Scottish Water Bill
The next item of business is a statement by Stewart Stevenson on the proposed Scottish Water bill. The minister will take questions at the end of his statement, so there should be no interventions or interruptions.
14:56
Water is one the most abundant resources on the planet. It is also one that, through its ubiquity in Scotland, its being almost constantly in our vision and its easy availability from our taps, we Scots often take for granted. However, the idea of water’s ubiquity and its easy availability to all is false. For many in the world, it is a vital commodity in desperately short supply. As available water resources become stretched, the value of water, both economically and in humanitarian terms, becomes greater. According to the United Nations, there is enough fresh water on the planet, but it is distributed unevenly and too much of it is wasted, polluted and managed unsustainably. We take water for granted but disregard it at our peril.
It may not always feel like it, but Scotland is a lucky country. It is blessed by an inventive and inquisitive people, resource-rich land and sea and easy access to what the world is increasingly recognising as the next great asset—water. One of the tests for us in the future will be how we care for and use that great asset. Our Victorian predecessors, in particular, exercised clever stewardship and innovation, building drinking water and sewerage infrastructure for Scotland’s people and helping to drive cholera out of our cities. To this day, we benefit from their investment, their foresight and their efforts. Scottish Water is the embodiment of that. For less than £1 a day, the average household gets wholesome water and has its waste removed and treated.
Our water is a public asset, and we are committed to ensuring that it is managed and exploited for the public good in a public agency. I believe that a majority of members continue to believe in that. Our first purpose in looking at how we should discharge our water responsibilities is to maintain that link between public asset and public good. Has our public body, Scottish Water, done well? Yes, it has. It has been the fastest-improving water company in the United Kingdom and continues on an improvement path. It delivers excellent-value services while improving quality and customer service. Customer bills are stable.
Can Scottish Water do more? Yes, it can. Scottish Water is Scotland’s biggest purchaser of electricity, and there is considerable potential in its asset base to develop wind, hydro and micro-hydro power generation to the extent that all its electricity needs could be met and further amounts of electricity could be generated and exported to the grid. There is also considerable potential to develop redundant assets, such as disused sewage treatment works, into modern waste recycling facilities that support Scotland’s drive to become a zero waste society. Scottish Water also holds a great deal of water knowledge and experience, which it could use to become part of a centre for the sustainable exploitation of water. We should aspire to lead the world in that.
We are confident that there are significant commercial opportunities in each of those areas—and there is more. Let us look at areas that are not so overtly commercial. Our people want to help when international disasters strike. Water is often the instrument of disaster, the carrier of disease or the cause of drought. We should aspire to a situation in which Scottish expertise and practical help can make a bigger difference.
The vision that was painted by the First Minister in his statement in September on the programme for government described an evolution for Scottish Water, not a revolution. He promised that we would bring forward legislation to enable Scottish Water to play a wider role. It is usual, as part of such a process, for discussions to take place between the Scottish Government and the parliamentary authorities about various matters relating to draft legislation.
It is true that we originally believed that we could start the move of Scottish Water into a broader role with a very limited bill. However, as we reflected further on our vision for Scottish Water, it became clear that we were at risk of underestimating the potential. Our proposals for legislation might be seen as being too limited and as not providing a sufficient basis for the continuing development of Scottish Water’s role.
We can also be more imaginative in thinking about how Scottish Water could develop a role in key areas of public concern at home. For example, Scottish Water already has a close relationship with local authorities. Its retail arm, Business Stream, works with them to help them to reduce water use and therefore save money on their bills. That is only a beginning.
Scottish Water also has extensive experience in procuring large-scale capital projects. Could we find a way to use that experience more widely? Perhaps local authorities could draw on that expertise when procuring flood protection schemes and other flood management work, which would ensure the best use of public funds by taking a shared service approach.
Canals are important assets that we are retaining in the public sector in Scotland. We should be asking ourselves what opportunities there are for creating additional public benefit from all our water infrastructure, both inland and maritime.
