Forecasting Scotland's public finances post-independence

We have two weighty reports today on Scotland's public finances post independence, one from the Scottish Government and the other from the Treasury. The numbers are some way apart and that's due to their respective assumptions, not a dodgy calculator.

The BBC has done a good job of summarising the claims in both reports with some nice info graphics. So I will focus on two key areas - start up costs and public finance projections, both key concerns for UNISON members.

The Treasury has published a projection for the costs of creating government departments for an independent Scotland. Based on LSE estimates that it costs around £15m to set up an individual department, this means a £2.7bn bill to replicate the work of the 180 government departments and agencies in Scotland. They have previously estimated that a new benefit system could cost £400m, while setting up a new tax system could cost as much as £562m.

In my view this calculation is mince and I note that one of the LSE researchers has also said as much. Only four wholly-new departments are needed - defence, foreign, HMRC and a Scottish Department for Work and Pensions. Crude calculations like this do nothing for the UK government's credibility in this debate and undermine much better papers in the Scotland analysis series. They can of course, with some justification, point to the absence of costings from the Scottish Government on this issue. John Swinney's argument that we are saving on the putative Revenue Scotland, is a bit thin.

The Scottish Government is on much stronger ground when it brings Scotland's share of the UK’s £1.3 trillion public sector assets into the debate. The Treasury’s Whole of Government Accounts for 2011/12, shows a total public sector estate in the UK worth £745bn and financial assets worth £288bn. Although much of Scotland's share will already be domiciled here, less the bits we don't want like Trident!

Let's move onto the more substantial part of both papers, the assessment of public finances.

Here the Scottish Government outlines a much more optimistic medium term picture for Scotland than the IFS and others. The Scottish Government's paper claims that total spending in Scotland in 2016-17 would exceed revenues by 2.8% of national income - more optimistic than the Treasury paper and the 5.2% deficit forecast for Scotland by the Institute for Fiscal Studies (IFS).

The main reason for the difference is varying forecasts for revenues from North Sea oil and gas. The Treasury and IFS used the Office for Budget Responsibility’s projections. The Scottish Government report uses their own, higher forecasts. Their figures assume that Scotland will receive £6.9bn (or 4.1% of Scottish GDP) in tax revenues from offshore oil and gas production in 2016–17, rather than the £2.9bn (1.7% of GDP) forecast by the OBR. David Bell from Stirling University puts this in perspective by explaining that the difference exceeds the annual revenue from council tax and non-domestic rates combined.

David Bell has explained these forecasts in some detail and is worth a read. However, the bottom line is that oil revenues are both volatile and notoriously difficult to forecast.

There is another problem with the Scottish Government's position that IFS has previously highlighted. In the longer term, Scotland's ageing population will place greater strains on public finances and revenues will decline as oil and gas reserves are depleted. The Scottish Government claims that this can be addressed in their scenarios for increasing productivity, employment and population growth through immigration. These may happen, but again they are optimistic scenarios, not for the cautious or faint hearted. In addition, public service spending per person usually increases in line with productivity growth, so unless relative public spending was to decline, it is difficult to see how these scenarios make that much difference.

As is often the case with the referendum debate, these points depend on assumptions and forecasts that don't have a strong track record for accuracy. You certainly wouldn't bet the Friday night pub kitty on them, let alone your mortgage. The UK public finances don't look good, but it also requires a leap of faith to accept the Scottish Government's alternatives.

 

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CIPD survey paints a bleak picture of the pressures on the public sector workplace

The CIPD quarterly employee outlook survey offers an insight into employee attitudes in the workplace. The latest report highlights a marked increase in negative perceptions of senior managers, particularly in the public sector. It also reveals that almost a third of employees believe that their current performance management systems are unfair, again particularly in the public sector.

Only a third of employees feel engaged in the business. Job satisfaction levels (+42) are slightly up with employees in the voluntary sector the most satisfied with their jobs (+48). Job satisfaction has decreased in this survey in the public sector (+37), although still up on 2013 levels (+25).

