Managing Change in the Water Industry: A Consultation Paper

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I. LONG-TERM ISSUES

I1. Competition will clearly bring changes to the Scottish water sector. It is, however, difficult to predict what form these changes will take, as experience of the introduction of competition into the other utilities shows.

I2. The approach set out in this consultative document is to establish a legal framework compatible with the development of competition, while ensuring public policy objectives, in terms of social inclusion, environmental standards and public health, continue to be achieved.

I3. It is also, clearly, essential that Scotland’s public sector water authorities are put in a position to compete effectively, but fairly, with new entrants. That is why the Scottish Executive is substantially revising the existing guidelines on joint ventures in order to allow water authorities to enter into new forms of partnership to pursue new business opportunities. It is also why views are being requested on how the role and structure of water authority boards should develop given the changing nature of the challenges facing the water authorities.

I4. The Executive’s judgement is that the immediate challenges for the Scottish water authorities are clear: to implement urgently needed ambitious investment programmes, improve efficiency, raise standards of customer service and respond to growing competition. It is on these issues that management efforts need to focus. In addition, at this stage, it is difficult to argue that any more radical restructuring options would clearly serve the public interest better than the existing structure. The Executive’s preferred approach is therefore to provide the water authorities with the stability they need to meet the considerable immediate challenges, while recognising that, since they operate in a rapidly changing environment, it may be necessary to reconsider the position in the future. Comments are invited on whether this is the right approach.

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