In a supreme irony, a body called the Scottish Futures Trust is said to be seriously considering selling off Scotland’s water.
Set up only in September 2008 and with its CEO taking office under a year ago in May 2009 – Scottish Futures Trust has commissioned consultants KPMG to report on the future funding of the state owned Scottish Water. This is the only water company in the UK still in public ownership.
Today’s Sunday Herald has a report carrying the shock information that, as well as full nationalisation and mutualisation, KPMG has also been instructed to investigate the possibility of a sell off into the private sector. The story has been fed by a sufficient spectrum of clearly well informed and involved sources to be authoritative.
Business, enterprise and the public sector
Iain McMillan, Director of business lobby group, CBI Scotland, told the Sunday Herald: ‘Scottish Water’s £150 million a year subsidy could be freed up to invest in other important projects’.
He said too that: ‘If the Government don’t think about privatising Scottish Water, they will come under increasing political scrutiny from the business community’. Now that’s talking.
This is of course a situation where Christmas is calling for turkeys: a grab raid of the golden goose of Scottish Water and plum pudding contracts for the business sector when the Government spends the sale money and the saved annual subsidy.
The Scottish CBI is a notably unevolved body, red in tooth and claw in pursuit of the profit motive and bereft of the awareness that, in this century, the weight of political and philosophical thought is moving to prioritising society over business.
This does not mean that the role of the private sector and of the spirit of enterprise will not continue to be central to economic growth and social vitality.
It does mean, though, that enterprise will have to move to become, well, enterprising.
Hanging about below the table of the public sector and snarling at the ankles of those serving the food above in order to make them throw down as many Sirloin roasts and game pies as possible is not enterprise. It’s aggressive begging.
The Scottish Futures Trust
The Scottish Futures Trust exists as a buffer zone between government and business. Independent of Government, its job is to secure best value (the hollow phrase of the moment) on public sector contracts.
It describes its job as ‘operating across the whole public sector and delivering benefits and savings wherever possible at each point in the infrastructure investment cycle.
‘From needs identification, options investigation and investment appraisal; through financing, procurement, design and construction; to life cycle management, maintenance and disposal, the SFT will bring value and professional expertise’.
That’s the high level project management that the Scottish Parliament building needed. Let’s see if these guys can deliver all they promise. If they can it will be a UK first.
Let’s get two things straight.
- It is not the job of anything called the Scottish Futures Trust even to consider selling what Harold MacMillan memorably referred to as ‘the family jewels’ when Margaret Thatcher set out on the first relentless closing down sale. Getting rid of future-proofed assets to solve short term spending needs is irresponsible financial management.
- It is the job of the Scottish Futures Trust to discipline the procurement process. The benchmarking of UK public sector contract costs has always been slackly high. SFT action on this front will make far more of a long term difference to the Scottish budget than will flogging the last good thing we own.
The second Forth Road Bridge
The second Forth Road Bridge project would be a likely beneficiary of such a sale. Its projected cost is now £2 billion – one of the most expensive bridges in the world.
What did we say about the monopoly-money benchmarking of public sector contract costs here? No other country can believe what we are proposing to pay for this bridge.
Holyrood’s Transport and Finance Committees have been asked to investigate just how Transport Scotland calculated this cost. Do they know where to start? The Scottish Labour group can’t even work out what infrastructural cuts might be imposed to let its sacred cow of the Glasgow Airport Rail Link project go ahead.
Let’s hope the Scottish Futures Trust is more savvy. This is where we need to see its mettle.
Far better that it introduces a new benchmarking regime to bring the cost of the second Forth Road Bridge contract down to what other countries recognise as plausible, than sell off Scotland’s water to pay for fatly cushioned profit margins for private sector companies – which is what will happen.
The visceral public response to water
There is no asset we could buy that would come anywhere near the essential and priceless value of water? The projected sale price – were the nightmare to come about – is around £1 billion. This would be eaten up almost invisibly in the exploitive cost of the proposed Forth crossing – a depreciating asset from the start.
After the inflationary collapse of the banks, £1 billion for our water would be the sale of the century.
Think about it: £2 billion cost of a time-limited bridge. £1 billion price for Scotland’s water in perpetuity.
Water is fundamental to life – elemental. It is the most evocative and most instinctively valued resource. It feeds life of all kinds and it drives industry.
It is now almost a cliche, accepted without question and parroted without thought, that, with increasing global warming, water will become a key resource over which wars will be fought. Without it, people – countries – will be fighting, literally, to live.
The role of Scottish Water Horizons
Scottish Water is our biggest consumer of power, facing an annual bill of £40-£50m. It has now created Scottish Water Horizons, a renewables wing planning to develop wind turbines to supply the main company’s power needs.
The rationale is that many water and waste water treatment sites are sited in rural locations appropriate for wind turbines.
Its estimate is that 60 three-megawatt turbines around the country would supply all of Scottish Water’s power needs, helping it to cut costs.
So what are we looking at here?
- Will this cost saving – the investment for which will naturally come from the public purse - lower the annual subsidy to Scottish Water, freeing some public funding for other projects?
- Or will the public purse simply be used to produce lower operating costs to sweeten a sell off of Scottish Water to a private sector operator – almost certainly extra-national?
The latter is what Chris Patten, the plumeless last Governor of Hong Kong, memorably called ‘a double whammy’ – except that this would be a quadruple whammy.
- We’d lose our water to a private sector operator whose only loyalty would be to the bottom dollar - increasing profit margins.
- We’d be held to ransom in rising service costs.
- We’d be a prey to the private owner selling our water elsewhere as demand and achievable price dictated, leaving us needy and impotent.
- And we’d have paid for the privilege by subsidising the sweetener to lure the buyer.
What sort of Scottish future is that? What sort of trust does such a prospect engender?
The politics of water
As we said, water is elemental, as is land.
Look at the unstoppable popular furore aroused by Michael Russell when, in a previous incarnation as Environment Minister, he proposed to lease 25% of Scotland’s forest estate for 75 years and to use the revenue generated to pay for climate control measures.
There was no room for reason, for time to look at exactly what he proposed. The very idea of leasing our forest estate for a long term was unequivocally unacceptable to the Scottish people.
The retreat was marched in a reshuffle, Russell moving to Culture and Roseanna Cunningham stepping up as the voice of reason, accepting the strength of public feeling on the issue and binning the proposal.
Imagine what would happen if it was water – and a sale? If the SNP is set on harakiri, there is no faster route than proposing to divest itself of Scottish Water.
If such a sale were to become a proposal, the Scottish people should make the decision in a referendum. This is an infinitely more important issue than saying whether or not we are minded to become independent.
The need for water surpasses everything short of the need to survive – which it centrally enables.
Were Scottish Water to be sold, it would, at a stroke, negate the entire independence argument. ‘It was Scotland’s Water’ would ring down the centuries with far more resonance than ‘It’s Scotland’s Oil’. But this time we’d have sold ourselves out.
