Water Services etc (Scotland) Bill: Stage 2
Item 4 is stage 2 consideration of the Water Services etc (Scotland) Bill. I invite members to declare any interests that they need to bring to the attention of Parliament.
I am a member of Unison, so I put that registered interest on the table.
I welcome the Deputy Minister for Environment and Rural Development, Lewis Macdonald. He will steer us through the bill today, as he has a series of amendments. I also welcome his officials.
The committee has not dealt with a bill at stage 2 for some time so, for the record, I remind members how we handle such matters lest we get ourselves tied up with the procedure. In front of them, members should have a copy of the Water Services etc (Scotland) Bill as introduced; the first marshalled list of amendments, which was published yesterday; and the groupings of amendments. On my authority, the amendments have been grouped into a logical order to facilitate debate. However, the running order of the amendments is set by the rules of precedence that govern the marshalled list. Therefore, we need to move through both the groupings paper and the marshalled list. All amendments will be called in strict order—we can move only forwards, not back and fro—as we go through the marshalled list. Our target today is to complete consideration of sections 1 to 11, together with schedules 1 and 2.
We will debate amendments group by group. Today, the first amendment in each group is in the name of Lewis Macdonald, who has the lion's share of the amendments. I will call him to speak to all the amendments in the group and to move only the first amendment. After that, other members who wish to speak can catch my attention in the usual manner. Only one amendment has been lodged by a committee member—Rob Gibson—and I will ensure that he is given the opportunity to speak during the debate. For winding up the debate on each group of amendments, I will invite the minister to make any comments that he may have, although my reading of the amendments suggests that that may not be necessary in every case. I remind everyone that only committee members can vote on amendments.
As well as considering the amendments, we must decide whether to agree to each section of the bill. Therefore, we may have a short debate on each section to cover any issues that have not been raised in amendments. That is the general outline of how we will go through things today, so I will now get my marshalled list organised and we will begin.
Section 1 agreed to.
Schedule 1 agreed to.
Section 2 agreed to.
Section 3—Determinations relating to provision of certain services
Section 3 agreed to.
Group 1 is on the water customer consultation panels and the representation of customers. Amendment 1, in the name of the minister, is grouped with amendments 2, 2A, 19, 21, 24, 26 and 29 to 35.
It is useful to begin with this group of amendments, because of their significance. They relate to water customer consultation panels and the proper representation of customers. The various amendments in my name make a coherent set of changes. They are designed to strengthen the representative functions of the panels, making provision for them to influence the water industry's policy framework and providing for the convener of the water customer consultation panels to handle complaints from individual customers, while ensuring that the appropriate powers and safeguards are in place.
As was indicated at stage 1, we have considered the implications of the proposed new regime on the panels. We consider it right for the panels' role to be expanded and for them to be given a strong voice, both to influence policy and to deal with individual complaints. It is important that those who have been given responsibility for taking key decisions about the industry listen to the panels' voice.
Many of the critical provisions lie in amendment 2, which enters into some detail. The first part of amendment 2 seeks to strengthen the role of the panels. It provides that they will represent the views and interests of all customers—domestic and non-domestic—who use the public water supply and sewerage systems. That includes non-domestic customers who are not direct Scottish Water customers; it excludes the licensed providers, which will be brought into being by the bill. That provides the right balance, allowing all those who use services—the ordinary domestic and non-domestic customers—to be represented.
Under the bill, Scottish Water will continue to provide water and sewerage services and will be responsible for their physical provision to all customers and for dealing with domestic customers in every respect. The proposals will allow the convener of the panels to deal with complaints about services from customers of all kinds. We want the panels to have an input into the charge determination process and, in doing so, to be able to speak for all users of the public water and sewerage systems.
New section 2(4) of the Water Industry (Scotland) Act 2002, which is added under amendment 2, ensures that a panel can
"publish reports on any matter it considers relevant to the interests of"
customers, and that it can direct recommendations to Scottish Water, to the Scottish ministers or to any of the industry regulators. New section 2(5) of the 2002 act would require those people to whom recommendations have been made to respond to them.
New sections 6A, 6B and 6C of the 2002 act cover a number of important matters. New section 6A gives the convener of the panels a duty to investigate customer complaints and a right to request information from Scottish Water in relation to that duty. It is important that it is the convener who is given that responsibility, rather than the panels. We believe that placing complaints in the hands of the representative consumer body strikes the right balance, allowing panels to continue to focus on their wider representative functions as the convener deals with individual complaints. We hope that that will provide customers with greater clarity as to how complaints may be dealt with.