On top of all of that, however, is the fact that water is global. It respects no borders. Climate change brings droughts to previously wet areas and floods to places that are not used to flooding. Water’s ever-changing journey across the planet means that the issues are international and the solutions are global. As water supply becomes less predictable, so its importance to the economy and society becomes more obvious. There is an old adage that nobody worries about the well until it is empty. As the world begins to worry about the well, so our vision needs to be international.
Those are among the important questions that we need to examine more fully. Given the extent of the proposals, it would be wrong if we did not have a full consultation phase. Many people will have views and ideas, and I am sure that they will add to the menu that I have described today. It is important that they are heard.
We have identified some areas of uncertainty, which could be material. Significant among those are the UK Government’s decision to move British Waterways in England and Wales to the third sector, and the forthcoming Scottish bill’s approach to borrowing powers.
Present legislation is highly complex and is based on Scottish Water undertaking a limited set of functions. We need to ensure that that framework—its regulation, financing, corporate structure and interaction with ministers—is robust enough to deal with the wider possibilities that we have begun to identify.
We therefore decided last week that the present limited provisions should be withdrawn, and I wrote to Patrick Harvie, the convener of the Transport, Infrastructure and Climate Change Committee, to explain that and to set out our plan to consult on proposals for legislation that is more wide ranging than was initially planned.
Later this month, it will be my pleasure to deliver on that promise when we bring forward draft proposals as part of an ambitious consultation on Scottish Water’s future. I am sure that colleagues in all parties will welcome our commitment to consult on these important matters.
In setting out that there should be a water bill, the First Minister spoke about developing a legacy for future generations and said that making the best use of our precious water resources is a long-term strategy. I agree with his words, and I think that, when we discuss such a vital part of our economy, our environment and our society, we should do so in a constructive fashion.
When we talk about water, we talk about our future. It underpins much of what we do. This chamber should beware of starting a storm in a water cup, if the price of that is to block our ears and close our eyes to the important business of mapping a future for our most precious resource.
The minister will now take questions on the issues raised in his statement, for which I will allow about 20 minutes.
I am grateful to the minister for the advance copy of his statement. However, I find it difficult to be grateful for any other aspect of his Government’s handling of the proposed Scottish Water bill.
Two months ago in the chamber, as the minister mentioned, we heard the First Minister invoke the spirit of the late, great Tom Johnston and his hydro power achievements. However, when Stewart Stevenson told me soon afterwards that what was coming down the pipe was a modest bill with some five sections that would tidy up the non-core—I repeat, the non-core—activities of Scottish Water, I realised without surprise that Tom Johnston’s mantle was too big even for Alex Salmond’s ample frame.
Stewart Stevenson has been sent out to stop a bullet for his cavalier boss today. Precisely when will his Government get beyond the back-of-a-fag-packet stage and tell Scotland’s people what it has in store for their water?
I am a reformed former smoker of some three decades’ abstinence, so fag packets do not form any substantial part of our approach.
The First Minister was right in his remarks in September to draw on the inspiration of Tom Johnston, who was a man of a different political persuasion but one who was widely respected for his contribution to empowering much of Scotland through hydro power. He was probably one of the greatest secretaries of state that Scotland has ever had.
It is clear that the issue is not simply legislation. It is about direction, and the need to create space for Scottish Water to deliver on the huge potential of the huge water resource that our country possesses, which is valuable to us and to people elsewhere. We have never intended to progress simply by developing Scottish Water through a legislative process. Our approach has always been about using legislation to deconstruct barriers and develop a wider vision for Scottish Water, and taking the opportunity to create a real water agency that can deliver not only for Scotland but for people across the world by using expertise, exploiting water and dealing with natural—and unnatural—disaster.
The minister has no doubt quoted to the First Minister what Oliver Hardy said to Stan Laurel—“Here’s another fine mess you’ve got me into.”
