Water Resources (Scotland) Bill: Stage 1
The next item of business is a debate on motion S4M-05229, in the name of Nicola Sturgeon, on the Water Resources (Scotland) Bill.
15:12
I am very pleased to open the debate on the general principles of the Water Resources (Scotland) Bill. During its consideration of the bill, the Infrastructure and Capital Investment Committee took written and oral evidence. At the outset, I thank the committee for the work that it has done. I also thank everyone who gave evidence to the committee, as well as those who responded to the Scottish Government consultations.
I have had the opportunity to read the committee’s report on its findings, and I am pleased to note that the committee agrees that the bill’s principles are sound. We all appreciate that Scotland’s water resources are a precious commodity that should be protected and enhanced, not just for the here and now but for the benefit of future generations.
The committee has made a number of extremely helpful recommendations about the bill. I make it clear at the outset that I will give each and every one of those points serious consideration. I will, of course, respond fully to the committee in due course. I am considering amendments that might be lodged at stage 2. I note the considerable weight of opinion among stakeholders that in part 1 of the bill the value of our water resources should be expressed not solely in economic terms, but in terms of the social and environmental benefit that derives from them. Our intention was never to drive economic benefit to the detriment of social or environmental factors, as those always need to be weighed up and balanced, but I have decided that I will lodge an amendment in that area at stage 2 to make that absolutely clear.
In Scotland, we are very fortunate that we have a relative abundance of water. We have a beautiful water environment and, in Scottish Water, we have a highly successful public corporation. We are fortunate in that regard, but others around the globe are not so fortunate and we have a responsibility to help them.
The bill acknowledges the importance of water as a natural asset and it places a duty on ministers and others to develop Scotland as a hydro nation, which is one that utilises its water resources to their fullest potential. The bill also aims to further improve our management and protection of the water environment. It is a deliberately ambitious agenda, and it is important to be clear that the work of building Scotland into a hydro nation will not be achieved through legislation alone, important though the bill is.
It is also important that we progress the programme of work that is being developed alongside the bill. In that regard, I was pleased to address the hydro nation, global ambitions conference earlier this month, which also saw the hydro nation forum convened for the first time. The event was hosted by the Scottish Council for Development and Industry, which demonstrates that the business community recognises the importance of the agenda and also that the business community has an important part to play in the success of the agenda.
The hydro nation forum brings together a high-calibre group of water experts to give new insights and impetus to the hydro nation programme of action. The forum will provide a place for debate and knowledge exchange, helping us to shape the hydro nation programme of work.
Water is an essential component of every national economy and its good management is critical to the delivery of the sustainable low-carbon future that we all aspire to. However, we have to be mindful that one in eight of the world’s population does not have access to clean water, and 2.5 billion people live without basic sanitation. As the world’s population continues to grow and with the impact of climate change, water availability will become even more critical. Scotland clearly has a responsibility to bring our expertise to bear for the benefit of the global community. We have built up knowledge and expertise that I believe can be beneficial elsewhere.
I cannot disagree with what the minister has said so far. I am sure that she will agree that the fact that many people in the world do not have access to water concerns people around the globe. There is also a concern that many transnational corporations see the provision of water and the control of that essential resource as a tremendous business opportunity in the developing world. I am sure that the minister will join me in trying to ensure that there is no exploitation of such countries when they are trying to provide clean water for their people.
I take that point. Perhaps when I come on to the section on the abstraction of water, Neil Findlay will see that, in how we intend to manage our own resources, we seek to show a good example to others around the globe.
I hope that we can all agree that we have a responsibility to use the resource that we have, as well as the expertise that flows from having that resource, to help people around the world. To give a specific example of how we are doing that, Scottish Water, the Scottish Environment Protection Agency and the James Hutton Institute are already working with the Government of Malawi. Those water experts are discussing the management and governance of water and waste water and they have the full support of the Scottish Government in that endeavour.
In addition to offering support to developing nations, there are commercial opportunities for Scotland to develop in this sector—I say that deliberately but, in so doing, I am mindful of Neil Findlay’s point. We have expertise in water governance; we have academics with specialist knowledge of global water issues; and we have a track record of developing new and innovative technologies in the sector. Scottish Water, for example, is providing technical advice to the water industry in Qatar. We have a number of enterprises providing water services, for example Biomatrix Water in Moray. Those enterprises are also operating internationally, delivering ecological engineering services. We have a responsibility to encourage collaboration, support innovation and encourage fresh approaches.
To turn back to the bill, the committee commented in its report on the importance of partnership working. I thoroughly agree with that—partnership and collaboration are key themes running through this work and the broader hydro nation programme.
Although part 1 lists as key organisations Scottish Water, Scottish Enterprise, Highlands and Islands Enterprise, Scottish Natural Heritage and the Scottish Environment Protection Agency, that list is not exclusive or exhaustive. Those organisations are important to the development of the value of our water resources, so the provision enables ministers to direct them in relation to that agenda. However, the hydro nation agenda covers such a broad range of activities that it would clearly not be possible to list all the participants. From academics to engineers, from those involved in the industry to individual land managers and farmers, there are diverse roles and different types of partnerships.
Bringing together those different organisations across sectors will be challenging, but it is vital to ensure that we invigorate new relationships, encourage different working practices and foster the sharing of experience. The bill seeks to encourage partnership working across different sectors and within communities. There is no wish to impact on existing local partnerships or agreements where those are working well. For example, good work is already under way on sustainable approaches to land management and in many other areas.
In addition to helping others, of course we must manage our resources wisely. That is why the bill gives Scottish Water the power to take steps to investigate and locate the source of issues that have an impact on its raw water quality. Drinking water quality and public health are critical issues, and it is vital that our water is of the highest quality. Our very clear expectation is that Scottish Water will work with the owner of land to agree access for monitoring purposes. Ultimately, if something is entering the water supply that should not be there, removing it at source is far more efficient than resorting to treatment further along the network.
The committee has also commented on the bill’s provisions on the abstraction of water, which I mentioned earlier. Abstraction—the process by which water is taken from a river or other water body for a specific purpose—is regulated by SEPA using the controlled activities regulations. When an application for an abstraction is made, SEPA will consider the request and the impact of the abstraction on that water body from an environmental perspective and then decide whether to grant a licence. We have taken the view that that environmental focus, although important, is not sufficient, and that is why we have inserted the abstraction provisions in the bill.
I appreciate that the late inclusion of the abstraction regime in the bill meant that it did not form part of the formal consultation process. However, officials have been in discussion with stakeholders to explain the background and to provide reassurance about the intention behind the provisions. I want Scotland to continue to be a great place to do business and we want new enterprises to be attracted to Scotland. As a relatively water-rich country, we may well increasingly see businesses that are heavy users of water wanting to move into Scotland, and we want to encourage that business growth.
Given that part 2 was not consulted on and is a late addition to the bill, will the cabinet secretary also take into account the fact that 66 per cent of the water abstracted by the Scotch whisky industry goes back into the environment within a matter of hours? Will the abstraction regime measure consumption, as opposed to total abstraction?
As I said, there has been on-going discussion with stakeholders including the Scotch Whisky Association—I have personally discussed the issue with the SWA—and we will continue to seek to give them reassurance that nothing in the bill is intended to, or will, compromise their ability to continue to grow the sector. I am sure that we will come back to that issue at stages 2 and 3.
As I said—this relates to Mary Scanlon’s point—we want both indigenous businesses and new businesses coming into Scotland to grow, but we also have a duty to protect our natural resources for the long term. An important point is that the threshold in the bill is 10 megalitres of water per day. An application will be required to be made only where the abstraction is greater than 10 megalitres per day, which is the level at which ministerial consent will need to be sought. That is precisely to enable ministers to consider whether the abstraction is in our wider and longer-term interests and whether it is in the right location, with the right infrastructure, business and other support. That will not alter SEPA’s role as the environmental regulator—a controlled activities licence will need to be sought in the usual manner—but it will enable ministers to take a broader view and look to the future, which is a future where our water assets will be increasingly valuable in a world of growing water scarcity.
In my remaining time, I will briefly mention Scottish Water, which, as we all know, is a highly performing public sector organisation, and we intend to ensure that it continues to be that. The challenge for Scottish Water is not just to maintain high standards but to continue to drive forward with efficiency and to improve water quality and waste water infrastructure. The current programme of investment runs until 2015, but Scottish Water as a business must look far ahead, anticipating risks and opportunities for its business. Changing weather patterns and population and climate change will all impact on its network. Scottish Water must ensure the resilience of the infrastructure and build new capacity where it is needed. Resilient infrastructure is vital. Part 7 therefore deals with water shortage situations.