New section 6B of the 2002 act requires the convener of the panels to submit an annual report to ministers, which is to be laid before the Parliament, enhancing the accountability of the panels. New section 6C provides for a statutory memorandum of understanding between the water industry commission for Scotland and the panels. That responds to a specific recommendation that the committee made earlier and we believe that it will work in the interests of customers.
Amendment 2 and the consequential and associated amendments take forward and put into practice the commitments that were given towards the end of stage 1. I hope that they will attract support on that basis.
I will say a word or two at this point about amendment 2A, in the name of Rob Gibson, as it will be the subject of some discussion in the debate on the grouping. I have sympathy with the view that a snappier title than convener of the water customer consultation panels could have been found. Although I can see the argument for a snappier title, I am not persuaded that that needs to be done in statute. I therefore do not support amendment 2A.
The wording of amendment 2A would see the title being limited to the consultation panels' function of dealing with individual complaints. The Executive's view, which I know is shared by the committee, is that panels should be a one-stop shop for customers and should be recognised and identifiable by customers not only in regard to their complaint-handling process but in regard to the other inputs that they make.
There is no requirement for a different title to be laid down in statute. Members may be aware that the English equivalent body has one title in statute, which is rather formal, and another in general use, which is a little bit more recognisable and, indeed, snappy. Although I do not recommend support for amendment 2A, I have some sympathy with the purpose behind it. If Mr Gibson were minded not to move amendment 2A, I would be happy to consider the matter further before stage 3 and see what we can do to respond to the purpose that lies behind the amendment.
Members will see that there are a number of other Executive amendments in the group. In order to allow full debate on the grouping, all that I will say is that they are in line with amendment 2. The intention behind them is that they reinforce the provisions of amendment 2 throughout the bill—where that is required.
I move amendment 1.
I thank the minister for his words on the snappy title issue. In paragraph 7 of its response to the committee's stage 1 report, the Executive says:
"We also welcome the Committee's recommendation that clear guidance should be made available to customers on the complaints process, both as handled by the Convener but also in approaching Scottish Water. The Convener sees this type of information provision as a valuable function the Panels could supply and we would look forward to him providing this in the future."
The committee is agreed that that is precisely what we want to happen. At our last committee meeting, we discussed the need to have a snappier title. Someone has to start the process and I had hoped that the imagination of the Executive would be brought to bear in that respect. It is a pity if that is not going to happen. I am minded to hear the views of other members, after which I will consider my approach.
First, I will speak to amendment 2A. I agree with everything that Rob Gibson says, but a title is not something that we need to put into primary legislation. It is better for it to happen outwith the bill process if for no other reason than that Scottish ministers might be skilled in all sorts of ways but not necessarily in finding snappy titles for things.
I have a point of clarification. I assume that if we are moving section 3 to after section 19, all the things that are introduced after section 3 move as a consequence and come after section 19. Is that right?
Amendment 1 does not change the position of anything else.
Right. So, when we move section 3, everything that goes in after section 3 goes in after that section in its new position after section 19. The clerk is indicating that that is not the case. If only section 3 moves, all the stuff that comes in after section 3 stays between sections 2 and 4. Is that right?
Yes.
Thank you.
I am glad to see this full group of amendments because a few weeks ago we had a useful discussion about seeking supplementary evidence from a variety of interests including Scottish Water and consumer organisations on the issue of how complaints should be dealt with. At the time, we were assured that the process would be resourced adequately and monitored. That will need to be kept under review, but the process that these amendments seek to introduce should be a step forward.
Rob Gibson has raised a pertinent point about what the system will be called. I take the minister's point that it does not need to be set out in statute, but I am prepared to accept his offer to come back at stage 3 after reflecting further on the matter. Rob has made his point quite effectively in amendment 2A and I hope that at stage 3 the minister will come up with something that is close to the spirit of Rob's suggestion. Perhaps they should have a mini-competition. The issue needs to be addressed if the bill is going to set out the complaints process and the panels' more proactive role. I take the minister's point that amendment 2A is not necessarily the way of doing that, but nevertheless it needs to happen.
I am very happy to exercise the Executive's corporate imagination and discuss the matter with the convener of the panels and panel members. I will come back at stage 3 with some imaginative suggestions.
Rob, you can tell us what you want to do with amendment 2A when we reach that point in the marshalled list. I want to keep everything in a strict order so that I do not get lost.
Amendment 1 agreed to.
After section 3
Amendment 2 moved—[Lewis Macdonald].
I call Rob Gibson to indicate whether he will move amendment 2A.
Given the minister's assurance that he will reflect on the matter, I am happy not to move amendment 2A.
