We move to group 14. Amendment 15, in the name of Robin Harper, is grouped with amendment 16.

Amendment 15 seeks to add an additional requirement to section 56A(3) of the Water Industry (Scotland) Act 2002.

During oral evidence at stage 1, it became clear that Scottish Water prioritised the more immediate or short-term financial cost of options when assessing what form of work to undertake. The Rural Affairs and Environment Committee made it clear that that was incompatible with Scottish Water's duty to promote sustainable flood management, which will be more cost effective in the long term.

The committee recommended that changes to existing arrangements for financial regulation of Scottish Water were required in order to remove any doubt that Scottish Water will be able to meet its full responsibilities under the bill. The Government's response has not addressed those concerns satisfactorily. Therefore, I have lodged amendment 15 which I hope will, along with Peter Peacock's amendment 16, ensure that Scottish Water delivers sustainable flood management.

While amendment 16 addresses the Water Industry Commission for Scotland, amendment 15 adds an additional requirement on ministers to consider Scottish Water's duty to act in the best way calculated to manage flood risk sustainably when issuing directions to Scottish Water under section 56A of the 2002 act.

Scottish ministers issue a statement on ministerial objectives to Scottish Water. The statement includes objectives on such things as the standards of services to be provided to customers by Scottish Water; support for new development; the protection of drinking water; and other forms of environmental protection.

With the new bill, the statement will now also include sustainable flood management. That will sit alongside a requirement on ministers to consider Scottish Water's duty to act in a way calculated to contribute to sustainable development when issuing directions.

I believe that amendment 15 will go some way towards ensuring that Scottish Water starts to consider a range of investment options that allows it to take a more sustainable approach to its investment programmes.

I move amendment 15.

When Scottish Water officials admitted in their evidence at stage 1 that Scottish Water prioritised options with more immediate and short-term financial benefits when assessing what form of work to undertake, I think that we all realised that there could be a problem. The admission came despite the fact that Scottish Water has a duty under the 2002 act to act in the best way calculated to contribute to sustainable development.

In its stage 1 report, the Rural Affairs and Environment Committee recommended that the Scottish Government should change its existing arrangements for the financial regulation of Scottish Water, in order to remove any doubt that Scottish Water will be able to meet its full responsibilities under the present bill.

The Water Industry Commission is the economic regulator of Scottish Water and has only a limited role in promoting sustainability. In that limited role, it has to have regard to any Scottish Water duties and to the guidance that is issued to it by ministers. However, it remains unclear how the commission goes about meeting that obligation. Amendment 16 seeks to ensure that it is required to consider Scottish Water's duty to act in the best way calculated to contribute to sustainable flood management when exercising its functions regarding charges. That duty would sit alongside the existing requirements for the commission to consider guidance that is issued to Scottish Water by Scottish ministers.

Amendment 16 deals only with issues of sustainable flood management. The issue of the sustainability of Scottish Water is wider than just flood management and cannot be fixed through this bill. I hope that the minister will be able to offer reassurance that the general issue of the sustainability of Scottish Water's investment programme will be dealt with appropriately at an early opportunity. That could be achieved in the short term by issuing guidance to the WIC on issues of sustainability and on how the WIC should exercise its functions regarding charges.

I support amendment 15, and I hope that members will also support amendment 16 when we come to a vote—if, indeed, we do.

This is an important issue. I have constituents who regularly suffer sewage flooding problems but cannot get resolution through Scottish Water, even though councillors and I have lobbied it.

Scottish Water would like to address the issue. It has bid for funding to give it the capacity to do remedial work to solve the problem, which is caused by greater flooding incidents. However, Scottish Water is not able to secure funding, because that would contravene the advice given by the WIC. That means that my constituents will not even be considered for the next round of improvement works until 2014. They have property that is regularly flooded with sewage, but the problem will not be addressed. That is not just an economic problem for my constituents, it is also a health and safety issue. It is directly related to the way in which advice from the WIC is structured. That is why we need to ensure that sustainable development is added to the calculations when investment advice is being set for the next period.

At lunch time today, the cross-party group in the Scottish Parliament on renewable energy and energy efficiency held a meeting at which we considered energy efficiency and water use. There is at present no way of ensuring that the economics of climate change are factored into investment programmes. Amendments 15 and 16 will go part of the way towards ensuring that the issue is at least on the agenda. We must not simply take the short-term solution that seems economically appropriate now. That would mean that our medium-term decisions would be the wrong decisions for climate change and sustainable development.