As I said at the outset, I appreciate the report that the Infrastructure and Capital Investment Committee has prepared at stage 1. A number of issues were raised, all of which I will consider. I mentioned one amendment that I intend to lodge at stage 2, but I will listen carefully to points that are made in the debate and feed those into the further consideration of our approach to stage 2. I look forward to the debate that will follow.
I move,
That the Parliament agrees to the general principles of the Water Resources (Scotland) Bill.
We are tight for time so, to protect speakers in the open debate, I ask members to stick to their times, including interventions.
15:26
The Infrastructure and Capital Investment Committee welcomes the introduction of the Water Resources (Scotland) Bill and has agreed to recommend to the Parliament that the general principles be agreed to. Our stage 1 report sets out how we arrived at that conclusion. The committee received evidence from a wide range of water interests, including domestic and commercial water users, environmental and energy bodies, industry specialist engineers and academics plus, of course, Scottish Water. I thank all those who gave written and oral evidence, those who hosted our visits to their premises and the clerking team, for their sterling support.
The evidence supported the basic premise of the bill that, although we are fortunate to have such an abundant water resource in Scotland, we must recognise more fully the value of that resource and learn to make more efficient use of it. As the committee heard in evidence, the bill, together with the Scottish Government’s hydro nation agenda, will put Scotland at the forefront of water policy making in the developed world. The benefits for Scotland could be substantial. In the global context, growing stress is being placed on the world’s water supply, due to an ever-increasing global population. As a result, many countries are becoming more and more interested in finding ways to make better use of what water they have.
The committee has heard about the work that Scottish Water is already doing through its international operations. It has won consultancy and training contracts in Canada, Ireland and, more recently, Qatar. To respond to Neil Findlay’s point, I say that he will find that the United Nations Educational, Scientific and Cultural Organization centre for water law, policy and science at the University of Dundee is, for example, working with countries along the River Euphrates to get some agreement on water abstraction. Scotland’s expertise in water matters is clearly in demand, and the bill recognises that. There is an opportunity for Scotland to develop what it is already good at doing in the water sector, to continue to grow its expertise in sustainable water management and to increase its competitiveness on the world stage.
I welcome what the member says, but the main point that I made was that, although we should go abroad and help countries to develop their infrastructure, we should not be complicit in any moves by private companies to exploit those countries by privatising their water systems.
Scottish Water is helping overseas countries with precisely that, although it is not so much about infrastructure and more about how countries determine the governance of their water supply. That is part of what Scottish Water is doing.
Given the abundance of our resources, it is probably fair to say that Scotland is the envy of the world. After all, we tend to be good at managing our liquid resources. Other countries just seem to bottle it, but we bottle it and export it, and we do lots of other things with our water.
The committee agrees that the bill will go some way towards establishing a framework that will allow us to make the most of our water resources. The message that we received from witnesses is that there is strong support for that direction.
In addition to the positive comments that we heard, I will talk about some of the concerns that were raised with the committee. Although the committee’s view is that the negative comments do not call into question the general principles of the bill, our report makes recommendations that are aimed at improving it.
As the cabinet secretary said, the almost unanimous view of witnesses was that the bill places too much emphasis on developing the economic value of water and does not say enough about environmental and social considerations. From the evidence that the committee received, it seems to be widely accepted that the three pillars of sustainability—economic, environmental and social—need to be given equal weight when we are seeking to develop the value of our water resources. The committee agreed that, if the bill is to specify economic value, there is no reason why it should not also include environmental and social considerations. I welcome the commitment that the cabinet secretary has given today to lodge an amendment on that point.
Part 2 deals with water abstraction. Alex Johnstone took a lead in questioning on that part of the bill, so I will not steal his thunder and will leave him to cover that in detail. That said, I draw the Parliament’s attention to the evidence that the committee received that reflected a general lack of understanding on the part of witnesses about the intended purpose of the new abstraction regime. It appeared to the committee that that was due, in large part, to a lack of consultation on that element of the bill because it was added just prior to the introduction of the bill. It is also fair to say, however, that some witnesses were confused about whether the new regime would add anything, given that the current CAR system already includes some abstraction control. As our report says, we felt that it was necessary for the cabinet secretary to engage directly with organisations to discuss the intended purpose and effect of the proposed abstraction regime. We called for a programme of engagement to be carried out prior to stage 2, and I welcome the cabinet secretary saying that such a programme is already being undertaken.
Other concerns were raised with the committee about the proposal that would actively encourage Scottish Water to develop its commercial activities in, for example, the renewable energy market. Serious concerns were raised with the committee by businesses that operate in the renewable energy and waste management sectors. They feared that the bill would give Scottish Water an unfair commercial advantage, based on its status as a Government-funded public body. The committee examined the issue in detail and questioned the Water Industry Commission for Scotland, the water industry regulator, as well as the cabinet secretary, about the proposals in the bill. We are content with the assurances that we received. It seems clear to us that the intention is that Scottish Water’s non-core activities will be entirely separate from the core services for which it receives public funding. Thus, there is no question of public funding being used to support Scottish Water’s commercial activities. Of course, it is the WICS’s responsibility to regulate Scottish Water’s activities, and the Parliament will have a continuing scrutiny role in ensuring that the regulator continues to do its job properly.
Finally, I will touch on the bill’s wider context and the hydro nation agenda. In considering the bill, particularly the expansion of Scottish Water into commercial and international markets, we must have regard for the interests of water customers in Scotland. We must ensure that water customers are protected. There is also scope to go further by, for example, enabling benefits that are derived from the development of Scotland’s water resources to be passed on to customers in the form of lower bills. The cabinet secretary has indicated that the bill and the hydro nation agenda should bring positive benefits for customers directly and indirectly. The committee will wish to focus on the interests of customers, and we have an ideal opportunity to do so as we move towards the next water regulatory period, which will run from 2015.
The objectives that are set out in the early part of the bill and in the hydro nation agenda are ambitious and require substantial co-ordinated action by the Government and other public bodies in order to achieve them. If the bill is passed, my committee will take a close interest in these activities. The committee’s wish is that the new prominence given to water environment issues must have substantial gains for the Scottish people.
Today’s debate coincides with moves at European Union level to encourage greater efficiency in water use. The European Commission’s water blueprint has just been announced amid disappointing results for the implementation of river basin management plans, which have been implemented by only 53 per cent of member states. Europe needs to do more to use its water resources sustainably and efficiently, and if Scotland plays its cards right, it can show the way for the rest of Europe.
When the bill was published under the previous cabinet secretary, there was great media interest in the idea of exporting water by pumping it south or tanking it abroad. That issue did not greatly exercise us but, as the Presiding Officer knows, our food and drink exports such as beef and lamb require rich grassland, and salmon, whisky, beer and other such products require a lot of water. As a result, we actually export a great deal of virtual water—it is amazing what one can learn in this place.
On behalf of the committee, I recommend that the bill’s general principles be agreed to.
15:36
I congratulate the committee on its work on the bill. As is evident from the convener’s speech and from the report itself, the committee has been diligent in its scrutiny and has highlighted the key issues, including those that require more work from ministers and those that have been the subject of dispute in what is a largely uncontentious bill. I believe that the committee has reached the right conclusion that we should support the bill’s general principles and, although there are issues to resolve, we agree that the legislation will have a largely positive effect.
It is fair to say that the bill does not live up to the expectations that there might have been about its significance. Given the language used by the First Minister when the bill was first announced, many people will have expected something a bit more momentous. Ministers argued that the legislation would have a transformational effect on Scottish Water, its impact on our economy and the way in which we protect and promote Scotland’s huge natural water resource. We were told that ministers had increased their ambition for the bill and, in June, The Times reported that the First Minister had decided that Scottish Water should be run as a public benefit corporation along the lines of Network Rail.
However, none of that has come to pass. Ministers have rafted back from such indications and, indeed, have been wise to do so. Although other parties have argued—and might well argue again today—that changing Scottish Water’s structure and ownership will release significant funds for the Scottish Government—[Interruption.] I hear Mr Johnstone already commenting on that from a sedentary position, but I have to say that it is far from clear that that would be the case, or what impact it would have on the block grant under Treasury rules.
Although the hydro nation policy itself might be described as ambitious, I am not sure that the terminology is right for the bill. What we have is a bill that places a duty on the Scottish ministers to take reasonable steps to progress the hydro nation agenda. I remain to be convinced that legislation is really necessary in that regard and, indeed, the committee’s report notes that the specific duty on the Scottish ministers to develop the value of Scotland’s water resources does not actually place new powers or responsibilities on them.