Attitudes towards line managers remain positive, with 64% of employees strongly satisfied or satisfied. However, this survey sees a fall in ratings for senior managers. Confidence in particular has fallen by 5% and trust in senior leaders and perceptions of consultation have fallen by 4% each. Employees in the public sector remain the most negative about their senior managers and there have been some substantial decreases in this survey. The biggest decreases are in relation to senior managers treating employees with respect (down 12%), trust in senior leaders (decrease of 11%).

More employees reported that they believe their organisation’s performance management process is fair (39%) rather than unfair (30%), but these are very low figures demonstrating little confidence in these systems anywhere. Employees in the public sector were even more likely to believe their performance management process is unfair (33%).

The proportion of employees reporting excessive pressure at work every day or once or twice a week in spring 2014 remains high at 41%. Employees’ satisfaction with their work–life balance has remained at the relatively high level of 58% in this survey. However, it is women (63%) who are significantly more likely than men (52%) to enjoy a better work–life balance. The public sector is now the least satisfied sector.

Spring 2014 sees a slight drop in the overall number of employees saying it is very likely or likely that they could lose their job as a result of the current economic context. Employees’ fears over losing their jobs are highest in the public sector (23%) and lowest in the private sector (13%). There is increasing concern in the voluntary sector over job losses. These numbers show that workers are not convinced by rhetoric around the economic ‘recovery’ and does not bode well for economic confidence in the longer term.

Overall this survey shows a pretty depressing picture of the UK workforce. The fact that the public sector comes off worse in almost every section is a reflection of the constant UK government attacks on workers in the sector.

Transforming childcare is the right policy

In today's Scotsman I set out the case for making childcare a priority for Scotland.

Research shows low-cost quality childcare benefits women, children, family budgets, in-work rates and economic growth. It’s one of the few policies that contributes to both growing the economy and redistributing that growth more fairly. It is undeniably a good thing.

Good progress was made in the early years of devolution, but that pace was not maintained. However, childcare is rightly back on the political agenda and we should welcome that. Childcare is too expensive for many families and that is driving a race to the bottom with poor quality provision. It is local authorities who employ the best-qualified and most experienced childcare workers and are best placed to expand their workforce while maintaining a high standard.

Transforming childcare will cost money, we can’t pretend otherwise, and without doing the preparatory work at this stage it is anyone’s guess as to how much. But we do know it will generate more tax by creating jobs and by supporting women to return to work after maternity leave. And we know there will be a return on our investment. We will also make savings if we invest in getting it right in the first place, as opposed to the high costs we currently pay to overcome the effects of poverty and inequality.

Also in today's Scotsman, there is a helpful piece on child protection social work from the ADSW President, Sandy Riddell. He makes the point that social workers seem to be the default group to blame when a child is harmed. He says: "We shouldn’t risk paralysing a profession in order to give the public the comfort of having someone to blame quickly. No social worker killed any of these children and if we didn’t have good committed social workers, how many more children would be at risk of harm?"

Transforming the economy

A different, sustainable economy is possible, for Scotland and globally, if we break away from the neo-liberal race to the bottom.

Today, I was speaking at the Friends of the Earth Scotland's conference, 'Transforming Scotland 's Economy'. My contribution was on the impact of privatisation with a focus on the energy industry and local government.

Instead of lots of numbers and charts that I am inordinately fond of, I started with a topical story that for me illustrates all that is wrong with our economic system.

Soma, is a small mining town in western Turkey, host to one of the greatest industrial crimes in mining history when an explosion trapped 800 miners. The death toll has already claimed 280 lives and may yet exceed 300. I use the word crime deliberately, this was no ordinary accident.

Turkey and people across the world mourn the lost lives, but we should also feel anger towards a system that squeezes out profits at the expense of workers' safety.

The Soma mine was privatised in 2005. There are 4.5 worker deaths per million tons mined in Turkey’s publicly-owned plants, compared to the private sector average of 11.5 deaths. Workers in a privately owned mine in Turkey are ten times more likely to die on the job than their Chinese counterparts. We should also remember 1000 Chinese miners die each year, albeit down from 6000.

