A greater choice in water services
Published:
IT IS exceedingly rare these days for Scotland to lead the way in introducing competition into public services.
But on April 1, a first was chalked up and, perhaps even more surprisingly, it was for that most essential and emotive of elements – water.
More than 100,000 Scottish businesses and public bodies can now choose from whom they buy their water and sewerage services.
Four suppliers have been licensed by the Water Industry Commission for Scotland, one being an arm’s length Scottish Water company.
These licensees will aim to offer competitive pricing, higher quality and consistency of supply, better environmental standards and improved customer services.
Businesses will be able to compare and contrast which supplier best meets their needs.
With the steeply rising charges of earlier this decade in mind, all of this will be applauded by businesses in the Highlands and Islands.
Greater choice in water and sewerage services has certainly not been opposed by the Scottish Council for Development and Industry.
But we have repeatedly said that it must be introduced carefully in order to ensure that no region or business is disadvantaged.
We also believe that payments for water services must be fairer for SMEs.
While all the new water supply companies are obliged to offer all customers a basic default level of service, one concern is that the new licensees will cherry-pick the most lucrative customers, leaving Scottish Water Business Stream as the last resort provider.
This may mean that some businesses or regions get less competitive deals. The Water Industry Commission for Scotland must carefully monitor this.
SCDI has just written to Scottish ministers arguing for the importance of maintaining stable charges and ensuring that business customers in the same category pay the same rate if they choose the same service, wherever they are based.
SCDI has also drawn attention to the basic unfairness of the £44million a year subsidy from non-domestic to domestic water customers and the “over-recovery” of £25million a year from non-household customers.
Furthermore, Scottish Water over-recovers £3million per annum from SMEs and under-recovers £3million from larger users.
SCDI believes that charges should be broadly cost-reflective and these cross-subsidies should be gradually unwound.
However, this must be done in a way which does not undermine the competitiveness of a water-intensive industry such as Scotch whisky, which is economically important to many communities in the Highlands and Islands.
The costs of doing business are a growing headache for many companies in the Highlands and Islands.
Energy and fuel bills are rising and Chancellor Alistair Darling seems determined to hike them up further. So the prospect of more competitive water pricing – along with the Scottish Government’s reduction of business rates – is a welcome relief.
Gareth Williams is Highlands and Islands manager with the Scottish Council for Development and Industry
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