Members are concerned to ensure that Scottish Water is funded to carry out its new responsibilities under the bill. I recognise and share that concern. However, given the structure and operation of the regulatory framework in which Scottish Water operates, I do not believe that amendments 15 and 16 are necessary. I assure members that the existing framework will ensure that the new functions are funded.

Scottish Water carries out a number of important functions, including—most obviously—the treatment and supply of drinking water and the treatment of waste water and sewage. Those functions are funded through the regulatory framework, but neither is identified specifically within the relevant legislation and there is no difference in importance between those functions and the new functions under the bill.

Members might find it helpful if I say a few words about the funding of Scottish Water and the basic role of the Water Industry Commission in determining and setting charges. To determine the maximum charges for a period defined by ministers, the commission considers the cost of all the core functions that Scottish Water must perform in that period together with the requirements of any guidance or any applicable directions that ministers may have given to Scottish Water. That includes a direction from ministers setting the investment objectives that guide Scottish Water's investment programme.

The definition of "core functions" in the Water Industry (Scotland) Act 2002 is very broad. It includes the basic functions of providing water and sewerage services but will also, on the passing of the bill, include all of Scottish Water's flood risk-related functions under the bill. That means that the present text of the 2002 act will already require the cost of performing flood risk-related duties to be taken into account when charges are set, just as the duties in relation to water supply and waste water are taken into account.

By focusing on just one of Scottish Water's important functions, the amendments risk undermining the carefully balanced regulatory framework. Scottish Water is already under a statutory obligation to act in the best way calculated to contribute to sustainable development, which is clearly the issue behind the amendments.

In fact, the Government has issued Scottish Water with guidance on that duty, to which the commission must have regard in setting charges. We recognise that understanding of the issue continues to develop and, as I said at earlier stages of the bill, I would be happy to review and update the guidance in full consultation with all relevant organisations, bodies and groups. As the commission is an independent body, there is no provision for ministers to issue it with directions or guidance. However, I consider it essential that we work towards a shared understanding of sustainable development and its evolving role in the water industry. I can, therefore, commit to entering into open discussions with the commission and Scottish Water to pursue that shared understanding.

I do not believe that the amendments will do anything to address the wider concern that members have outlined today. On that basis, I ask Robin Harper to withdraw amendment 15 and Peter Peacock not to move amendment 16.

I call Robin Harper to wind up and to press or withdraw amendment 15.

The assurances from the minister were fairly detailed but not detailed enough. I think that I would be safer moving the amendment.

The amendment has already been moved, so you are pressing it.

The question is, that amendment 15 be agreed to. Are we agreed?

Members:

No.

There will be a division.

Division number 4

For: Alexander, Ms Wendy, Baillie, Jackie, Baker, Claire, Baker, Richard, Boyack, Sarah, Brankin, Rhona, Brown, Robert, Butler, Bill, Chisholm, Malcolm, Craigie, Cathie, Curran, Margaret, Eadie, Helen, Ferguson, Patricia, Finnie, Ross, Foulkes, George, Gillon, Karen, Glen, Marlyn, Gordon, Charlie, Grant, Rhoda, Gray, Iain, Harper, Robin, Harvie, Patrick, Henry, Hugh, Hume, Jim, Jamieson, Cathy, Kelly, James, Kerr, Andy, Lamont, Johann, Livingstone, Marilyn, Macdonald, Lewis, Macintosh, Ken, Martin, Paul, McArthur, Liam, McAveety, Mr Frank, McCabe, Tom, McConnell, Jack, McInnes, Alison, McMahon, Michael, McNeil, Duncan, McNeill, Pauline, Mulligan, Mary, Murray, Elaine, O'Donnell, Hugh, Oldfather, Irene, Park, John, Peacock, Peter, Peattie, Cathy, Purvis, Jeremy, Smith, Elaine, Smith, Iain, Stephen, Nicol, Stewart, David, Tolson, Jim, Whitefield, Karen, Whitton, David
Against: Adam, Brian, Aitken, Bill, Allan, Alasdair, Brocklebank, Ted, Brown, Gavin, Brown, Keith, Brownlee, Derek, Campbell, Aileen, Coffey, Willie, Constance, Angela, Crawford, Bruce, Cunningham, Roseanna, Don, Nigel, Doris, Bob, Ewing, Fergus, Fabiani, Linda, FitzPatrick, Joe, Fraser, Murdo, Gibson, Kenneth, Gibson, Rob, Grahame, Christine, Harvie, Christopher, Hepburn, Jamie, Hyslop, Fiona, Ingram, Adam, Johnstone, Alex, Kidd, Bill, Lamont, John, Lochhead, Richard, MacAskill, Kenny, Marwick, Tricia, Mather, Jim, Matheson, Michael, Maxwell, Stewart, McGrigor, Jamie, McKee, Ian, McKelvie, Christina, McMillan, Stuart, Milne, Nanette, Mitchell, Margaret, Neil, Alex, Paterson, Gil, Robison, Shona, Russell, Michael, Salmond, Alex, Scanlon, Mary, Scott, John, Smith, Elizabeth, Somerville, Shirley-Anne, Stevenson, Stewart, Swinney, John, Thompson, Dave, Watt, Maureen, Welsh, Andrew, White, Sandra, Wilson, Bill, Wilson, John