This is not simply misfortune. Unregulated, hasty privatisations have forced people into more informal work coupled with the use of sub-contracting. The new owners proudly declared that production costs had declined from around $120 per ton under public ownership to just under $24 per ton. This “miraculous market success” was the determined evasion of the security measures and safety standards. Production tunnels were extended from 350 meters to more than 2.5 kilometres. The government cut most formal safety inspections.

This story is replicated across the world. 1200 mostly Indian and Nepalese building workers have died building World Cup stadiums in Qatar. A death toll that is likely to grow to 4,000 before a ball is kicked. Forced to work in conditions that are little more than slavery.

If all this sounds like a story of medieval practice in a countries far away, it isn't. In the UK, the HSE is being slashed, inspections cut and safety regulations are described as Red Tape. In Scotland we had the Stockline explosion in Glasgow where the lessons have still not been learnt. Environmental health officers rarely do safety inspections in Scotland any more after their numbers have been cut. Food safety is being deregulated with proper meat inspection of some animals abandoned at the behest of meat producers focused on profits.

All of this is so the richest in society can get even richer.

The richest 1% of the population are becoming increasingly removed from everybody else. Share of post-tax income captured by the richest 1% leapt from 8.2% to 9.8% in 2013/14. Total post-tax income increased by about £37bn last year. Of this, £16bn went to the richest 1%, with just £11 billion shared across the poorest 50%. They also dodge taxes with £120bn lost to the exchequer. Just think what those resources could do for our battered public services.

The share of wages as a percentage of national income has progressively fallen from around 58% in the early 1980’s to 54% in 2011,while profit’s share has increased from 24% to 28% over the same period.

This is not just about cash. As this week's new IPPR report 'Fair Shares' highlights, workers experience of work is disempowering, lacking dignity and autonomy. One-third of all employees are fearful at work in some way, most feel that they lack a say over decisions and a majority feel disengaged at work. Growing insecurity at work, the rise of zero-hours contracts and the growth in jobs paid less than the Living Wage. 1 in 5 Scots are paid below the Scottish living wage.

These statistics reflect the prevailing interests in our economy. The primacy of shareholder interest and the spread of financialisation have structurally unbalanced returns towards a narrow elite. The capture of returns has become detached from the creation of value. Just one of the points brilliantly set out in Thomas Piketty’s ground breaking work, 'Capital in the Twenty First Century'.

This is a form of capitalism in Scotland and the rest of the UK that values short termism over long term investment. Illustrated by huge drop in R&D spending in the UK that mirrors the fall in GDP. While successful economies are growing their R&D spend.

The ConDems are proposing a future of government cuts without end, of growing inequality, and of a Britain with only 10% of our output in manufacturing, finding it increasingly difficult to pay our way in the world.

All the evidence shows that countries with lower levels of inequality, such as the Scandinavian countries and Germany, have performed better than those countries, such as the UK and the US, where high and widening levels of inequality have accompanied relatively poor economic performance over recent decades.

So what about some solutions? I illustrated some of these by looking at the energy sector.

The UK had a public service energy industry, privatised in the Thatcher era. We now have a so-called energy market, with huge challenges including cost increases for consumers, financing infrastructure investment and a shortage of workforce skills. The lights in our homes are largely powered by generating capacity that was built when energy was a nationalised industry – when we planned our energy not left it largely to the vagaries of the market. Most of Scotland’s existing energy capacity will close within 15 years and the UK needs something like £120bn of new investment.

In the 'Red Book on Scotland 2014' I argue for a planned, balanced energy policy. A key element of that is not Morrisonian nationalisation, but rather a more diverse generation ownership model. In Scotland, renewables are dominated by big business, whereas in Denmark small scale operators play a much bigger role. Some key features we might adopt include:

• A strong political vision over the long term, with commensurate policy and planning provisions.
• Favourable feed-in tariffs to create the incentive for new generation using different business models.
• A state owned grid that will usually connect up communities. The cost is repaid through a public service obligation payment in energy bills.
• A clear focus on energy efficiency with measures to tackle hard-to-heat homes.
• Strengthening the ability and willingness of local government to get involved - a utilities culture largely lost in the UK.

