Scottish Water disposes ofland in accordance with the rules laid out in the Scottish Public FinanceManual which is available at:http://www.scotland.gov.uk/library5/finance/spfm/spf-00.asp.

As set out in the WaterIndustry (Scotland) Act 2002, Scottish Water must, in exercising its functions,act in the way best calculated to contribute to sustainable development.Sustainable management of water is also a requirement of the European WaterFramework Directive. Scottish Water have been developing a sustainabledevelopment action plan, which includes a commitment to protect and manage our water resources and encouragetheir customers to use water more efficiently in homes and businesses. Oncefinalised, the intention is to publish annual updates on progress.

I have asked Dr Jon Hargreaves, Chief Executive of Scottish Water to respond. His response is as follows:

Processes have been established to ensure Scottish Water (SW) maintains a governance role and ensures Scottish Water Solutions are delivering the programme and projects, within the programme, for best value. Benchmarking of projects will be carried out to assess solutions targets against industry best practice again to ensure best value is being achieved.

SW continues to assume full responsibility for the capital programme

SW has established a mechanism for controlling the spend on delivering the capital programme.

Capex approval process, mirrors SW’s process, and ensures approval of the cost of individual projectsis on the basis of best value.

Key performance indicators have been established and will be monitored by Scottish Water.

Audit Scotlanddiscusses a wide range of issues with the Executive, and we are aware they areconsidering whether to examine lessons that might be learned  from capitalprocurement in the water industry.

I have asked Dr Jon Hargreaves, Chief Executive of Scottish Water to respond. His response is asfollows:

An assessment was made of the capability of the existing capital delivery model to achieve the requiredcapital efficiency. It concluded that the status quo was not a viable option todeliver the required capital efficiency in the available timescale. Havingdecided not to use the inherited delivery models, the options availablerevolved around outsourcing or partnering. There were emerging trends aroundoutsourcing that indicated that the real, or perceived, loss of control isunacceptable to customers. In addition, there is significant evidence of risk“bounce back”. The ultimate reputation risk is carried by the client. ScottishWater’s focus was therefore on the creation of the most effective and efficientpartnering arrangement. Scottish Water initiated a consultation exercise toexplore the alternative means of delivering the capital programme. A range ofdelivery models were identified, five in number. Thereafter comments weresought from external parties who had no vested interest in the chosen model andthe final delivery model established.

Information on net income bysource for 2003-04 is contained on page 16 of the CIPFA Rating ReviewEstimates of Income and Expenditure 2003-2004, a copy of which is availablein the Parliament’s Reference Centre (Bib. number 29256).

have asked Dr JonHargreaves, Chief Executive of Scottish Water to respond. His response is asfollows:

Chairman:

Geoff Aitkenhead, ScottishWater

Directors:

Chris Banks, Scottish Water

John Bennett, Scottish Water

Mike Edwards, UnitedUtilities

Bruno Speed, Morgan Est

Tony Collins, Gleeson

Graham Mallett, Thames Water

I have asked Dr JonHargreaves, Chief Executive of Scottish Water to respond. His response is asfollows:

A comprehensive selectionprocess was implemented, complying with European procurement legislation, whichensured a competitive environment existed for the duration of the process

Selection Process:

Ojec Advert, April 2002 – 17Expressions of interest received

Pre qualificationquestionnaire – reduced number to 10

Consultation phase –Discussions with 10 bidders and the industry as to the optimum delivery modelfor the procurement of the Capital Programme. Agreed to Integrated Partnershipwith two Consortia and Scottish Water.

Implementation Process –Stage 1 Consortia number reduced to five.

Implementation Process –Stage 2 Detailed tender process including cost models, scenarios, on sitereviews, commercial financial arrangements, capital programme verification,presentations and interviews (incl several board members), business plansubmission, assessment centre.

Clarification Process –Intention from the above was to reduce number to final two. However, to achieveflexibility and best fit, i.e. two consortia and Scottish Water, furtherclarification was sought, this included, management fees, staff levels,incentive mechanism, use of engineering trading unit and contract services andassessed before the final two were presented to the board on 29 Jan 2003 forapproval to proceed to the next stage.

I am pleased to announce thepublication of the Chief Statistician’s Annual Report for the year 2002-03. Thissets out progress on the development of statistics and on the performance of the Scottish Executive in relation to the principles and procedures set outin the National Statistics Framework and Code of Practice.

The report of the independentStatistics Commission was published in July 2003.

We are committed to an independentreview of local government finance. We are discussing the timing, remit and formatof the review with COSLA.