Amendment 2A not moved.
Amendment 2 agreed to.
Section 4—Public water supply system: offences
Group 2 is on the limitation of regulation-making powers with regard to offences relating to public systems. Amendment 3, in the name of the minister, is grouped with amendment 4.
Amendments 3 and 4 seek to respond to an issue that was raised by the Subordinate Legislation Committee and are intended to put beyond doubt the prohibitions that the bill seeks to establish.
Members will recall that sections 4 and 5 seek to create new offences that will prohibit common carriage and unlicensed retail competition for non-domestic premises that Scottish Water serves. They also seek to provide an order-making power to modify those offences that would, for example, prescribe circumstances in which the offences do not apply. That position is quite clear. However, the Subordinate Legislation Committee expressed concern that the powers might be used to circumvent the bill's objectives or to disapply one or more offences in the bill. Obviously, that would nullify the bill's purpose.
The Executive's view is that it is not possible to use secondary legislation to overturn the stated purpose of primary legislation, because in such cases the courts will always ask about the Parliament's intention in passing a particular piece of legislation. In that respect, I think that the Parliament's intention is clear. That said, amendments 3 and 4 make it clear beyond any doubt that the order-making power can be used only in a manner that does not prejudice Scottish Water's responsibility for providing core water and sewerage services through the public networks. The amendments seek to reinforce the offences that sections 4 and 5 set out and provide that they may be modified only in a way that does not detract from Scottish Water's responsibility for the networks and the provision of services to domestic households.
I move amendment 3.
I want to give a brief explanation of my position. The minister is aware that I am opposed in principle to the prohibitions in the bill. However, given the will of the Parliament, I feel that, on balance, amendments 3 and 4 will improve the bill as it stands. Therefore, I will not oppose them.
As no one else wants to make such fulsome comments, I invite the minister to wind up. I am not sure that he needs to say much.
I am pleased to have unanimous support for the proposed changes.
Amendment 3 agreed to.
Section 4, as amended, agreed to.
Section 5—Public sewerage system: offences
Amendment 4 moved—[Lewis Macdonald]—and agreed to.
Section 5, as amended, agreed to.
Section 6—Licence authorisation
Amendment 5 is grouped with amendments 27 and 28.
Amendment 5 seeks to change section 6 and amendments 27 and 28 seek to change section 20. The amendments are somewhat technical, but they are nonetheless important. They seek to ensure that arrangements can be made between a customer and a licensed retail provider as conveniently as possible.
Section 6 provides for licences to be granted authorising a water services or sewerage services provider to make arrangements with occupiers of premises to retail services to them. However, where premises are unoccupied, the owner may wish retail arrangements for water and sewerage services to be put in place. Amendment 5 will ensure that that would be possible. For example, where a newly built office block does not yet have an occupier, the proposals in amendment 5 will ensure that the owner of the block could make arrangements for water and sewerage services in advance of occupation.
Section 20 defines "eligible premises" for the purposes of retail licensing as those that are connected to the public water supply or sewerage system, but which are not a dwelling. Amendments 27 and 28 will amend the definition to enable premises that are to be connected to the public networks, as well as those that are already connected, to be eligible for supply on the basis of retail competition, as long as they are not a dwelling. The amendments will give an owner or an occupier the required flexibility to make arrangements in advance of the premises being connected.
I move amendment 5.
Amendment 5 agreed to.
Section 6, as amended, agreed to.
Sections 7 to 11 agreed to.
Schedule 2—Licences and compliance: further provision
Amendment 6 is grouped with amendment 36.
Again, amendments 6 and 36 respond to an issue that the Subordinate Legislation Committee raised in relation to an order-making power in subparagraph 1(7) of schedule 2, which amendment 6 will remove. Our intention in providing the order-making power was to recognise that flexibility might sometimes be required to streamline the licence application procedure, particularly in making representations about an application—for example, in relation to the initial application by Scottish Water's retail subsidiary, which will be established under section 12.
The order-making power, as it is currently drafted, is drawn somewhat widely and we are happy to make specific provision in section 12 for procedures to be modified in relation to the first application for a licence by Scottish Water's retail subsidiary only. I hope to bring an amendment to section 12 to the committee next week.
In the meantime, amendment 6 will simply remove the general order-making power and the redundant reference to it in the bill to allow the subsequent amendment to be lodged next week. It is fairly technical and is intended to make it clear that the power relates only to the setting up of Scottish Water's retail subsidiary body.
I move amendment 6.
That sounds like quite a technical but important piece of tidying-up work. I do not see any member requesting to speak—we are all totally convinced by that explanation.
