The future of Scottish Water makes a return to the political stage with Peter Jones's article in the Times and Willie Rennie's, albeit disguised, call for privatisation.
Recent attempts to promote water privatisation are usually dressed up in the cloak of mutualisation or the Public Interest Company. There are in essence the same thing. It is dressed up as a policy compromise between the alleged inefficiency of the public sector and the worst aspects of unfettered privatisation.
The key questions are who has the resources and capacity to invest in mutual assets, how would this investment be subscribed, and how would the governance and management of a mutual organisation deliver high quality water services at reasonable prices to Scottish water users? Attached to this are critical questions about the governance and accountability of a mutual water company in Scotland.
The core issue is that of investment because of the scale of the capital programme needed to replace ageing infrastructure. The only obvious sources of funding for investment in a mutual water company in Scotland are from the private sector. Essentially mutualisation for the capital intensive Scottish water and sewage industry is simply a smokescreen for privatisation. The mutual body would in effect be owned by the financial institutions that provided (the more expensive) capital funds. To minimise financial risk they would insist that all services be provided by private contractors. Therefore the so-called mutual option is in reality a token representation for customers on a board overseeing a wholly privatised Scottish Water. This is what happens at Welsh Water creating a cosmetic mutual.
To ensure democratic accountability Scottish Water should remain in the public sector where other interests can be represented through Parliament and locally. Water is not simply about customers seeking the cheapest possible water services as the Scottish Government's, albeit modest, Hydro Nation shows. Water users are also citizens who may be concerned with social equity and environmental justice. Mutualisation makes such objectives more difficult to achieve in practice.
That is not to say that we should stick with the status quo. There is a need to establish an innovative, participatory, democratic system of public water management that is efficient, transparent and regulated and that respects the objectives of sustainable development in order to meet the population’s needs. Such an approach includes the democratisation of Scottish Water. This requires that it is put firmly into public ownership, meaning that Scottish Water operates not as if it was a private corporation, but as a public service. It would not be required to prioritise market efficiency over social or environmental efficiency. Bonds can be used to finance a public service without changing the ownership model.
Scottish Water is a public service success story and goes with the grain of international developments in the industry. In Europe, South America and across the developing world nations and cities are turning away from market solutions in water. The English privatised industry has also been heavily criticised recently. The privatisers know this and that's why they are coming up with proposals like a public interest company that attempts to introduce privatisation through the back door.
It's Scotland's water and it's not for sale.