That said, we broadly support the hydro nation agenda. It is right that we take steps to maximise the economic and environmental potential of the management of our water resources and to promote internationally our expertise in those respects. The cabinet secretary’s predecessor was given to making rather overblown claims about exporting massive amounts of our water south of the border—the convener touched very diplomatically and very well on that point in her speech—but nevertheless there are many other areas in which Scottish Water has the capacity to expand its business and boost our economy. It is right that we focus on such opportunities. In recent years, Scottish Water has had considerable success in many areas, one of which is its increasing international activity. I also welcome the cabinet secretary’s comments on Scottish Water’s work in Malawi; it is good to hear that its expertise is being used to good effect beyond simply its business ambitions.
On the economic contribution to Scotland that is made by Scottish Water, Jim and Margaret Cuthbert made an interesting submission to the committee on Scottish Water’s approach to outsourcing activities and procurement, which they say has resulted in a situation in which management skills and research and development seem to be almost completely derived from outside Scotland.
They advocate Scottish Water adopting a procurement policy that is aligned with sustainable economic development. That is in line with the proposals in the excellent paper on procurement that they produced for the Jimmy Reid Foundation. Although I have debated other matters with the Cuthberts, I say to the cabinet secretary that their paper on procurement should be required reading ahead of the publication of the long-awaited procurement bill early next year.
There has also been discussion of the definition of the value of water in the bill and the committee has made the case that adding environmental and social elements would provide clarity and balance to the definition. I was therefore pleased to hear the cabinet secretary say that she accepts that point and will make the appropriate amendments at stage 2. The committee also asked the Scottish Government for clarity on whether peatland habitats are covered by the reference to water resources in the bill. I know that environmental groups were concerned about that and I would be interested to hear the cabinet secretary’s comments on the matter.
In terms of the economic focus of Scottish Water, we acknowledge the broad welcome that there has been for the clarity that has been brought to the definitions of core and non-core services, and it is right that the Scottish Government should be able to lend directly to Business Stream. There is clear logic behind the new powers to enable licensed water and sewerage service providers to demand and recover charges from non-domestic customers in situations in which payment is due. All of those kinds of provision are right and sensible.
However, in a number of other areas of the bill, there are further questions to be asked about the purpose of the legislation. There are laudable intentions behind many of the provisions, such as those on the maintenance and improvement of water quality and the protection of the sewerage network by ensuring that businesses that are responsible for the blockage of the network are responsible for those costs. However, some people, including people from business organisations who contributed evidence to the committee, have asked whether there is really a need for Scottish Water to have those new powers, given that in a number of areas there are already regulatory regimes operated by SEPA and others. If new powers are addressing a problem that exists in the current set-up, then of course they are required. If that is not the case, then it is right to ask whether there is a need for new legislation.
Part 2 of the bill, on abstraction, is a case in point. As the proposals on abstraction were not part of the consultation process, the committee was right to ask the minister to undertake further consultation on the issue before reporting back ahead of stage 2.
It is right that there should be oversight of major industrial and commercial abstraction of water, but ministers need to make a stronger case for the need for additional powers beyond the controlled activities regulations licensing regime that is operated by SEPA, to which the convener of the committee referred earlier. More consideration also needs to be given to the list of exempt organisations. Mary Scanlon pointed to the example of the Scotch Whisky Association, which has made strong representations on the issue. The committee also reported that there was little understanding of why 10 megalitres of abstraction had been set as the threshold for ministerial approval. Further clarification of that will be useful.
Other provisions, such as those on water shortage orders and common maintenance of private sewage treatment systems, are sensible, and seem to improve on the regulations that are already in place. However, as I have said, there are a number of areas that require further reflection, particularly as some of them will mean new regulatory regimes where there is already a regime in place, and potentially new costs to businesses that are in challenging economic conditions. If the regulations are necessary, then of course they have to be there, but we need to be sure that they are indeed required.
I hope that the cabinet secretary will reflect on some of the points that have been made in the course of the stage 1 consideration and we look forward to her engaging with the committee on them at stage 2.
In general terms, the bill is beneficial. In some cases, that benefit is only marginal, but where it will make it easier to pursue the hydro nation agenda, that is welcome.
We agree that Scottish Water and our natural water resources represent an area of significant potential for Scotland, and ministers are right to bring a focus to that work. That is why we will support the general principles of the bill.
15:44
I will start with something that Richard Baker has raised already. The hydro nation agenda was introduced with a great deal of high-profile publicity and hyperbole. However, at the end of the day, we got a rather more down-to-earth approach to the objectives that lie behind the bill. Although some members may view that as a criticism, I assure them that, coming from me, it is praise that the Government got down to its job and tried to do it correctly.
The bill comes in a great many parts—eight in total. Members will forgive me if I do not address them all individually during the next six minutes, but I will try to deal with those that concern me most.
Part 1 contains the vision. It might have been rather larger had the Government wished to take the hyperbolic approach. However, it sets out the vision in fairly plain language, allows us to understand what the objectives behind the bill are and introduces a number of additional responsibilities in terms of activity by ministers and reporting on that activity.
It has already been mentioned that, during the committee inquiry, I took most interest in part 2, on abstraction. Although I will pass on to my colleague Mary Scanlon the responsibility to talk about most of the abstraction issues, I repeat the accusation that has already been made and will be made again in the debate that there was a lack of consultation in the build-up to the bill’s introduction. It came as a surprise to many that abstraction was addressed in the bill and it remains a concern that a full consultation exercise did not take place. I fully accept the answer that ministers gave to the committee and that the cabinet secretary gave again in her opening speech that a dialogue continues with the industry. However, that is no substitute for a formal consultation exercise. Many of the misunderstandings that the committee came across during its inquiry were the results of a failure to consult adequately at the appropriate stage. There are still challenges ahead of us in relation to that.
Part 3 is the most important and I will spend the most time on it.
When Scottish Water was created, it replaced a Scottish water industry that was difficult to manage and was succeeding or failing in various degrees. It was important that we had a structured approach to dealing with the industry’s problems.
Ten years down the line, Scottish Water is a success story. The company has a collection of individuals in management and a collection of skills that are far greater than the sum of their parts. As a result, there is a great deal of opportunity to exploit the assets, both people and property.
The Conservatives have suggested on many occasions that the best way to release Scottish Water is to allow it to become a private company so that it can become yet one more Scottish success story.
Will Alex Johnstone give way?
No, not at this stage.
Unfortunately, it is unlikely that we will command the majority in the Parliament required to change Scottish Water into a private company. However, the changes that are taking place as a result of the bill in effect give the company the opportunity to do many of the things that it could do in the private sector but permit it to do so within a public sector model.
Will Alex Johnstone give way on that point?
I am about to take a step back from my previous argument and examine the changes that are proposed in the bill. I welcome them, as far as they go.
The issues raised during the committee inquiry concern the way in which Scottish Water will function in relation to private sector companies and the existence of competition.
The separation of core and non-core activities is critical to the success of the changes that the bill will introduce.
It is essential that we are confident that private companies will not suffer as a result of unfair competition from a company that the Scottish Government supports. I was significantly reassured by the answers that the committee got a number of times in taking evidence that suggested that the separation will be defined enough to ensure fair competition.
Scottish Water has a strong opportunity to exploit resources for the provision of renewable energy. Of course, it is one of the major energy consumers in Scotland. It is vital that it can exploit that opportunity.
Will the member take an intervention?
Alex Johnstone is in his last minute.
I do not get much time in debates and I need to finish my points.
I will deal briefly with other parts of the bill. The changes that are taking place are largely justified and we will be happy to support them.
You have 20 seconds.
It is perhaps ironic that part 7 relates to water shortage orders. At some point in the distant future, there might be days when Scotland experiences a water shortage again, but that is certainly not happening at the moment. I hope for and dearly look forward to the day when we can test such provisions.
You must close, please.
However, I do not see that day happening.
15:51
In a nation that is blessed with as many natural resources as Scotland has, water has a special place as perhaps our most precious and important natural resource. Scotland’s relationship with water is deeply ingrained in our national psyche.
The resource provides us with our drinking water, is home to our fish and sustains our rich and varied natural habitat. It provides a focus for leisure and recreation activities and it is vital to life, our environment and our economy.
The Scottish Government’s ambition to make Scotland a hydro nation reflects the importance that we place on our water resources. As Scotland seizes the opportunity to lead the world in tackling climate change, we also have an opportunity to demonstrate leadership in meeting the challenges that the management of water resources presents around the world.