On 28 October, in response to my scepticism about whether we would hear much more of the bill before next May, the minister said:
“I am working hard on the future for Scottish Water, and we will be excitingly engaged in that in the future.”—[Official Report, 28 October 2010; c 29739.]
We now know that that exciting engagement has all the panache of previous excitements, such as a local income tax or the independence referendum.
The First Minister promised us
“not a revolution but an evolution.”—[Official Report, 8 September 2010; c 28251.]
He did not promise us yet another false start. His Government has had four years to formulate a convincing policy, and it has failed. In the minister’s words, the First Minister’s well is now truly empty, and the minister needs to start worrying.
Will the minister eschew the doe-eyed sentiment of his statement today and step up to address the broader interest—Scotland’s interest? Will he work with Scottish Conservatives to overcome whatever objections he has to a mutualised solution and give up control of Scottish Water, freeing it to make its own decisions and allowing it to develop for and contribute to the greater benefit of Scotland?
Jackson Carlaw has put the usual record on the record player. The idea of giving up control is interesting, because if we were to change the current arrangements and move Scottish Water from its present position as a public corporation, we would not be giving up control but placing control in other hands: the hands of those who have narrower interests. They will not have at heart the broad interests of Scottish public policy and our role in the world as a centre of water expertise that can support countries around the world when they need advice and help on water.
Commercial companies have a much narrower agenda. Whether they be mutual, as is the case in Wales, or privately owned, as is the case in England, those companies are there to serve their owners, but to do so in a much narrower sense. They work under the rules of the Companies Act 2006, and the fiduciary duties that are placed on directors make it clear that the generation of profit has to be first and foremost. The whole point about Scottish Water and its present position in the public sector is that it can support wider social and economic agendas that the Government and the people of Scotland wish it to support. No, we shall not be looking at removing Scottish Water from the public sector.
I thank the minister for the statement. However, we asked for a statement not so that the Government could tell us that water comes out of a tap but so that it could tell us whether its proposals were competent. Are we seriously expected to believe that the Minister for Transport, Infrastructure and Climate Change submitted a water bill to the Presiding Officer but, the moment the bill left his hands, immediately regretted it and, in those few seconds, suddenly thought that the Government could do better and that there needed to be a greater vision?
The First Minister’s statement in September on the legislative programme devoted seven pages to the water bill. He could not have been clearer about how substantial it should be, so where is it? There is no new information today that was not available before the bill was presented to the Presiding Officer.
The minister has drafted words in an attempt to rival Sir Walter Scott on the clarity and beauty of what flows from the Scottish springs, but there is no clarity about what happened in the few short days between the bill’s submission and its withdrawal. Parliament needs an answer to a straightforward question: was the bill competent?
The Liberals have made much of the suggestion that the bill was incompetent because it focused on borrowing powers. Let me read section 42(3) of the Water Industry (Scotland) Act 2002. It states:
“For the purpose of the exercise of any of its functions, Scottish Water may ... with the consent of the Scottish Ministers, borrow money, in sterling or otherwise, from any person or body, whether in the United Kingdom or elsewhere.”
There would never be any question of the issue of borrowing powers making any proposal that we brought forward incompetent when the powers already put in place by the Liberal-Labour Administration in 2002 are so comprehensive. There is, of course, a difficulty in relation to borrowing. It lies in paragraph 10.14 of HM Treasury’s “Consolidated Budgeting Guidance from 2010-11”, which states:
“should the PC”—
the public corporation; that means Scottish Water—
“undertake any borrowing the financing raised will be recorded in the budget of the sponsoring department.”
There is no question of the bill being incompetent for those reasons and no sensible Government would ever bring forward a bill that was incompetent. There is no issue in relation to competence.
I have delineated exactly the whole issue of borrowing in relation to Scottish Water. I am happy to ensure that the member, if he requires further information, receives it, but I have quoted section 42(3) of the Water Industry (Scotland) Act 2002 and I have indicated how Scottish Water scores on Scottish Government spending. However, the Scotland bill that is in preparation at Westminster, where his political colleagues are engaged in that, is an opportunity to look again at HM Treasury’s consolidated budgeting guidance—
Did the minister know that before he put the bill forward?