The result of the division is: For 55, Against 57, Abstentions 0.

Amendment disagreed to.

Amendment 16 moved—[Peter Peacock].

The question is, that amendment 16 be agreed to. Are we agreed?

Members:

No.

There will be a division.

Division number 5

For: Alexander, Ms Wendy, Baillie, Jackie, Baker, Claire, Baker, Richard, Boyack, Sarah, Brankin, Rhona, Brown, Robert, Butler, Bill, Chisholm, Malcolm, Craigie, Cathie, Curran, Margaret, Eadie, Helen, Ferguson, Patricia, Finnie, Ross, Foulkes, George, Gillon, Karen, Glen, Marlyn, Gordon, Charlie, Grant, Rhoda, Gray, Iain, Harper, Robin, Harvie, Patrick, Henry, Hugh, Hume, Jim, Jamieson, Cathy, Kelly, James, Kerr, Andy, Lamont, Johann, Livingstone, Marilyn, Macdonald, Lewis, Macintosh, Ken, Martin, Paul, McArthur, Liam, McAveety, Mr Frank, McCabe, Tom, McConnell, Jack, McInnes, Alison, McMahon, Michael, McNeil, Duncan, McNeill, Pauline, Mulligan, Mary, Murray, Elaine, O'Donnell, Hugh, Oldfather, Irene, Park, John, Peacock, Peter, Peattie, Cathy, Pringle, Mike, Purvis, Jeremy, Smith, Elaine, Smith, Iain, Smith, Margaret, Stephen, Nicol, Stewart, David, Tolson, Jim, Whitefield, Karen, Whitton, David
Against: Adam, Brian, Aitken, Bill, Allan, Alasdair, Brocklebank, Ted, Brown, Gavin, Brown, Keith, Brownlee, Derek, Campbell, Aileen, Coffey, Willie, Constance, Angela, Crawford, Bruce, Cunningham, Roseanna, Don, Nigel, Doris, Bob, Ewing, Fergus, Fabiani, Linda, FitzPatrick, Joe, Fraser, Murdo, Gibson, Kenneth, Gibson, Rob, Grahame, Christine, Harvie, Christopher, Hepburn, Jamie, Hyslop, Fiona, Ingram, Adam, Johnstone, Alex, Kidd, Bill, Lamont, John, Lochhead, Richard, MacAskill, Kenny, Marwick, Tricia, Mather, Jim, Matheson, Michael, Maxwell, Stewart, McGrigor, Jamie, McKee, Ian, McKelvie, Christina, McMillan, Stuart, Milne, Nanette, Mitchell, Margaret, Neil, Alex, Paterson, Gil, Robison, Shona, Russell, Michael, Salmond, Alex, Scanlon, Mary, Scott, John, Smith, Elizabeth, Somerville, Shirley-Anne, Stevenson, Stewart, Swinney, John, Thompson, Dave, Watt, Maureen, Welsh, Andrew, White, Sandra, Wilson, Bill, Wilson, John

The result of the division is: For 57, Against 57, Abstentions 0.

The vote is tied. I cast my vote against the amendment.

Amendment 16 disagreed to.