The bill will place a clear and explicit duty on the Scottish Government to develop the
“value of Scotland’s water resources”.
To do that, the Scottish ministers will have additional responsibilities to
“take such reasonable steps as they consider appropriate”,
as the Deputy First Minister said. The bill will help to ensure that Scotland’s water has a sustainable future and will underline the worldwide contribution that Scotland has to make—which previous speakers have outlined—in areas such as water technology, governance, management and regulation. The bill will also play an important role in cementing Scottish Water’s international profile as a leading player in the water sector.
Notwithstanding specific concerns that I and other members have about the need for infrastructure investment in our communities, Scottish Water delivers one of the United Kingdom’s largest investment programmes for the lowest household bills. It will remain a successful and innovative public corporation.
The bill confers on Scottish Water the ability to do anything that it
“considers will assist in the development of the value of Scotland’s water resources”
and proposes a new duty on Scottish Water to take reasonable steps to develop its property, assets and expertise to promote the next generation of renewable energy. The bill will ensure clear and adequate separation between Scottish Water’s core and non-core functions, which will protect customers from increased bills.
During the Infrastructure and Capital Investment Committee’s consideration of the bill at stage 1, we heard evidence that profits from the non-core business could subsidise Scottish Water’s core functions and possibly reduce customers’ bills. However, it is vital that the customer does not pay higher bills as a result of any shortfall in any of the functions of Scottish Water’s non-core business. When I questioned the cabinet secretary on that point, I was pleased to receive her assurance that
“Scottish Water’s regulatory regime”
is
“very clear about the protection of core services and”
stipulates
“that nothing in the non-core part of Scottish Water’s services should be subsidised by the money that people pay for water and sewerage services.”—[Official Report, Infrastructure and Capital Investment Committee, 7 November 2012; c 1094.]
Rather, Scottish Water’s commercial activities should support the Scottish Government’s overall purpose of increasing sustainable economic growth and the strategic objective of making Scotland greener.
In the evidence, a number of key stakeholders raised concerns about Scottish Water’s environmental impact. That point was well made by the committee’s convener earlier.
RSPB Scotland pressed the importance of creating in the bill
“a clear requirement to ensure that any use of Scottish Water assets for renewable energy generation is sustainable and balances social and environmental impacts.”
That point was echoed by Scottish Environment LINK, which stated that it is crucial that any duty on Scottish Water to develop the value of water resources ensures that development is sustainable and includes sufficient provision for the development of assets to achieve the correct balance between the social and environmental impact. Again, the cabinet secretary said in evidence to the committee that the current definition of value notes the importance of the economic contribution, but that it should not be
“to the detriment of other factors, such as environmental or social benefits.”—[Official Report, Infrastructure and Capital Investment Committee, 7 November 2012; c 1089.]
The Scottish ministers will expect Scottish Water to deliver its core functions with increasing efficiency, as was stated earlier, and at a standard that the people of Scotland expect and deserve. That impacts on every aspect of Scottish Water’s business, from corporate governance and accountability right down to the infrastructure that serves our local communities.
I have been contacted by constituents of mine from the Shandon area who have suffered no fewer than four serious flooding incidents with sewage-soiled water in the past 16 years. Those floods have arisen because of limitations in the physical capacity of the existing infrastructure. Scottish Water admitted in an email to me this week that it
“would require to carry out a capital investment project to provide additional storage or upsize the existing sewer.”
However, as yet, Scottish Water has refused to place those properties on the internal flood register. It stated that in order to qualify for inclusion on the register, a property must be assessed as being at risk of flooding during a
“1 in 10 year storm event.”
A previous event in July 2011 was assessed as being a one in 331-year event. Given that the flooding has happened four times in the past 16 years, that is understandably difficult for my constituents to accept. I am sure that other members of the chamber face similar issues.
There are therefore issues for Scottish Water regarding accountability. I am concerned that Scottish Water is the judge and jury in its own court when it comes to investment decisions. Is there no place for independent scrutiny of its assessments? I am sure that further clarification on that point would be welcomed by MSPs and the people we represent. As Scottish Water takes on new and onerous challenges to develop our most precious natural resource, it must not be allowed to forget its obligation to customers and people in my constituency and across the country.
15:57
Water is more than a prized natural resource; it is an essential that we cannot do without and a resource on which key industries such as agriculture, food and drink, manufacturing and the energy sector all depend. We should never underestimate the value of our water; equally, its value should not simply be measured in pounds and pence or even just in terms of what it can contribute to the economy. The sound management of Scotland’s water resources brings social and environmental benefits that are not easily quantified but which are nonetheless important to who we are and how we live.
Too many people around the world confront barriers that prevent them from accessing clean drinking water, let alone water for any other purpose. Those barriers are heightened by climate change, rising global demand and globalisation. Even here in the United Kingdom, there are parts of these islands where demand outstrips supply. Scotland is water rich, but, because of their high population density, our nearest neighbours in England and Wales face water scarcity not unlike that experienced by some Mediterranean countries. Drought occurs on average every seven years in England and Wales, especially after the country goes through a dry winter, as it has now done for two or three years in a row.
That is the backdrop against which the bill is being taken forward, which is why the decisions that we take about our water in the next few weeks and about the stewardship of that resource in future are so important.
The bill should lead to a framework not just for managing our water, but for realising the full value of the resource—for the benefit of Scotland. In that context, the bill refers to “economic and other benefits”. I support calls for greater clarity on that point, so I appreciate the cabinet secretary’s earlier remarks and I look forward to the amendment.
If by “other benefits” the Government means social and environmental benefits, as the cabinet secretary indicated, it should be explicit about that in the bill. Innovation and creativity in how we manage our water can not just contribute to the economy but improve our environment and communities. The committee will welcome that simple but significant amendment to the bill.
I associate myself with members who have welcomed new rights for people who seek to repair septic tanks in common ownership, new access rights for people who monitor water quality and new offences in relation to the illegal passing into the sewer network of substances such as fats and acids.
The Scottish Government must clarify what it means by economic benefit and how it expects Scottish Water and the Scottish ministers to secure such benefit. We all agree that Scottish Water should be an efficient, competitive and high-performing organisation, but if we are serious about an all-Scotland recovery and about pulling together to build up our shared prosperity, we must examine Scottish Water’s role in the wider economy.
Scottish Water is a publicly owned corporation and I do not accept that it can contribute to the nation’s economic success only if it is privatised. If it has an ambitious framework and there is the possibility of further reform in the new year, Scottish Water can make its considerable budget go further and treat public procurement as a way of delivering jobs and new opportunities in Scotland, rather than just a transaction.
In response to the consultation on the bill, Jim and Margaret Cuthbert pointed out that of the 16 partners who deliver Scottish Water’s capital investment programme, only three are Scottish firms. Even if firms employ people in Scotland, the involvement of foreign-owned firms, along with the outsourcing of key Scottish Water functions such as R and D and design and construction, is stripping skills and experience out of the Scottish economy. As we await the introduction of the procurement bill in the new year, we should reflect on what “economic benefit” means and on how a new framework for Scottish Water will help Scotland to retain its world-leading position in the field.
Many responses to the consultation and submissions to the committee were thoughtful and helpful. I hope that the Government will continue to take on board the points that have been made, particularly in relation to the meaning of “value” and “economic benefit”. Scotland’s water is one of our greatest and most abundant natural resources. Precisely because that resource is so crucial, I reiterate to the cabinet secretary the need for clarity and caution as the bill proceeds through the Parliament.
16:02
It is fair to say that the Water Resources (Scotland) Bill is not the most controversial bill that the Parliament and its committees have considered. That is not to say that making the most of Scotland’s water resources, as the bill seeks to do, is not vital.
Scotland is a lucky country when it comes to natural resources. We have a superabundance of fresh water. Indeed, I am told that the volume of water in Loch Ness is nearly twice that of all the standing waters of England and Wales combined—that is fascinating fact number 1.
What is more, our water quality is among the best in the world. In Europe, Scotland is recognised as a leading nation in achieving the standards that are required under the European water framework directive.
We also have a high-performing water industry, led by our publicly owned Scottish Water, which supplies high-quality water and waste water services, supporting economic growth while protecting our health and environment, at much better value for the customer than is the case with Scottish Water’s privatised rivals down south—Alex Johnstone, please take note.
Given the Liberal Democrats’ position on Scottish Water, I am a little surprised and disappointed that no Liberal Democrat MSP saw fit to participate in the debate.
In addition to the growing excellence of Scottish Water, we have a strong academic base and innovative small and medium-sized enterprises. Therefore, in an increasingly water-stressed world, Scotland is well placed to develop into a world-leading hydro nation, as the cabinet secretary ably showed in opening the debate.
