SNP rapped by water regulator – Lib Dems were right!

Documents released under Freedom of Information legislation reveal that Sir Ian Byatt, the former water industry regulator, sent a memorandum to finance secretary John Swinney two years ago to warn him that bosses at Scottish Water were “increasingly concerned” they would not be able to afford repairs if the company remained funded solely by the government.Still concerned about the way that the company is financed, Byatt, in unreported comments last month, said he feared that the utility would be forced to put a temporary halt to its investment programme due to a shortfall of funds. “We face the problem – as we faced in England and Wales – that companies stop their capital expenditure and then start again,” he said.

Water companies in England have been privatised, allowing them to raise investment funds privately. In his memo to Swinney in 2009, the then chairman of the Water Industry Commission for Scotland urges Swinney to reform the company, possibly as an arms-length operation, which would allow it to pay for investment by borrowing from the financial markets, thereby freeing up tens of millions of pounds to spend on roads, hospitals and schools.

And his latest comments last night re-opened the debate about the status of Scottish Water, one of the Scottish Government’s biggest assets.

SNP ministers said that they would keep the utility under full public ownership “operating for the benefit of all the people of Scotland”.

But both the Conservatives and the Liberal Democrats backed Byatt’s call, saying it should be turned into a so-called public benefit company. The row centres on the fact that, as it is in public ownership, the cost of Scottish Water’s improvements come direct from the taxpayer. Budget figures show this equates to £700 million between now and 2015.