Water Industry (Hansard, 26 November 1998)

§ Mr. Dewar

The Scottish Water Industry Review proposed a range of measures to modernise the Scottish water industry. A central measure was the proposal to create a new position of a professional regulator responsible for all aspects of economic regulation of the Scottish water industry and for promoting the customer interest. There was consensus in all parts of the industry, including the Customers Council, that this would be a major improvement on the present arrangements. To safeguard the operational independence of the regulator, I proposed in my statement to the House of 16 December 1997,Official Report, columns 145–58, that we should establish the position in statute.

The Water Industry Bill, which was published today, contains provisions to discharge this commitment. It will wind up the current Customers Council and establish a new Water Industry Commissioner for Scotland to promote the interests of the water authorities' customers. The Commissioner will assume most of the existing duties of the Customers Council and will have the new function of advising the Scottish Executive about setting water and sewerage charges over periods of several years. The Bill also establishes new Water Industry Consultative Committees for each water authority to advise the Commissioner on the promotion of customer interests in their respective areas.

These new arrangements will allow objective, professional regulation of water charges. Requiring the Commissioner to consider charges over a number of years, will ensure more long-term stability than at present. This will allow the water authorities to plan for the future with greater certainty, helping them deliver better services to their customers as efficiently as possible.

The Bill requires the Commissioner to publish the advice put to the Executive on charges and also any modifications the Executive might make to that advice subsequently. These arrangements will safeguard the operational independence of the Commissioner, and will make the operation of the new system transparent to the general public. The Commissioner will be accountable to the Executive and, through it, to the Parliament. I believe these arrangements will give customers the best possible deal on prices and quality of service.

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The water industry review also stressed the need to tackle the chronic under-investment in the industry. I can report that by the end of the current financial year the water authorities will have invested over £800 million since 1996 in new and upgraded infrastructure, with a further £1,500 million of investment planned over the following 3 years. This scale of investment represents a massive transformation and modernisation of the industry and brings to an end decades of neglect.

The Review stressed the importance of a stable financial framework for the industry, and it should be helpful that the recent allocation of EFLs has been made on a three-year basis.

The Review also recommended that the water authorities should become more responsive at a local level. To promote this our new appointments to the Water Authority Boards brought the number of local authority representatives up to roughly half of the total. I also issued a direction to the water authorities on 14 August this year requiring them to consult local authorities and other local representative bodies regularly. Copies of this direction were placed in the Library. The evidence so far suggests that these new arrangements are working well.

In sum, to implement our review we are modernising and improving standards in water and sewerage on a scale unprecedented since Victorian times. We are investing massive sums in improving the quality of drinking water and cleaning up our beaches, as can be seen by the new investment being put in place through the length and breadth of Scotland. And we are ensuring that our authorities are open, democratically accountable, responsive to local concerns and professionally regulated.