Amendment 6 agreed to.
Group 5 is on the licensing process and appeals regarding applications and transfers. Amendment 7, in the name of the minister, is grouped with amendments 8 to 10 and 14 to 18.
The amendments concern the appeal provision that is part of the procedures for applying for, transferring or modifying the conditions of a retail licence under schedule 2. The bill includes provisions for an applicant to appeal, for example, against the refusal of a licence application; against the conditions in a licence; or against the refusal of consent to transfer a licence. Provision is also made for Scottish Water to appeal against the granting of a licence to another body that it feels ought not to receive that licence.
We are keen to ensure that such appeals should be only
"on a question of law"
and that the courts should have the appropriate power to review the legality of decisions that are made in that regard without necessarily having to go back to look at all the merits of the application or to consider technical matters that a court of law would not wish to drift into if it were not required to do so. Amendments 7 to 10 and 15 are intended to achieve some clarification and to give the courts an appropriate degree of scrutiny in relation to licensing decisions that are taken by the water industry commission.
Amendment 14 is a drafting amendment and will make no substantive difference; it simply tidies up the language a little bit.
Amendment 16 will give Scottish Water a right to appeal against a decision by the commission to grant consent to the transfer of a retail licence. Again, that makes consistent the provision that applies between the initial granting of a licence and the transfer of a licence from one body to another. We intend to ensure that Scottish Water has the same rights of appeal as the applicant if it is not happy with the commission's decision. However, the amendments will ensure that such appeals are on questions of law only. The other amendments in the group are consequential to that purpose.
I move amendment 7.
Amendment 7 agreed to.
Amendments 8 to 10 moved—[Lewis Macdonald]—and agreed to.
Group 6 is on sustainable development. Amendment 11, in the name of the minister, is grouped with amendments 23 and 25.
Perhaps we are back in more interesting territory for committee members. The intention is to make additional provision to ensure that the principle of sustainable development is fully embedded in the new regulatory framework that will be established by the bill. There was some debate on that in the committee at an earlier stage, and we are keen to confirm that sustainable development should guide the work of all those who are involved. I hope that our amendments will achieve that to the satisfaction of the committee.
The framework that is established in the bill will ensure that the water industry commission must take full account of the existing duty on Scottish Water regarding sustainable development. In our amendments, we wanted to provide further reassurance of that and some explicit application of that to retailers in the bill. Amendments 23 and 25 require the two policy documents that will guide the commission in determining Scottish Water's charges to have regard to Scottish Water's sustainable development duty in relation to new section 29D of the 2002 act and new section 56A of the 2002 act. For example, in setting Scottish Water's investment objectives, ministers will also have regard to the contribution that reduced water usage could make to sustainable development. That is a good example of how the requirement on ministers will apply.
Amendment 11 addresses the new issue of ensuring that licensed providers that are established under the bill should also make a contribution to sustainable development. It places that requirement on Scottish Water's retail subsidiary and on other retail providers. We believe that retail providers have a valuable role to play in the promotion of the efficient use of water by their customers, and we want to ensure that they play that role. Amendment 11 provides powers to enable ministers to issue guidance on the contribution that licensed providers should make to sustainable development, which is equivalent to the provision in section 51 of the 2002 act that enables us to issue sustainable development guidance to Scottish Water. The water industry commission is required to have regard to that guidance in setting licence conditions, which will ensure that those are binding requirements on licensed providers.
Taken together, the amendments provide the effective mechanism that we want to ensure that sustainable development is at the heart of the bill, as it is at the heart of our approach in general.
I move amendment 11.
I welcome the Executive's three amendments on sustainable development, which reflect the concerns that have been expressed in the debate that we have had in the committee. I believe and hope that amendment 11 will create a level playing field for the new retail entrants and Scottish Water, but I seek some clarification in that regard. Subparagraph (1) in amendment 11 talks about
"how water services and sewerage services providers might … reasonably contribute to the achievement of sustainable development."
Does that mean the same as what is stated in section 51(1) of the Water Industry (Scotland) Act 2002—that
"Scottish Water must, in exercising its functions, act in the way best calculated to contribute to the achievement of sustainable development"?
Do
"reasonably contribute to the achievement of sustainable development"
and
"act in the way best calculated to contribute to the achievement of sustainable development"
mean the same thing? I am trying to clarify whether there is a genuine level playing field in the duty that will be placed on the new retail entrants and on Scottish Water.