From the evidence that the committee gathered, it is fair to say that there is broad consensus among all stakeholders on the desirability of pursuing the hydro nation agenda, and broad support for the bill’s intention of doing so. That is reflected in the committee’s recommendation to the Parliament that the general principles of the bill be agreed to. That is not to say that there are no areas of contention that the Scottish Government will need to address at further stages of the bill. The most prominent of those areas relate to the provisions in parts 1 and 2 of the bill, to which I will confine my remarks.
Part 1 places a duty on the Scottish ministers to take all reasonable steps to develop the value of Scotland’s water resources. In itself, that will, of course, sharpen the Parliament’s focus on holding ministers to account. There is a strong case for consolidating annual reporting to Parliament on the hydro nation agenda and incorporating scrutiny of not only the bill, when it has been enacted, but the implementation of other relevant water-related legislation, such as the Water Environment and Water Services (Scotland) Act 2003 and the Flood Risk Management (Scotland) Act 2009. We look forward to the cabinet secretary’s proposals in that regard.
The main point at issue relates to the definition of the value of water. The bill emphasises the development of the economic value of the resource and does not refer explicitly to the social and environmental elements of value. I agree with the witnesses who argued that the legislation must ensure that any future development of Scotland’s water resources is entirely sustainable and must seek to protect and improve the natural environment. In its briefing for the debate, the RSPB suggested adding in a sustainable development duty akin to that in the Marine (Scotland) Act 2010, which should reinforce that intention. I look forward to discussing such an amendment at stage 2. Similarly, the bill and the hydro nation agenda need to link in with other policies, such as those in our climate change legislation, and the EU’s blueprint to safeguard Europe’s water resources, which recommends efficiency measures to save water and energy.
The Government will need to clear up the current confusion about the purpose of part 2, which will introduce ministerial control of large-scale water abstraction. As members have mentioned, the provisions were a late addition to the bill and were not consulted on. They also relate to an activity that is already subject to the controlled activities regulations licensing regime that is operated by SEPA in circumstances in which a proposed abstraction may have a practical impact on the environment.
Members have been made aware that the Scotch Whisky Association has expressed concern that the 10 megalitres per day threshold that is set out in the bill may be reduced in future and that the industry’s growth could be constrained unless it is exempted from that provision. Dealing with the Scotch Whisky Association and its concerns will be familiar territory for the cabinet secretary.
I would be grateful if you could come to a conclusion.
Yes, Presiding Officer.
Notwithstanding those issues of detail, which can be addressed at later stages, I am pleased to support the principles of the bill and the Government’s ambition to build Scotland into a hydro nation.
16:09
Presiding Officer, as I stand before you, I am a mixture of natural chemicals. The most important of those, without which I would have no existence, is formed by two atoms of hydrogen in close embrace with one atom of oxygen: H2O or water. That constitutes some 57 per cent of my body—of all the chemicals that make up the essential me.
We can survive without food for many weeks, but we can survive without water for only a very few days. We can choose, but people in areas of substantial aridity have no choice whatsoever.
I am lucky so far: my body receives water of adequate quality, processes it with other inputs, retains enough for its needs and discharges water waste, all with adequate efficiency. That is a model for Scottish Water.
A key part of the bill relates to those who are less lucky. We need to embed the domestic success of Scottish Water—which is cheap, cheerful and effective in comparison with companies elsewhere in these islands—in the wider world. The bill addresses the hydro nation agenda, and we should ensure that, through our expertise, others gain the type of skills that we have in Scotland.
I have no objection whatsoever to a state-owned company in Scotland helping with and engaging in commercial and social activities in countries elsewhere. Alex Johnstone may care to consider whether DB Schenker should be thrown out of the rail network in the UK, or whether the Dutch post office should not get to undermine Royal Mail, but I suspect that that is not where he was going with his remarks.
Providing commercial services through Scottish Water’s expertise and working in conjunction with the 300 or so companies that constitute Scotland’s water industry is important in engaging internationally.
I particularly welcome the duty that the bill places on ministers at section 1(1)(b) in relation to ways that
“contribute to the sustainable use of”
water
“resources”.
The wider sustainability agenda is progressed through the climate justice fund, with which I have been pleased to be associated. Those two elements—economic and sustainable futures—march together. As the bill says, our water resources are to be used not just for economic benefit but for any other benefit, and I particularly welcome the cabinet secretary’s plans to make that much clearer.
I will focus a little on the international activities relating to water in which we can be involved. When I was in Rio as the Minister for Environment and Climate Change, I was pleased to meet a number of international organisations for which water was a key issue. While we have—too often, perhaps—a surfeit of water, increasing numbers of people around the world are in water deficit. Meeting people from around the world who come from countries that are in water deficit, and who have to deal with those problems from day to day, is a graphic way of engaging attention and making real what are otherwise only words on paper.
I am pleased that we have been able to work with Mary Robinson and others to create the climate justice fund and, through that, to support water initiatives. The Government has said—and I support this—that it wants to be
“the helpdesk to the world on water governance”,
which is very important.
Water and energy are closely connected. What do members think a tonne of water looks like? The answer is a cubic metre. Moving water around involves moving a heck of a lot of weight, and I welcome the fact that Scottish Water is now engaging in producing green power on its own estate. The bill gives certainty to Scottish Water’s ability to profit from doing that and to produce an economic and environmental benefit, rather than simply to use such activity for its own purposes.
That builds further expertise at the join between the economy and the environment, which I welcome. It is another opportunity for countries to learn from the developed world, and for us to support countries that are in greatest need where they cannot afford to pay for such skills as we have.
There have already been border disputes over water around the world, and it is not unlikely that, in the next 100 years, skirmishes and perhaps even wars will be fought over water. No asset in the modern world will be more important. We can contribute to world peace—and what higher objective could we serve?—by engaging with countries around the world whose populations are in water deficit. We must allow Scottish Water and other companies with expertise in the water industry in Scotland to engage internationally, to support those in greatest need and to contribute to world peace.
That is a pretty good day’s work. I congratulate the committee and the Government on what they have done so far, and I look forward to more of that in future.
16:15
If Scotland has lots of water, Greenock and Inverclyde is blessed with an abundance of water, which the bill recognises as a real resource.
In Greenock history, water was long ago recognised as a resource. Loch Thom is an internationally renowned engineering marvel designed by the Scottish civil engineer Robert Thom who used water assets to address public health issues through the provision of clean drinking water for the town while, at the same time, fuelling the industrial revolution by providing water power for our mills and refineries.
Although those mills and refineries may now be gone, the good-quality water that I drink at home every day has been sustained—a core responsibility delivered by a public company, Scottish Water, that is clearly valued in that context and supported by the Scottish public. Whatever the recognised benefits of the bill, there are clear responsibilities, of which the provision of clean, good-quality water should remain a priority.
If the bill can achieve the worthy aims and outcomes of Robert Thom’s invention and engineering skills, it will have achieved what it sets out to achieve—the greater good and impressive outcomes for social, business and other interests. I welcome the cabinet secretary’s announcement today, in response to the committee, that the Scottish Government recognises the importance of our water resource in the widest possible terms—in terms of the environment and the social benefits as well as any financial benefit that may accrue to Scottish Water and its customers.
Although the ambitions are clear and worthy, we need to recognise that questions remain. Who will ensure that the environmental and social considerations are given equal weighting in any discussions? Who will make the decisions? There is a genuine worry that, although it is worthy to see the benefit of water as a resource and to have the commercial development associated with that, that may divert Scottish Water away from its core principles.
These questions need to be asked. Who will ensure that the partnership working that happens now will continue and that the views of those partners will be respected? What of the community planning process, involving public bodies, that takes place now? How will that be recognised in the bill? What requirements will be placed on Scottish Water to work effectively with other public bodies—as happens now—and communities, particularly in the area of renewables?
Those questions are important to my constituency and its community, which wishes to be a full member of the Scottish hydro nation. We want to use to the full the infrastructure that has been bequeathed to us—Loch Thom, the Greenock Cut and all the infrastructure that is on the hills that stretch along the Greenock to Port Glasgow waterfront. We want to be able to use that effectively and to good purpose, particularly to develop the ideas that have come from the community and been taken up by the local authority about how we can best develop a renewable electricity supply from those resources and the natural environment.
I believe that the bill moves us in the right direction. Nevertheless, given the cabinet secretary’s opening remarks, I am sure that she recognises that there are still more questions to be answered and much more work to be done if we are to realise our ambitions both in the Greenock and Inverclyde area and for our nation to be a hydro nation. I welcome the bill.
