congress
May 2004
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