I, too, would like to add one or two comments. Mark Ruskell is right. We explored this issue in some depth at stage 1. We need to get some clarification from the minister and think about how the provision would work in practice across the industry. When we visited Wales recently, we explored the issue with the water company there, Dwr Cymru. It was interesting to get a slightly different take on the issue and to see a slightly different set-up regarding sustainable development. I am pleased that amendment 11 has been lodged as it clarifies the bill's aim, and I hope that the minister will be able to give Mark Ruskell the reassurance that he seeks about the interpretation of the wording.
I was pleased to see that, in the covering letter to the bill, which Ross Finnie wrote to us before stage 2, water conservation was picked up as an issue that you expect both Scottish Water and new retail entrants to think about in the provision of services. That angle on sustainable development will be a major issue in the future.
I am pleased about your general response on water conservation and sustainable development and I am particularly pleased to see a detailed amendment that I hope will clarify matters both for Scottish Water and all potential future entrants to the market.
No other members want to ask questions, so I invite the minister to respond to Mark Ruskell and me.
I am happy to do so and to confirm that the intention is to achieve a consistent regime across the board. Section 51 of the 2002 act and amendment 11 set out clear requirements for Scottish Water and retailers to take action to contribute to the achievement of sustainable development. The two provisions are worded slightly differently and the committee might well take the view that the duty on Scottish Water is a little more emphatic than is the requirement on retail providers to "reasonably contribute" to sustainable development. That is because Scottish Water is the fundamental service provider and is responsible for the networks, the infrastructure, the water treatment and so on. Therefore its duty is clear and must apply across the range of its functions. Retail bodies do not have quite the same degree of influence on sustainable development, so the law will require them to make whatever contribution is reasonable for them as retail providers. That is in recognition of the fact that the direct impact of a retailer is less than that of the network provider.
In practice, both section 51 of the 2002 act and amendment 11 provide for guidance to be issued by ministers. We expect that the ministerial guidance that is issued to Scottish Water and the guidance that is issued to retailers will at least be consistent and, in many cases, will be identical when identical functions are being delivered. Amendment 11 will allow clear guidance to be issued by ministers to place requirements both on retailers through the licence conditions and, as at present, on Scottish Water, to deliver sustainable development in the range of policy decisions that are made.
Amendment 11 agreed to.
Group 7 is on licences and procedures for transfers. Amendment 12, in the name of the minister, is grouped with amendment 13.
Amendment 13 relates to instances in which a licence might be transferred between one operator and another. The amendment will ensure that the procedure for transferring a retail licence to another holder is consistent with the process for applying for such a licence in the first place. It does that by applying the procedures in paragraph 1 of schedule 2 in relation to original licence applications to transfer applications in paragraph 3, replacing specific provision for transfer applications. It also provides that
"Any applicant for consent to a transfer of a licence who knowingly or recklessly makes a statement, in connection with the application for consent, that is false or misleading in a material particular is guilty of an offence"
and for the penalties to apply on conviction. That is consistent with the existing provision in paragraph 1. The intention behind amendment 13 is simply to achieve consistency. Amendment 12 is consequential to amendment 13.
I move amendment 12.
I have a point about semantics. I presume that "knowingly" and "recklessly" are both included so that if someone takes a flier at not knowing, they are still caught by the law.
Yes. That is a general legal provision to cover someone acting in a criminal manner knowing it to be criminal, or acting recklessly regardless of whether they know it is criminal. Both would attract punishment in the same way.
Amendment 12 agreed to.
Amendments 13 to 18 moved—[Lewis Macdonald]—and agreed to.
Schedule 2, as amended, agreed to.
That completes day 1 of stage 2 consideration of the bill. Given the number of amendments that were lodged for today and the progress that we have made, which I have to say has been efficient, I suggest that the target for day 2 should be to complete stage 2 consideration. I have not received any indication that colleagues have hundreds of amendments waiting to be lodged. We should be able to work through stage 2 in an orderly manner next week. We intend to complete consideration of all the remaining sections and schedules. If we do not, we will still be able to have day 3 of stage 2 before Christmas. If members have amendments to the rest of the bill, they must lodge them by 2pm on Monday 13 December so that we can consider them on the Wednesday morning. I thank the deputy minister and his officials for coming along and providing clarification, which has helped us to get through business efficiently this morning.
We expect the Minister for Environment and Rural Development, who is currently in Cabinet, at 11.30. I suggest that we move on and take item 6, on climate change, which we agreed to take in private. Any members of the public and press who want to be here for our discussion on fisheries with the minister should come back at 11.30. We might need to take a seriously long comfort break, but that way, everybody knows what we are doing.
Meeting continued in private.
Meeting continued in public.