16:20
As others have said, Scotland is in an enviable position. As a country, we can sustain ourselves as a net exporter of food, we have around 90 per cent of North Sea oil and gas, we have the renewables industry and we have, of course, an abundance of water.
Most of the planet’s surface is composed of water, but freshwater is believed to be only 3 per cent of the total amount available. In many areas of the world there are severe water shortages, and the report “The Global Water Crisis: Addressing an Urgent Security Issue” highlights that
“sub-Saharan Africa or West Asia and North Africa ... are already facing critical water shortages.”
The report also states that expected water demand in India and China will exceed supplies in less than 20 years.
According to a statement on the Department for Environment, Food and Rural Affairs website:
“In 2012, a drought developed in much of England as a result of two winters with below average rainfall. By April 2012 river flows and groundwater levels were exceptionally low and temporary use bans were introduced by seven water companies.”
Scotland, with its vast water resource, has an economic opportunity and a responsibility to safeguard our water supply for generations to come.
The Scottish Government has a vision of Scotland as a world-leading hydro nation, and the Water Resources (Scotland) Bill will support that goal. The hydro nation agenda will deliver economic gain to Scotland, help tackle climate change, raise Scotland’s international profile and share our knowledge on water issues.
Part 1 places a duty on the Scottish ministers to develop the value of Scotland’s water resources. Many organisations favour that approach, including the IHP-HELP centre for water law, policy and science, the James Hutton Institute and Scottish Water.
Scottish Water welcomed the proposals and stated that they
“provide a strong statutory basis for developing Scotland's water resource in the interests of Scotland.”—[Official Report, Infrastructure and Capital Investment Committee, 31 October 2012; c 1027.]
Part 3 is concerned with Scottish Water’s functions and its exercise of those functions. The bill aims to protect customers who receive the core services of water and waste water services, but it also allows Scottish Water to
“do anything that”
it
“considers will assist in the development of the value of Scotland’s water resources”.
That includes using its assets for the generation of renewable energy and, with an investment of £44 million, to deliver the new functions imposed by part 3.
Scottish Water, through its subsidiary Scottish Water International, will be able to offer services internationally using the world-class expertise of its engineers, scientists and managers and, with their ability to help the world harness its water resources most effectively, assist countries to tackle the effects of climate change.
As the Institution of Civil Engineers suggested in its evidence, the bill would help Scotland to maximise the benefits of what it is already good at doing in the water sector; to continue to build capability in addressing complex sustainable water management issues; and to further increase Scotland’s competitiveness on the world stage in this area.
Part 2 relates to the control of water abstraction. I said earlier that we have an abundant water supply, but we also have a responsibility to ensure that the plans proposed in the bill are sustainable in the long term. The bill provides for the Scottish ministers to control large-scale water abstractions and requires ministerial approval before an abstraction above 10 million litres per day can take place. There are exemptions in place for those generating electricity from hydro power and for agricultural purposes, fish farming, quarrying or mining. However, there was one surprising omission from the exemptions: the whisky industry.
I should, at this stage, declare my interest in that omission as I have the Scotch Whisky Research Institute in my constituency. In addition, I have a modest collection of malt whisky and I am, of course, a consumer of the product.
I am well aware that the whisky industry is very important for the Scottish economy, as it provides thousands of jobs, many of which are in rural areas, thereby sustaining local communities. It also accounts for 80 per cent of Scotland’s food and drink exports. Therefore, it is a vital part of our economy.
In its written evidence, the Scotch Whisky Association said that the industry uses more than 37 billion litres of water per annum at current production rates, although two thirds of that is returned to watercourses after being used for cooling purposes. Whisky production has more than doubled since 1983. Although that is a fantastic economic good-news story for Scotland, we must be aware of potential problems if that growth rate continues.
The James Hutton Institute highlighted the difficulty of setting a threshold when every catchment area is different. It said that it is more important to measure the impact on a particular area than it is to apply a figure across the board. As well as safeguarding our natural resources, we must support our key industries. As the committee’s report states in paragraph 95:
“In order to provide greater clarity, the Committee considers that the Scottish Government should include discussion on the threshold limit when it engages with stakeholders on the wider policy intention of Part 2 of the Bill.”
Water scarcity and access to clean water and sanitation are a global concern. Scotland can and should play a leading role in tackling the problems.
16:26
Let me begin by stating the obvious: water is a basic commodity that is perhaps taken for granted by most residents in Scotland. I certainly have the expectation that, when I turn on the tap, water will flow.
There are some people whom I know who take the view that water, by its very nature and origin, should be free and that the imposition of charges by Scottish Water is somehow immoral or improper. However, the water still has to be piped to our houses, the network of pipes and pumping stations has to be maintained, and sewage needs to be piped and treated. None of that would happen without our paying for it to happen.
We are fortunate that our major water supplier remains in public ownership, unlike the situation south of the border. It is my belief that that represents a distinct advantage to the residents of Scotland, given the anecdotal evidence that I read about shortages and the failures of the privatised industry in England.
The introduction of the bill will help to develop and strengthen Scottish Water’s position as our major supplier of residential and commercial water and the provider of sewage services, and the bill’s vision of Scotland as a hydro nation is an inspirational one. Scottish Water already delivers one of the UK’s biggest investment programmes, against a background of charging the lowest household bills. I am very happy with the Scottish Government’s commitment to keeping this successful and innovative corporation firmly in public ownership.
It is worth considering some of the scale and background to the bill. More than 300 companies support the sector in Scotland. In 2008-09, the water supply and waste sub-sector in Scotland was estimated to have a market value of £709 million and to employ 6,200 people. Every day, Scottish Water provides 1.3 billion litres of drinking water through 29,762 miles of pipes and takes away about 839 million litres of waste water through 31,477 miles of sewer pipes—imagine all those pipes under our feet. Scottish Water serves 2.4 million households and 152,000 business premises across Scotland.
It must be clear that Scottish Water is a high-performing business by anyone’s standards. That is not a statement that can often be made with confidence in relation to utility companies. It is worth looking at some of the key indicators that support that statement.
Drinking water quality is at its highest-ever level—99.86 per cent of samples comply with strict quality standards. Leakage has been reduced by 70 million litres of water a day. Real operating costs have been reduced by 40 per cent since 2002. Can any other company in the water industry approach that? In 2011-12, Scottish Water achieved the highest-ever customer satisfaction score of 83 per cent.
In 2011-12, Scottish Water delivered £491 million of investment and, over the past 10 years, £5.5 billion has been invested across Scotland. In 2012-13, the average household annual charge, at £324 per annum, will be £52 lower than the average in England and Wales. That is quite a turnaround—and an improvement on 2002-03, when the average charge was £30 higher than in England and Wales.
Those are achievements to applaud and the proposed bill must—and does—support the development of Scottish Water across a number of critical areas. Importantly, the bill places a general duty on the Scottish ministers to actively ensure the development of our water resources. It gives Scottish Water power to control large-scale water abstractions and an obligation to develop its assets, including the generation of renewable energy.
The bill allows Scottish Water to place conditions on trade effluent consents, which should improve and control the quality of trade effluent. The bill prohibits the dumping of fat, oil or grease into the public sewer system—we would think that that would be fairly obvious—and it gives additional powers to monitor raw water quality. It allows the Scottish ministers to lend money directly to subsidiaries of Scottish Water or for them to borrow from other sources. It also creates a new system for dealing with temporary water shortages. Those points and the other content of the bill are key to the continued development of a vigorous and modern Scottish Water.
I will return to the hydro nation concept that I touched on previously. Scotland could play an increased role internationally. Water scarcity and access to clean water and sanitation are matters of global concern: people in China and India alone make up 50 per cent of the global population without sanitation facilities. The Scottish Government has launched a £3 million climate justice fund to support nations that contribute the least to climate change but feel the worst of its effects. That is all part of our increasing international engagement.
In considering all the aspects of the bill, it is clear that the Scottish National Party Government has the vision to make Scotland an effective player on the world stage by using innovation and the resources that our nation has available. This Government extracts the maximum value from our resources while still ensuring that the environment is protected and that individual consumers receive the high-quality service that they have come to expect.
We have a beautiful natural heritage, which will be preserved by this Government. Scottish Water has faithfully served consumers as a publicly owned corporation since 2002, lowering the cost to my constituents and the rest of the nation of clean water provision and sewage disposal.
The bill better prepares us for the future. Although there were floods in Musselburgh in my constituency last year, I am grateful for the provisions in this bill that will help to manage droughts and water shortages. We never know what the future will bring, but this bill is focused on the future and, most importantly, it ensures that we get the most out of one of our most valuable resources.