We did not, in any sense, have the kind of the position that we have now. We know, too, that the position on canals is moving. We have to take account of a whole range of things that are happening and we would be rightly criticised if we did not take the opportunity to ensure that what we are doing is in harmony with the UK Government. I am sure that the unionists opposite would wish me to do that on every possible occasion.
I see that a lot of members want to get in. As I hope to get in as many as possible, I would like quick questions and quick answers.
Returning to the ambition shown in the statement, I would like to know how the proposals will benefit the Caledonian and Crinan canals in my region.
As members will likely know, the previous Westminster Government looked at changing the status of canals that are operated by the British Waterways Board. We have been discussing the matter with the previous and current Governments for a considerable time now and the position that we have reached is that, whereas canals south of the border will move to a mutual position in a charity, canals in Scotland will remain in public ownership under the British Waterways Board. I should explain that the board is a cross-border authority and any ministerial decisions that are made require the authority of a minister in Scotland and a minister south of the border. Making the British Waterways Board the sole responsibility of the Scottish Parliament and Government is a convenient short-term solution, but there are clearly opportunities to explore whether, in light of the changes south of the border, different structures can deliver greater value. We will certainly look at that, but I repeat that canals in Scotland remain in the public sector to deliver value for the people of Scotland and the people who visit us.
I have to say that I picked out three major highlights from the minister’s statement. He said that water is global; that we take it for granted but disregard it at our peril; and that Scotland is a lucky country. If the bill was not incompetent because of borrowing issues, was it incompetent for other reasons?
The bill is now being progressed on a much wider canvas to look at other matters. The Government would not put forward any bill that it believed to be incompetent.
This is the most unusual ministerial statement that I have ever heard, but then I have been in Parliament for only three and a half years. Let us review the implications of the minister’s comments. When he gave the bill to the Presiding Officer, did he say, “You can have a look at it and spend precious public money on lawyers, but I’ll be back in a few months’ time with a better one”? Just how much public money has been wasted on this bill so far?
The member is asking me a question about something that happened elsewhere. I am absolutely sure of what happened in the Scottish Government: we initiated discussions with the committee likely to be dealing with the bill and the Presiding Officer—in other words, absolutely normal procedure in relation to legislation. In parallel, matters in relation to canals and borrowing powers for the Scottish Parliament were moving on south of the border and it was clear that our proposal for a limited technical change to the legislation for Scottish Water would have left us having to return to the matter at a later date. As a result, we have concluded that it is important to look at the matter in the round and, in undertaking the consultation that I have just announced, I invite everyone in Parliament and wider Scotland to engage in this issue in a way that will protect Scottish Water’s ability in the public sector to deliver for the people of Scotland using the most valuable public resource: water.
The minister might or might not be aware of my long-standing campaign to tackle flooding in Inverclyde, but I know that the minister to his left, Roseanna Cunningham, is. Given that much of the flooding is a result of years of neglect by the owners of the infrastructure in Inverclyde—including, I should say, Inverclyde Council and Scottish Water—is the minister able to guarantee that the development of micropower generation schemes will not be the sole preserve of Scottish Water and that small-scale community renewables projects that can aid the flood prevention measures that have already been introduced by the Scottish National Party Government will still be able to take place?
It is certainly not our intention for Scottish Water to abrogate exclusively to itself rights on microgeneration and micropower. However, Scottish Water has a very substantial estate that can be exploited and, as the biggest purchaser of electricity in Scotland, it must take every opportunity to generate power on its own estate where it can. Indeed, some steps involving joint ventures with others have already been taken.
However, this opportunity is so substantial that it might well be possible for Scottish Water to generate sufficient power to feed directly back into the grid. That is an issue on which the legal position is probably not clear and in respect of which legislation is likely to be of benefit. That is not required immediately, but it is required in the longer-term view. The issue is one in a range of issues that we wish to include in the consultation so that we ensure that we give the earliest possible indication to Scottish Water of how it may build on its success to date.