I completed my story with the last of these – local government.

Public services as we know them evolved due to the failure of the voluntary and private sectors to meet the needs of the people. While the well off could buy many things for themselves, infrastructure like roads, water supply and sewerage needed coordinated action and investment. Even the wealthy recognised that it was in their own self-interest to ensure that everyone had clean water to drink and wash in and that waste was dealt with, because everyone suffers when others aren’t covered. The vermin attracted to a street where only half the bins are emptied would be a problem for everyone.

Public sector growth in the 20th century was about providing fair and equal access to services. This also highlights that the defining difference between public and private provision of services is democracy. Not just voting, but deliberative involvement including not just communities of place but also communities of interest.

Scotland has local government but not many genuinely local councils. We have fewer councils and councillors than any other in Europe - an average of 1 councillor per 4270 people while France has 1 per 125. Stronger local government needs a wider range of people as councillors, power over finances and integration with other services that are being increasingly centralised.

Greater public ownership has widespread public support. Polls show that two thirds believe public services should be provided in-house, not run like a business and with stronger user voice. We should also remember that inequality impacts on people’s inability to influence the direction of the public sector, so any attempts to support local democracy will have to ensure that all voices, not just the already advantaged, are able to influence decision making.

How might we finance local energy generation? One approach is to use some of the £24bn in Scottish local authority pensions funds, provided by workers and the taxpayer. Half that money is currently invested abroad. However, governance is weak with decisions driven by advice from the very same fund managers who got us into the current financial crisis. They also cream off profits for themselves in transaction charges. I have written a paper that shows how this could be done for housing and I believe that approach could also work for energy generation and efficiency.

Our economic system is wrong in so many ways. Not just here in Scotland, but globally. The solutions are complex, but we shouldn’t be overwhelmed by the scale of the problem or the solutions. We can take action as individuals and more importantly collectively. From disinvestment campaigns to public service reform - there is a better way. One than prioritises jobs, wages, public services, fair taxes in an environmentally sustainable way.

 

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Public services need proper funding across the UK

Public services across the UK need proper funding and a respect for local democracy. Labour needs to create a clear vision out of the current crop of policy announcements.

I was in London today for UNISON's Public Services Summit. As Dave Prentis said, radical policies are not about left wing rhetoric, but about creating a civilised society. Labour has to be brave in addressing the key issues around public services to create the fairer society that will motivate members to vote in the next election.

John Cruddas MP talked about the scale of the crisis facing the UK and the challenges facing Labour. He outlined the recent policy ideas announced by Ed Miliband and signposted more on housing, economic growth, employment rights, care sector and social justice. Lots of reviews and some good ideas, the trick will be to pull them into a coherent vision. As John said, it is incumbent on Labour to create hope from despair.

On public services he focused on preventative spending - very similar to the cross party agenda in Scotland. He also talked about devolution to cities and communities in England, unpacking the centralised state. A topical debate in Scotland too - although somewhat less consensus!

John Trickett MP followed up on this theme in the afternoon session with an outspoken attack on the ConDem privatisation dogma. He made the key point that contracts are rarely evaluated on the whole life cost - promised savings are not delivered in practice. Most of the big outsourcers also hide their profits offshore. A particularly relevant point in Scotland as our Procurement Reform Bill reaches its final stage tomorrow. John was very strong on how the next UK Labour government should ensure social value in procurement, including the right of community challenge to current contracts. The concern of English colleagues was that this all looks like pretty complex procurement law rather than a clear policy direction against privatisation.

It's appropriate on the 15th anniversary of the first meeting of the Scottish Parliament in 1999 to recognise the challenge in creating a UK view of public services. This also came up at a CLP meeting I was addressing last night, in the context of creating Scottish Labour manifesto for the UK general election next year.