We turn to closing speeches, and I remind members who participated in the debate that they should be in the chamber for closing speeches.
16:33
I thank the Infrastructure and Capital Investment Committee for its stage 1 report, under the able leadership of Maureen Watt. Listening to Colin Beattie reminded me that my son often tells me that engineers save more lives than doctors because they provide clean water. I thought that was an appropriate point to make after Colin Beattie’s speech.
In this fourth session of the Parliament, I would have thought that the lessons from the past in bringing forward legislation would have been learned. The SNP and the Conservatives were vocal in opposition when measures were brought forward by the previous Liberal-Labour Scottish Executive with no consultation—rightly so.
I was therefore shocked to see that the sections of the bill on abstraction—part 2—was added with no consultation whatsoever. Neither does it seem to be clear to the many witnesses how the proposed abstraction application process will be separate from the current controlled activities regulations licensing regime—otherwise known as CAR—that is operated by SEPA. It is not surprising that the committee report states in paragraph 74:
“The Committee has been made aware in evidence of a number of concerns in relation to the proposal to introduce the new abstraction regime”
particularly when CAR
“was considered to be working well”
and
“Ministers already had the power to call in abstractions”
under the current system.
I hope that that potential duplication will be addressed so that we have some clarity, which is, from my reading of the bill, much needed.
Even SSE stated, in respect of the new abstraction regime, that
“it did not have enough information to form a view on it”—
that is mentioned in paragraph 75. The Centre for Water Law—which I did not know existed—considered that
“the CAR system worked well and found it difficult to see the added benefit of another layer of regulation”.
Therefore, it is not surprising that the committee’s report points out that
“Energy UK considered that Part 2 of the Bill was not in keeping with the better regulation agenda.”
As Alex Johnstone said, continuing to talk to stakeholders is a world apart from a thorough and considered consultation process, especially when the Government occasionally has a different interpretation from some of the rest of us about what constitutes consistent dialogue.
I also share the committee’s doubts in paragraphs 84 and 85. The committee acknowledged
“the ... concerns that ... questioned whether there is a need for the new abstraction regime”
and noted that
“it might be better to enhance the Controlled Activities Regulations”.
That suggestion makes much more sense to me. The committee’s disappointment
“that the Government did not manage to include the abstraction proposals in either of its two previous consultations”
is perfectly understandable. To be fair, such an omission is not conducive to good and effective legislation.
As I raised earlier with the cabinet secretary, and as others have mentioned, the Scotch Whisky Association makes the point—this would have been raised in a consultation process—that the threshold should specify the volume of water consumed rather than the amount abstracted, particularly as only one third of the water that the industry takes from the environment is used for distillation and two thirds of it is returned.
I note that paragraph 92 highlights SEPA’s concerns about the gap between the abstraction and the water being returned to the environment. When I asked plenty of people about that at the Scotch Whisky Association event in the main hall last night, I was told that the timeframe for that gap is between two and 12 hours. I cannot see burns running dry, despite the scaremongering from SEPA, so I am not sure whether SEPA is totally aware of the timeframe. As convener of the cross-party group on Scotch whisky, I also point out that the industry has done more than most to address energy use, pollution, recycling and environmental issues.
Paragraphs 94 and 95 seek clarity on
“the rationale for the abstraction threshold of 10 megalitres per day”
and point to a
“lack of understanding on the part of stakeholders about the policy intention”.
At this stage, the policy intention should be known. Once more, I say that that is why this Parliament, with no revising chamber, places so much emphasis on pre-legislative scrutiny to allow the committees the opportunity to do the work that they are tasked to do.
Although no distillery currently uses more than 10 megalitres per day, that time could come—Gordon MacDonald also alluded to this—given the increasing demand for whisky exports in China, Brazil, India and many other countries worldwide. Any limit on water use could be potentially damaging to the industry, which is perhaps the only industry in Scotland whose production is restricted to our country by law. Given the contribution that the whisky industry makes to our economy and the fact that two thirds of the water that it abstracts is returned to the environment within hours, I hope that even at this stage the Government will consider—I felt that the cabinet secretary was listening when I raised the issue earlier—an exemption on abstraction for the whisky industry.
I have not mentioned the leakage rate. Alex Johnstone has told me not to worry about that, because Scottish Water is making good progress and has reduced the leakage rate from about 1,200 million litres every day to 700 million litres a day. I do not know about other members, but I think that that is still a huge amount.
I fully commend the Infrastructure and Capital Investment Committee. Its work has been thorough and its report is excellent. We will support the general principles of the bill.
16:40
The debate has been mainly consensual, even though we have been invited to envisage Stewart Stevenson discharging water, and despite the fact that the Conservatives take a different view from other members on the value of retaining Scottish Water in the public sector.
It makes sense for Scotland to make the most of a resource that it possesses in abundance. As members have said, at times we have an overabundance. Water shortages are a concern throughout the world, as climate change and increasing global population take effect, while in Scotland we often complain about the amount of water with which we are blessed. The effect of global warming on us is that the resource is likely to increase, as is the severity with which it is deposited on our land. Clearly, we should turn that to the country’s advantage whenever possible.
Like other members, I am not sure that the statutory designation of Scotland as the first “Hydro Nation” is absolutely necessary to enable us to do all the things that we want to do. I must say in passing that I have an aversion to the appearance of capital letters in the middle of a sentence when not attached to a proper noun—that annoys me almost as much as the intrusive apostrophe, but I will let it pass. I am not convinced that some of the provisions in the bill are absolutely necessary and that we could not do some things anyway.
I think that, technically, I am now a member of the Infrastructure and Capital Investment Committee, but I was not a member during stage 1 consideration. I therefore read the policy memorandum and the committee’s report with considerable interest, and I look forward to stage 2. Despite the uncertainty about whether the ministerial duty is necessary, it appears to have received support from witnesses, although Consumer Focus Scotland wanted more clarity on the benefit of the bill to Scottish Water customers. Consumer Focus and the RSPB felt that the bill should not divert effort from improving the water resource and preventing its deterioration. For example, the amount of leakage of water from the system in 2009-10 was 704 million litres a day.
Maureen Watt, Margaret McCulloch and Duncan McNeil expressed concern about the meaning of the term “value of water” and that point was also made by witnesses to the committee, many of whom suggested that the bill should be amended to reflect the three pillars of sustainability, rather than simply the economic value. I am therefore sure that they and others will welcome the cabinet secretary’s announcement that she intends to lodge an amendment at stage 2 to make that clear. The environmental law sub-committee of the Law Society of Scotland was concerned that the provisions do not take the environmental impact fully into account.
I was interested to read in paragraph 49 of the committee’s report that RSPB Scotland, Scottish Environment LINK and the Scottish Wildlife Trust called for a wider range of bodies to be included in the list of designated bodies, in order to promote a partnership approach similar to that which applies to catchment management, legislation on which went through the Parliament in a previous year. Duncan McNeil highlighted areas of existing partnership that it is important not to interfere with.
Witnesses referred to the duty in the Flood Risk Management (Scotland) Act 2009 and said that it is working well. As Adam Ingram pointed out, the RSPB referred in its briefing for the debate to the sustainability duty in the Marine (Scotland) Act 2010. I was a member of the Rural Affairs and Environment Committee during the passage of both those acts, and I can well remember the discussions that we had on the duties that ought to be placed on ministers, responsible bodies and partners. Therefore, I was pleased to read that those acts are now being cited as good practice. I hope that we can learn from them. There might be parallels with the bill, so perhaps we can reflect the good practice that seems to have been brought in through those other pieces of legislation.
I will mention an issue that has not so far been raised in the debate, although I am sure that, if Rob Gibson or Claudia Beamish were present, it definitely would have been. The RSPB also urges us to explicitly include peatland habitats—blanket and raised bogs—in the definition of water resources, so that peat bog management and restoration can be pursued under the bill’s purpose of developing Scotland’s water resources.
Peatland, like water, is an abundant resource in Scotland, and it can play an extremely valuable role as a carbon reserve. It can help to contribute to our climate change targets, so it is well placed to deliver a better water supply and I hope that we will go along with the RSPB’s suggestion that we should amend the bill to include peatland habitats, as defined as a water resource, so that they can be covered by the provisions in the bill.
Margaret McCulloch noted the important role of procurement policy in the future development of Scottish Water, which will obviously overlap with the forthcoming procurement bill.
