| Allan Wilson:
First, I congratulate Richard Lochhead on getting a reference to fish into
a debate on the water industry-it was the pièce de résistance-but
he is fundamentally wrong. The debate is a retro debate that reminds me
of the 1980s and the bleak 1990s. We are talking about the public-versus-private
position. I am grateful to the Tories for reminding the Scottish public
just what they are missing without a Tory Government.
I listened with
interest to members' comments, and to the different proposals from members
of my party and others. Of course I am concerned for the environment generally
and that the people of Scotland should receive
good-quality
water for drinking. Of course we are concerned that people should pay a
reasonable price for service delivery. That is why we are investing in
our water infrastructure.
Frances Curran:
Why is the Executive forcing Scottish Water
to finance its investment programme with a public-private partnership,
instead of allowing it to borrow public money? That means that Scottish
Water is borrowing private finance, which is more expensive, and that the
charges are being placed on water consumers. Why will the Executive not
allow Scottish Water to borrow public money from public bodies?
Allan Wilson:
We could not have a retro debate without a contribution from the Revolutionary
Socialist League, for which I am grateful. Nobody answered the question
that I posed: how could a mutualised or a privatised model, or a public-sector
trust, borrow money more cheaply from the Executive? They could not. It
is impossible.
Mr Monteith:
The minister is right to pose that question,
but it is the wrong question. The question is not whether the money can
be borrowed more cheaply, but whether the cost of that dearer borrowing
can be offset by efficiency savings. In England and Wales, the cost is
being offset, but up here we have not yet had that advantage.
Allan Wilson:
Efficiency savings can be made in either the
public or the private sector. It is not the prerogative of the private
sector to argue that efficiencies cannot be made in the public sector.
It is straightforward. I argue that replacing the current public-sector
model with a mutual or a privatised model-and I accept that they are essentially
the same thing-would be highly disruptive, would add to Scottish Water's
borrowing, and would
increase customer
costs and charges.
John Scott:
Will the minister give way?
Allan Wilson:
Such a model would also need to be financed by payments to bond or dividend
holders, at additional cost to customers.
Alex Neil (Central
Scotland) (SNP): Will the minister give way?
Allan Wilson:
With respect, Alex, I would like to develop
the point.
I am grateful
to my colleague Sarah Boyack, who mentioned that, in England and Wales,
privatisation meant that some Government-funded debt was written off and
the rest was replaced by shareholder equity, which the companies have to
remunerate by paying dividends. Alex Johnstone and Murdo Fraser argue that
competition in England and Wales has resulted in lower prices for customers,
so we should use the water services bill that we intend to introduce to
increase competition, but I argue that that is a misunderstanding of the
situation in
England and
Wales. The water companies in England and Wales are, in effect, regional
monopolies. They are not subject to direct competition. As Des McNulty
said, effective regulation in England and Wales by the Office of Water
Services-Ofwat-has led to lower prices there.
Murdo Fraser:
The minister seems to be saying that the reason
why Scottish water charges are so high is that we do not have effective
regulation in Scotland, so what is he going to do about that?
Allan Wilson:
That is why the water industry commissioner
for Scotland benchmarks Scottish Water's position against the performance
of the Ofwat-regulated companies in England and Wales. That is the purpose
of the exercise. That
is why we have to increase the efficiency of Scottish Water, so that charges
will come down.
Alex Neil: Will
the minister give way?
John Scott:
Will the minister give way?
Allan Wilson:
I give way to Alex Neil.
Alex Neil: I
appreciate being allowed to intervene at the second chance, minister.
We heard that
under the current private finance initiative-type arrangements the average
rate of interest that is being paid by Scottish Water on moneys borrowed
is 6.72 per cent. What would the percentage be if the money was borrowed
at the current rate from the Public Works Loans Board? What would the difference
be?
Allan Wilson:
This is the mythical model that Alex Neil's
colleagues propound, under which, somehow or other, Scottish Water's £2.2
billion debt could, like a credit card debt, be taken to another loan provider
to secure a lower rate
of interest. Which one? Who would provide that?
Last year, the
Parliament considered in detail the best way to structure the industry
to suit Scottish circumstances and to ensure the best deal for Scottish
people. We decided then-correctly-that there should be one public corporation
covering the whole of Scotland. We decided that Scottish Water would be
held to account by drinking water, environmental and economic regulation
and that it would be answerable to the Parliament. Nothing that I have
heard today has convinced me that that structure, set up by Parliament
only last year,
does not remain the best way to deliver water services to the people of
Scotland.
I urge members
to reject the motion and to accept the Executive amendment.
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