The challenge is that almost all UNISON members in Scotland work in public services that are devolved to the Scottish Parliament. This means that the very different Scottish approach to the delivery of health, education and the full range of council services will be a matter for the Scottish Parliament elections in 2016. Depending of course on the outcome of the independence referendum in September 2014!

That doesn't mean that the UK General Election in 2015 isn't important to Scotland. As in the rest of the UK, austerity economics and the ConDem spending cuts have cut a swathe through Scotland's public services. 50,000 public service jobs have been lost in Scotland, mostly in local government and the services communities rely on have suffered as a consequence. Just one example of this is the delivery of social care to the most vulnerable members of society. Council cuts have led to a race to the bottom in care provision with hard pressed staff, often paid below the living wage, having too little time to care properly. In the UNISON report 'Scotland, It's Time to Care', staff tell their own, often harrowing, stories of what is rapidly becoming a national disgrace.

Cuts in welfare benefits are also devastating families and communities across Scotland. The cumulative impact of the welfare cuts over the six years from 2010-11 to 2015-16 means the Scottish welfare bill being reduced by around £6 billion. At least £1 billion of that relates directly to children.That's a personal tragedy for many families, but it's also a big hit on local economies - particularly in areas of greatest disadvantage.

The impact of ConDem cuts in Scotland also hits the disposable income of workers and their families. Scottish workers have suffered the same real term cuts in pay as their UK colleagues and one in five still earn below the living wage. Councils have plugged the cuts and the Scottish Government's self imposed Council Tax freeze, by raising charges from 40% of Council Tax Funding to 57%. The shift from funding via taxation to charging at the point of use also bears down most heavily on the low paid. Essentials, such as energy and transport costs, that more heavily impact on people in Scotland, have also increased above the headline inflation level.

We are regularly told by politicians that Scotland is one of the richest countries in the world - yet we run food banks and a fifth of the workforce don’t earn enough to live on. Scots also die earlier and have poor healthy life expectancy. The root cause of this is the failure to tackle our unequal society. Devolution has certainly mitigated some of the worse excesses of ConDem policies in the rest of the UK. However, the impact of austerity doesn't stop at Hadrian's Wall and Scotland's public services also need a change of direction at Westminster.

 

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IPPR report attempts to fix the busted energy market

Customer satisfaction with our energy companies is at an all time low. An IPPR report recommends a range of measures to improve competition.

Between January and March, a record 10,638 people complained to the Ombudsman about the Big Six gas and electricity firms, three times the number in the same period last year. The companies also received a staggering 5.5 million complaints last year. Npower had the most at 1.3 million, followed by EDF Energy and British Gas, with 1.2 million each, E.ON (over 900,000), SSE (almost 500,000) and ScottishPower (300,000).

Richard Lloyd, executive director of consumers' organisation Which?, said: "The fact that consumer complaints continue to rise is further proof that the energy market is broken."

While complaints rise, so do our energy bills. The average domestic gas and electricity bill has more than doubled since 2005, from £600 to over £1,200. The Debt Advisory Centre Scotland says more than 660,000 Scots used credit to pay their gas and electricity bills in February, three times the number six months ago. According to Gocompare, half of UK households have a credit balance on their gas or electricity bills. On average, customers are owed £90.20. This means that utility providers are profiting from £1.2bn in overpaid bills. Hardly surprising that in a recent survey only 50% of consumers trust the largest firms.

Market solutions like switching are far from straightforward, with Ofgem fining British Gas £5.6 million for blocking business customers from switching to other suppliers.

Fines at this level are unlikely to have much effect when profits are rising on the back of increased prices. ScottishPower increased profits from selling energy to consumers and businesses by 2% last year. It made £184.4m from selling power last year, up £3.9m, from the preceding year. The growth in profits followed a 7% hike in domestic energy prices from December 2012. This added £104 to the average annual dual fuel bill for customers on flexible tariffs. They then put prices up by an average 8.6% in December 2013 citing increased energy delivery charges and costs to support compulsory social and environmental schemes.

