Section 49 — Directions
Water Industry (Scotland) Bill: Stage 3
11:45 am

Murray Tosh (Conservative)

Amendment 104 is grouped with amendment 111.

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David Mundell (Conservative)

Members will recall the stage 1 debate, but when it comes to the question of determining where the Scottish Executive and other agencies will locate their offices, contrary to all the statements received from the Executive and assurances given by ministers in correspondence that they will locate such offices throughout Scotland, we find that offices are taken away from areas such as Dumfries. I have raised that issue with the minister, as have the constituency MSP Dr Elaine Murray, and Alasdair Morgan.

Amendment 104 seeks to ensure that Scottish Water acts consistently with what is said to be Scottish Executive policy on the distribution of jobs throughout Scotland. The jobs that are provided by West of Scotland Water in Dumfries are significant—they are well-paid jobs in an area that has the lowest earned income in Scotland. The facts that have been presented have not justified the removal of such jobs.

When Dr Murray and I met Professor Alan Alexander, the current chairman of West of Scotland Water, he could not cite a single cost saving that would be achieved by moving jobs from the low-cost area of the south-west of Scotland to the centre of Glasgow. I met subsequently the water commissioner who made it clear that, of the private water companies that operate in England, the companies that are the most effective and efficient are those that have pursued a policy of diverse location of employment. The companies that centralised their operations are those that are doing least well in serving their customers.

If people are going to argue that jobs should be taken out of rural Scotland, which—as Mr Morgan pointed out in support of amendment 103—is the responsibility of Mr Finnie, they must be able to demonstrate that that will create some benefit to somebody. On Tuesday, at a meeting of the Public Petitions Committee, Paul Hyles of Unison pointed out that West of Scotland Water is prepared to pay a fortune to allow people to travel from Dumfries to Glasgow, but it is not prepared to have people based in the Dumfries office.

I find myself frustrated by the continual ministerial assurances that Executive policy is not about the centralisation of jobs away from rural Scotland—assurances which are not backed up on the ground. As long as Scottish Water remains a public entity it should act in accordance with the Scottish Executive's policy on the distribution of work through Scotland.

I move amendment 104.

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Tavish Scott (Liberal Democrat)

The tone of what I will say in speaking to amendment 111 will be the same as that which David Mundell used when he moved amendment 103.

As an island—indeed a rural—member, I wish to express concern about the function and location of local offices of the new water organisation. I do so more in the sense of how best to find a mechanism to tackle the obvious consumer and community concerns about proposals that Scottish Water may have to remove local offices. I also want to pick up on the point made by Mr Mundell about the natural tendency of such large, centrally based organisations to centralise their powers.

Amendment 111 would lay an obligation on Scottish Water to carry out engineering, planning, design and operational work in local offices, unless the organisation can show that moving such work to a central location would save money. Furthermore, Scottish Water would be obliged to make such a case to the water commissioner.

I respect the minister's arguments on amendment 24 and the consultation code. However, as far as centralisation is concerned, I want to push him on how we can best make the same argument, using the routes that are available in the bill. After a spirited group discussion on this point, I came to recognise that amendment 111 gives rise to two specific concerns. In particular, Keith Raffan pointed out that it would be wrong for the Parliament to seek to micromanage Scottish Water. Indeed, I take that point.

The other significant concern about amendment 111 focuses on the central issue of efficiency. Scottish Water is required to achieve a level of savings across the whole network and any impediment to that requirement might translate into charges for individual consumers. As a result, the central question is how we can best achieve a mechanism that allows local communities to have some input into decisions about offices in their own locality. I have pressed the minister and written to the chairman designate of Scottish Water on those points.

This morning, ministers should provide clear guidance about how the consultation code would work in relation to the closure of a local office. Would that be considered under subsection 1 of the new section proposed by amendment 24? Furthermore, would that provision take into account issues such as office closures and substantial changes in staffing complements, expertise and retained functions? Amendment 111 is a method of achieving the same end as amendment 24, and I invite the minister to consider its merits.