It is clear that the minister is aware of Scottish Water’s strategic importance. He recognises its strategic value in the United Kingdom and the world and he recognises that there is a vision of it playing an extremely important part in our country’s development. However, that is not new knowledge—I think that almost every member possesses that knowledge. Was the minister not aware of those things before he submitted the original, rather feeble proposals, or did they just dawn on him rather late?
I return to issues south of the border. There is a clear set of changes that can affect the environment in which we can progress Scottish Water’s future. I associate myself with Tom McCabe’s remarks about the strategic value of Scottish Water and of water in Scotland more generally. I know that we share with the Labour Party common aspirations for Scottish Water and the exploitation of a public asset for the public good. It is clear that we have been aware over the period since September, and, indeed, since a little while before that, that there are circumstances south of the border that create further opportunities for Scottish Water. It is important that we do not lose those opportunities at the earliest point, which is why we want to consult on that and on a wider range of ambitions for Scottish Water. I am sure that we will get some very interesting replies.
The minister will no doubt be aware that the United Nations Educational, Scientific and Cultural Organization centre for water law, policy and science at the University of Dundee, which is in my constituency, is at the forefront of the science of water management, and that we need to continue to move forward in this area if we are to catch up with the Netherlands and Sweden. They are the global leaders in this commercial area. Does the minister agree that it is important that we get the balance right between selling water and selling our expertise in its management, engineering, science and financing?
Mr FitzPatrick touches on an important point. Water is a commodity that we seek to add value to. There is, of course, considerable engineering expertise and experience in Scottish Water, which can be made available to other bodies, such as local authorities when they are making engineering purchases. That expertise and experience complement the financial expertise in the Scottish Futures Trust, and create an even stronger offering from the public sector to ensure that we get value for money and exploit the precious world resource of water.
My constituency covers the area that was once represented by the great Tom Johnston and which the local authority describes as “The Canal Capital of Scotland”—the Forth and Clyde canal runs right through Strathkelvin and Bearsden. Does the minister believe that a Scottish waterways board is a viable stand-alone quango, or does he intend to add Scotland’s canals to Scottish Water’s portfolio?
There is already a degree of interworking between British Waterways Board Scotland and Scottish Water. Water is carried along our canals for some purposes for Scottish Water. It is a source. Similarly, Scottish Water is a provider of water for canals. Therefore, there is already a degree of synergy.
Communications are becoming ever more important in the modern world, and Scottish Water is looking at providing its sewerage in particular for conduits for communication cables. Canals present another opportunity without some of the difficulties that other methods present. Therefore, there is potential synergy. We have not come to a final conclusion on the matter, but it is important that we consider the opportunities and their associated difficulties in the consultation. However, it is clear that there are opportunities for both the BWBS as it becomes, we hope, a purely Scottish body and Scottish Water.
The minister wants us to believe that legal competence is not an issue. If that is right, surely we are left with the question of ministerial competence. Is he not aware of the frustration that has been felt on the Transport, Infrastructure and Climate Change Committee, as we have been left with no option but to cancel meeting after meeting that had been arranged to a timetable based on the given expectations about the introduction of the bill? Will he reflect on the wisdom of handing over a bill to the Presiding Officer before he decided what he wanted to put in it or of the First Minister starting the fanfare before the bill was even written?
I recognise the substantial inconvenience that has been created for the committee and I will certainly reflect on its convener’s remarks.
That concludes the statement. My apologies to the two members whom I have been unable to take, but I am afraid that time does not permit.
On a point of order, Presiding Officer. There has been much to-ing and fro-ing this afternoon in the chamber. Can the Presiding Officer tell us whether the bill as lodged was competent and is he able to publish all the correspondence between him, the Parliament and the Scottish Government on the matter?
I am afraid that that is not a point of order. However, I am sure that, if the member wishes to write to the Presiding Officer, he will give her a reply.