These and other company prices should have been cut by £50 due to savings from the reduction in green levies. However, four of the Big Six power firms have failed to pass on the full saving. E.ON, EDF, npower and Scottish Power have offered 3.7million of their customers just £12 off. British Gas and SSE gave their customers the full saving. Caroline Flint MP, Labour’s energy spokesman, said: "The companies were meant to cut everyone’s bills in return for changes to green levies. Instead, they have been allowed to pocket the savings and millions won’t see the benefit. Yet again David Cameron has let the energy companies off the hook."

So can the market be made to work better?

The IPPR report 'The True Cost of Energy' argues that while a lot of attention has been devoted to the cost of the government’s environmental policies as well as the impact of rises in the wholesale cost of gas, little attention has been paid to the potential costs of a flawed competitive market. In their mid-range scenario, £70 is saved from the average annual bill. Across all consumers this would create a saving of around £1.9 billion.This level of savings in 2020 would cover the costs to consumers of the electricity market reform, the carbon price floor, the feed-in tariff (FIT), the warm home discount and most of the renewables obligation combined.

The report makes a number of recommendations. On the current market review (RMR) they say that Ofgem must act with greater urgency to improve market conditions. This should be the last chance for the current market structure. If the RMR fails to significantly improve levels of competition, government should intervene and investigate alternative regulatory approaches.

On tariff reform they recommend that Ofgem should abandon its proposals to introduce a two-tier tariff system and include the costs of energy efficiency obligations in a standing charge for standard tariffs. There should be an absolute limit on the number of tariffs suppliers can have in operation at any one time. They are also critical of reforms to improve liquidity in the wholesale power market in such a way as to make entry of new suppliers easier.

Linked to tariff reform is tariff cost reflectivity and Scottish Power has been under investigation for over a year on this. Loss-leading tariffs should be included in the RMR and licensing requirements should apply to all tariffs, including fixed-term tariffs and those with introductory discounts. Adequate systems should be in place to monitor the suppliers’ operational costs and the costs of metering. The report is also critical of Ofgem’s published estimates of suppliers’ costs. They should expand regular publication of costs to include its estimate for each specific cost component and details of how this has been computed.

Customer dissatisfaction with energy bills are rising at the same rate as price increases and arguably even faster than company profits! The IPPR recommendations would certainly improve the operation of the market. However, it is doubtful that Ofgem is up to the task of what in any case may simply be tinkering with a busted market solution.

 

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Progress on the Scottish Living Wage and procurement

Progress with spreading the benefits of the Scottish Living Wage depends on a robust approach to public sector procurement.

The Procurement Reform Bill reaches its final stage in the Scottish Parliament next week and one of the most contentious issues has been the exclusion of the Scottish Living Wage. Labour's James Kelly MSP, who also led a separate debate on this issue, makes the case well in his recent Scotland on Sunday article. He is supported by a large civil society coalition who campaigned on this and other procurement issues.

In fairness to the Scottish Government, no one doubts their commitment to the Scottish Living Wage. Scotland leads the way in the UK with the implementation of the living wage across almost all the public sector. They have also funded an accreditation project that aims to encourage more private sector employers to adopt the living wage. The gap is procurement and this is largely due to the muddle and confusion over EU law.

The muddle is largely of their own making because they sent a very unwise letter seeking clarification from the EU Commission in 2012 that formed the basis for the current guidance. Daft letters tend to elicit daft answers and that is what they got. We had a perfectly straightforward statement from the Commission in 2009 setting out the way the living wage could be applied in procurement. That approach is supported by the counsel opinion we provided to the Committee considering the Bill. Only last week the EU Commission repeated their position, when they corrected another unwise speech from the First Minister blaming the EU for the problem.