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Maureen Macmillan (Labour)

I am sympathetic to amendment 111, as it seeks to protect personnel in rural areas, particularly in Shetland. However, I must reluctantly speak against it, even though I realise that Tavish Scott will once again express his great disappointment with me in the pages of The Shetland Times .

If we agreed to amendment 111 it would affect not only local offices, but the whole country, as it could mean a protracted consultation if Scottish Water wished in any way to restructure its operation to become more competitive. If Tavish Scott has read the Transport and the Environment Committee's report on its inquiry into the water industry, he will recall that the committee believed that it was imperative for Scottish Water to restructure as quickly as possible to ensure that it was ready to face competition from private companies. At the same time, it would have to manage human resources sensitively.

I am sure that Tavish Scott believes—as I do—that services are often more economically and effectively delivered at local level. If that is true, Scottish Water should have the nous to act accordingly without having to go through lengthy consultations that might jeopardise its overall efficiency and—as the committee report says—its "competitive position". That "may have serious consequences" for the authority, its staff and the communities that it serves.

However, I do not want Scottish Water automatically to believe that centralisation is best. I urge the organisation to consider rural offices and the good work that they do.

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Donald Gorrie (Liberal Democrat)

I support the general thrust of amendments 111 and 104 and hope that we will receive a convincing reply from the ministers that the Parliament and the Executive will take the issue of decentralisation seriously. We have accepted the general idea of having one water board; indeed, there might be good arguments for such an approach. However, any human organisation has a tendency towards centralisation. The offices of large organisations are sited for the convenience of the top brass; the proximity of the golf course patronised by the boss is more important that any organisational efficiencies that might be made. We must combat such a tendency, and ensure that Scottish Water is run sensibly and that it reflects the views of local communities. When the minister responds to amendments 104 and 111, he must explain how those objectives will be achieved.

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Robin Harper (Green)

I supported Tavish Scott on this issue during the committee's stage 2 considerations and I feel impelled to support him and David Mundell in the chamber. The net result of agreeing to amendments 104 and 111 would be a happier work force locked into local communities and, in the long run, greater efficiency and a better quality of service. I will therefore vote for amendments 104 and 111.

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Alasdair Morgan (Scottish National Party)

My support for amendments 104 and 111 is prompted by the continuing run-down of office, engineering and laboratory installation facilities in Dumfries that David Mundell highlighted. However, the same thing is clearly happening elsewhere in the country, and we have no indication that such a tendency will not accelerate. As David said, such jobs are relatively high-paid in Dumfries and Galloway and are therefore of great value to the economy. More important, the local knowledge of the engineers and others who work in those areas is valuable and ensures a quicker and more accurate response for customers. Stories are legion of people who have come in from outside the area to work for West of Scotland Water and have spent the first couple of hours on site working out where the pipes are, because the local knowledge has not been available.

I realise that not every area in the country can have a local office for every public operation. However, as far as Dumfries and Galloway is concerned, we are talking about changing the current situation. We will remove the current structure without giving back any countervailing advantages, unless we include the dubious one of hugely increased water charges. Furthermore, this is happening against the background of a centralising tendency in, for example, the awarding of contracts. More and more contracts for the water authorities are being awarded centrally by competitive tender, which means that small local contractors are being squeezed out. As a result, we are suffering a double blow: we lose the direct jobs in the local offices and the indirect jobs from the contracts that used to go to small local contractors.

As I said earlier, we have the ludicrous situation of a minister who has at least two hats. He is supposed to be responsible both for co-ordinating and promoting rural development, and for water. However, if the minister cannot even co-ordinate rural development in water, a subject over which he has direct control, what hope do we have that rural development will be co-ordinated in other areas? I said to Alex Fergusson that it might be interesting to ask when the cross-cutting ministerial group on rural development last met. I would be interested to hear the answer to that question, and whether the group has ever discussed the water industry in relation to rural development.