The bill provides for ministers to control large-scale water abstractions, as many members said, and there is some doubt that that is absolutely necessary as the CAR licensing regime could be extended to include that provision. The RSPB, for example, noted that ministers already have the power to call in abstractions. I know that the cabinet secretary disagrees with that point, because she said that CAR is restricted to environmental issues.
Mary Scanlon and Gordon MacDonald mentioned the concerns of the Scotch Whisky Association. I should declare an interest, but only as a consumer, although I would not like to see the industry’s future damaged. The Scotch Whisky Association has asked for the industry to be included in the list of exemptions.
Finally, many members who spoke in the debate thought that the issue of water shortages was a bit of a fantasy. However, it is only two or three years since Pinneys of Scotland in Annan, which is a big food processing company in my constituency, was beginning to get worried because we were facing water shortages that could have affected its commercial production. We must be concerned about potential water shortages and we need to consider the concerns of the food and drink industry regarding the proposals in the bill. We should also take on board Consumer Focus Scotland’s suggestion about protecting vulnerable people at times of water shortages, because—who knows?—such times might come back.
16:47
This has been a good debate. Adam Ingram said that the bill might not be the most controversial that Parliament will ever debate, and I guess that he is right. Nevertheless, it covers an interesting subject and I have thoroughly enjoyed the debate this afternoon.
There have been some extremely good contributions. The highlight of the debate for me has to have been the revelation that the bill is about the “essential” Stewart Stevenson. Like Elaine Murray, I could probably have lived without the rest of the explanation about how he processes the precious commodity, and I was becoming rather alarmed by how much he was drinking in the chamber in case we had to face a physical demonstration of what he was trying to describe. Notwithstanding all that, Stewart Stevenson’s speech was excellent, and many of the other contributions, including that of Maureen Watt as lead committee convener, were of a very high standard.
Many members spoke about the importance of water to our environment, our society and our economy. Colin Beattie was right to say that water is a commodity that most of us take for granted—probably because we regularly get soaked to the skin when we go outside. Nevertheless, we should remind ourselves how important the commodity is. Gordon MacDonald spoke eloquently about the big and serious responsibility that comes to us because of our relative abundance of a commodity in a world in which its scarcity will become a concern.
Duncan McNeil’s comments on the importance of water to Inverclyde give me the opportunity to tell the chamber that this week I had my own close contact with Port Glasgow water when I launched MV Hallaig, the world’s first sea-going roll-on/roll-off hybrid ferry, which was built at Ferguson Shipbuilders Ltd’s yard. With Stuart McMillan piping the guests as we performed the ceremony it was, all in all, a tremendous occasion and a great day for Ferguson’s, for Port Glasgow and for Inverclyde.
Many members mentioned the Government’s ambition—although I note that one or two referred to it in what appeared to be almost derogatory terms. We are unashamedly ambitious about the hydro nation agenda. It is right that when we in Scotland have an abundance of water and of the associated skills and expertise, we are being serious not only about making the most of those resources for our own benefit but about sharing them for the benefit of the world that we all inhabit.
Although I welcome what I thought was a good speech from Richard Baker, I have to point out to him that in my opening remarks I said explicitly that I do not think that the bill is the sum total of the hydro nation agenda—and nor should it be. I also went into some detail about the agenda in its widest sense. That said, although the bill is not the be-all and end-all, it fulfils an important function in the wider agenda, and I am glad that it has attracted support today.
I want to go through thematically some of the key points in the debate. I characterise the first set of points as being about the importance of striking the right balance. The bill is, to an extent, about competing interests. It is important to strike the right balance with regard to the interests of consumers and the importance that they attach to quality of service and fair water charges; to the interests of our businesses and the importance of supporting and encouraging them; and to doing what we can to support the interests of those who want to support developing nations, while all the time ensuring that we protect the vital resource for the benefit of future generations.
We have also to strike a balance with regard to economic, environmental and social factors, and I hope that an amendment to part 1—which I said at the outset I intend to lodge at stage 2—will assure people that the Government is serious about striking the right balance in that respect. Some favourable comments have been made about our intention; Maureen Watt’s remarks about it were particularly important.
The next set of comments relates to part 2, which deals with water abstraction. Maureen Watt, Mary Scanlon, Richard Baker, Alex Johnstone and Adam Ingram—among others—commented on part 2, and I want to address some of their points. First, with regard to the relationship with the controlled activities regulations, I do not see the provisions in the bill as being duplication. I say that as a minister who came to the bill at a late stage in the development of its draft form.
I see a very clear relationship between CAR and the bill’s provisions. As I said in response to Mary Scanlon, CAR focuses only on environment factors, whereas the bill is designed to take a much wider view and to consider a wider set of circumstances, such as whether the location of abstraction is appropriate, whether the right infrastructure is in place and whether we are taking adequate account of long-term interests with regard to safeguarding the resource. As a result, I think that it is right for those two systems to sit in parallel.
However, it is also right that the system is proportionate and I believe that a threshold of 10 megalitres a day strikes the right balance. That is a significant volume of water and the majority—perhaps the vast majority—of current abstractions in Scotland fall below that level.
Mary Scanlon and others mentioned the Scotch whisky interest in this issue. The bill’s exemptions principally cover non-consumptive activities that deliver a wider public benefit but I will, as I have said, look at the comments that have been made. I take Mary Scanlon’s point about the non-consumptive nature of the Scotch whisky industry’s abstractions, and we will consider such points carefully. Even if we do not agree to amend the bill in that respect, I hope that we can satisfy the concerns of interests including the whisky industry.
The next area that I want to deal with is the distinction between core and non-core Scottish Water services, and the concern that was expressed, certainly at an earlier stage of consideration, that Scottish Water might be given an unfair commercial advantage. I was pleased to hear Maureen Watt say that the committee was satisfied with the assurances that were given on that point, and I want to repeat those assurances today. No unfair advantage is being conferred on Scottish Water in terms of its commercial activities. For example, lending to Business Stream is done at a commercial rate, and it will continue to the be case that future lending to subsidiaries will be on that basis.
The split between core and non-core business is of huge importance, as Alex Johnstone said. The core business will continue to be a priority and will not subsidise the non-core activity.
I apologise for returning to an issue that was raised earlier, but is not actually relevant to what the minister is currently saying.
During the debate, it was suggested—I forget by whom—that where Scottish Water’s expertise is made available across the world, as it already is and will be to a greater extent in the future, the dispersal of that expertise should be conditional on Scottish Water’s organisational model also being promoted. I am concerned about that level of political interference. Would the minister perhaps take the opportunity to dissociate herself from an idea that might have an impact on Scottish Water’s activity?
To be fair, I think that Alex Johnstone is mischaracterising what was said. I am about to characterise what somebody else said.
Neil Findlay raised a concern about assisting in privatisation of water resources in other countries. Maureen Watt made the perfectly valid point that there is an opportunity for Scottish Water to show leadership, because the success of its ownership structure and model of governance—it is an extremely successful public corporation—shows that the model works. That is part of the leadership that Scottish Water can show and that is a perfectly valid point to make. If I have missed part of what Alex Johnstone was talking about, I would be happy to deal with the remainder in writing.
I want, in the time that remains to me, to deal specifically with Scottish Water, which is a success story. Some members raised particular constituency issues, which I will ensure are drawn to Scottish Water’s attention and are responded to.
Scottish Water is in its 10th year and has a record of which we should be proud. It has delivered significant efficiencies, with average household water charges that are lower than those in England and Wales. As Mary Scanlon said, leakage has been reduced and new infrastructure has been built, but that is not the end of the story, because the business has to continue to drive forward with efficiency while ensuring that its assets are resilient and are meeting the needs of customers. I am sure that Scottish Water will rise to that challenge.
Some members in the debate—not the Liberal Democrats, who did not contribute, but the Tories—put forward what they consider to be the case for privatisation. The question that people such as Alex Johnstone have to answer is this: why on earth, when Scottish Water is operating so successfully in the public sector, would we want to change that and put at risk the success that it is enjoying?“ This Government will not do that.
As Jim Eadie said, the bill challenges us to show leadership and to develop the value of our massive water resources. When we talk about the value of those resources, we are talking about more than the water in the rivers, lochs and canals; we are also talking about the work of land managers, regulators, industry experts, academics and the volunteers who spend a lot of time protecting our environment.
Water underpins our economy. Given our relative abundance of water, it is right that we have a positive and ambitious vision for the future. We are very fortunate, and it is right that we share that good fortune with others.
I look forward to discussing with the committee the points that have been raised today, and I invite members to support me in agreeing to the principles of the Water Resources (Scotland) Bill, so that we can move on to the detailed scrutiny of stage 2.