Despite all this, I am pleased to say that we are now making some very real progress. The Deputy First Minister has tabled amendments to the Bill that does introduce the living wage for the first time. This approach gives public bodies legal clarity and a way of introducing the living wage into procurement. They will now be able to include the living wage in their procurement strategies in a way that will make it clear to contractors that, for relevant procurements, they will evaluate bids taking their employment policies including the living wage into account. That will then be included in the contract and can be enforced through contract performance.

This will be set out in more detail in the statutory guidance that public bodies 'must' take into account in relevant procurements. We have been given a very clear assurance from the DFM that the guidance will be robust, actively enforced and we will be involved in its drafting.

This is important because past experience has not always been positive in this regard. In particular, we already have the Local Government in Scotland Act s52 guidance that was supposed to end the two tier workforce. However, that has been poorly followed by many authorities. The irony is that if authorities properly applied s52 then the living wage would already be mandatory in public procurement. That's because the guidance covers not only new outsourcing, but also to a change of provider. As councils pay the living wage that should be specified in the contract now to avoid a two tier workforce.

Of course we still believe that the Scottish Government could go further and make the Scottish Living Wage mandatory. The legal basis is clear and the grounds for legal challenge minimal, not to mention unlikely for the reasons I set out to the Committee. But governments are cautious beasts when it comes to legislation and the DFM has promised to pursue the issue further with the EU Commission. Verbally this time!

The absence of a mandatory provision means that public bodies might not make the necessary changes to their procurement policies. The main issue here is cost and the key area is social care contracts. This is being addressed in other forums and progress on this issue is the next big step forward. We believe the costs are not massive and in any case the current arrangements are indefensible, as UNISON Scotland's 'Time to Care' report shows.

So not everything we would want, but very real progress and potential light at the end of this very long tunnel. The Scottish Living Wage makes a big contribution towards tackling in-work poverty and promoting sustained economic growth. Using Scotland's substantial public procurement spend will be a big step forward.

 

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Scotland's public water service continues to deliver

Scotland's public water service continues to deliver high levels of investment with charge increases below the rate of inflation. However, they persist in disowning their public corporation status and we the consumer continue to waste £millions on bottled water

Scottish Water has published capital investment plans totalling £3.5bn for the period 2015 to 2021. The overall cost of delivering the plan will be £8bn. met by customer charges of £7bn and net new government borrowing of £720m. There will be a fixed nominal annual price increase of 1.6% for the years 2015/16, 2016/17 and 2017/18. Well below the rate of inflation.

Scottish Water said: "We expect that our future capital investment requirements will remain around £500 million per annum (in 2012/13 prices) as a result of increasing capital maintenance requirements and ongoing investment to improve services to meet customers' expectations in areas of water supply resilience and prevention of flooding from sewers."

These plans show the continuing benefits of having a public water service in Scotland that doesn't have to fund private profit. Not that you would recognise that from Scottish Water publications that talk about being a trusted 'business', rather than a public service. Scottish Water subsidiary, Business Stream talks about customers cutting £36 million from their consumption-related water bills due to the introduction of competition. This is simply nonsense, what's happened is that 'customers' have been helped to invest in water efficiency measures - nothing to do with competition.

Despite getting high quality water from the tap, the UK market for bottled water is now worth £1.6 billion per year and Britons drink more bottled water than fruit juices or wines and spirits. Consumption per person exceeded 34 litres in 2012, up from 26.9 litres in 2001 and is set to reach 40 litres per person by the end of the decade.

Given the fact that UK tap water is widely considered to better for you than the bottled variety and subject to more stringent safety checks, why do we insist on purchasing something which is up to 300 times more expensive than what comes out of our taps?

It is of course a triumph of marketing over common sense, but with a big environmental kick. Plastic bottles add massively to pollution and clog up landfill sites. Professor Paul Younger puts it well, “The bottled water industry is very largely a scam, and a very expensive one at that, in terms of both money and extravagant carbon footprint.”

So let's celebrate our public water service even if Scottish Water dreams of privatisation. We might also drink more of it and help the environment at the same time.

 

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