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Keith Raffan (Liberal Democrat)

My colleague Tavish Scott referred to concerns about the micromanagement of Scottish Water. Although I certainly do not believe that that should happen, I agree with him and Donald Gorrie that Scottish Water should have a decentralised structure and be accessible to people. That is why I am delighted not just that the organisation's new headquarters will be in Dunfermline, but that no more than 50 to 60 people will work there. The situation is inconsistent at the moment. East of Scotland Water has four local offices; North of Scotland Water has 13; and West of Scotland Water has eight. I am not saying that there should be rationalisation; obviously, the remoter parts of the country, particularly the northern isles, Orkney and Shetland, must be looked after. However, Scottish Water should establish a consistent policy on local offices.

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Ross Finnie (Liberal Democrat)

We have to resolve two separate issues in order to square this particular circle. My problem with amendments 104 and 111 is that we are in danger of—to use Keith Raffan's phrase—micromanaging Scottish Water. We must strike a balance between ensuring that the organisation has proper commercial freedom and that the bill provides a structure for the new organisation that addresses the points that David Mundell and Tavish Scott raised concerning the deficiencies of the current structure.

In response to Alasdair Morgan, one of the general duties of Scottish Water is that it must have due regard to the interests of its customers or potential customers. That relates to the points made by Tavish Scott. Those who are ordinarily resident in rural or remote parts of Scotland will be particularly drawn to the attention of Scottish Water.

It is important to consider the role of the consultation panels and the access that local residents have to those panels. There will be five panels, including, in particular, one for Orkney, Shetland and the Western Isles. Amendment 24, which was agreed to earlier, proposes a consultation code for Scottish Water. That imposes on Scottish Water a duty to consult people on its key activities and core functions. Scottish Water must not only say whether it will save money, but amendment 28, to which we have just agreed, places a duty on it to demonstrate that it is operating "economically, efficiently and effectively." That goes a long way to meeting the concerns raised by members.

The panels that we are putting in place will be able to take up far broader issues. The bill imposes statutory undertakings that are not present in the current legislative arrangements. The consultation code, and the fact that Scottish Water must operate economically, efficiently and effectively, gives the local consultation panels clear statutory grounds. Never mind whether they have a view—they might or might not—they know the tests that Scottish Water must meet and they are able to apply those tests in bringing matters properly to the attention of the commissioner.

The bill also provides that the commissioner must have regard to the panels and Scottish Water must have regard to matters raised by the commissioner. I say to David Mundell and Tavish Scott that there are mechanisms in the bill that meet their understandable concerns, and those of other members, including Alasdair Morgan and Donald Gorrie. There are measures in the bill that would prevent Scottish Water from acting in a way that was detrimental to those in remote and rural communities and to customers as a whole. I therefore invite Parliament to resist the amendments and to consider carefully what is already in the bill. I hope that that will provide a suitable remedy to the real concerns that members have raised.

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Murray Tosh (Conservative)

I invite David Mundell to sum up and to indicate whether he will press or withdraw his amendment.

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David Mundell (Conservative)

I will press the amendment, because I am not reassured by what the minister has said. We have invariably received reassurances on this matter, but what the employees of West of Scotland Water in Dumfries have received is 90-day notices that their jobs are being moved from Dumfries to elsewhere. While I accept that the consumer panels have an important role, they will not be engaged in determining where services are located. Indeed, the water commissioner himself presents exactly the same argument as the minister, which is that it is not for him to micromanage the industry. Therefore, although he will say that companies in England that spread their work force throughout their locality are the most efficient and effective companies, he does not have the capacity to tell Scottish Water that that is what it should do.

The Scottish Executive has set clear policy guidelines and ministers repeatedly answer questions by saying that it is Scottish Executive policy for jobs to be dispersed throughout Scotland. However, when it comes to the bit, the Executive is not prepared to go the extra step and deliver on that commitment. The minister in particular, with responsibility for rural Scotland, should understand that the Executive is not just an outside intervener in rural areas, but an important economic agent in itself. If he fails to locate agencies such as Scottish Water in rural Scotland he is missing a development opportunity and creating greater difficulties for himself.

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Murray Tosh (Conservative)

The question is, that amendment 104 be agreed to. Are we agreed?

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Members:

No.

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Murray Tosh (Conservative)

There will be a division.

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Murray Tosh (Conservative)

The result of the division is: For 49, Against 64, Abstentions 1.

Amendment 104 disagreed to.

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