To ask the Scottish Executive whether it considers that the value of Scottish Water's investment in water quality in the Western Isles will be eroded if leakage in the pipe network is not addressed at the same time. (S2O-12261)

There would be little point in making such investment if it was not accompanied by initiatives to tackle maintenance-related issues such as leakage. That is why Scottish Water has been given a series of challenging targets for leakage reduction during the first four years of its current investment programme. It is required to close 50 per cent of the gap between current performance and the economic level of leakage by 2010, with interim targets of a 16 per cent reduction in this financial year and a 25 per cent reduction by 2007-08.

I acknowledge what the minister has said, but does she agree that pipe network leakage of around 50 per cent throughout Scotland is a massive waste of expensively treated water, and that the problem will be adequately rectified only by releasing Scottish Water from the financial limitations of the current funding process and replacing it with a not-for-profit mutual model?

I could not disagree more. Vast investment of more than £2 billion is being made. The key point is that Scottish Water must tackle the level of leakage and reduce it progressively year on year. The Water Industry Commission is keen to ensure that that happens. It is important that Scottish Water has a clear understanding of the quality of its assets throughout the network. If it reduces significantly the amount of leakage in one area without having a consistent programme in other areas, the network may pop elsewhere. A coherent programme is needed. Scottish Water has been set challenging targets that have been agreed with the WIC. I am confident that the resource allocation from the WIC that has been agreed with Scottish Water will enable it to meet those targets.

Can the minister enlighten us on whether the cost accounting method of regulatory capital value that Scottish Water uses has led to a choice of far more expensive water supply systems in the Western Isles than, for example, boreholes and local pipes? Will she listen to the people of Lismore and Scoraig, who have been chosen for far more expensive systems than are necessary? Will she try to stop that squandering of scarce public money by opting for simpler solutions?

If the member had attended Tuesday's meeting of the Finance Committee, he would have been able to participate for the best part of an hour in a detailed discussion of such issues, including the one that he raises. I made the point to Jim Mather that we cannot take a simplistic view of what is appropriate.

The drinking water quality regulatory process is important. The quality of drinking water in Lismore—including water for schoolchildren—is one of the key issues that were considered. The WIC deals with economic regulation and considers what Scottish Water can afford. The Scottish Environment Protection Agency deals with environmental regulation. I am perfectly satisfied that those three regulatory processes will determine what Scottish Water should do.