Sunday 15 June 2003

Cheaper to use whisky?

For many Scottish businesses the cost of water supply is becoming unacceptably high:
Mr Downie (of the Federation of Small Business) said: "It’s the biggest overhead now for all Scottish businesses. We were promised by the commissioner that increases would be between 7 per cent and 10 per cent last year, but now we are seeing 25 to 500 per cent increases.
Mr Downie draws attention to the fact that the English water companies had their debts written off at the time of privatisation whereas the state owned Scottish Water continues to be responsible for debt. Our local leftist politicians have offered this as an explanation for Scotland's high water cost. But things are not as claimed writes Peter Jones of The Economist:
One myth, which the state-owned Scottish Water is happy to see propagated, is that it is saddled with debt, whereas the English private firms were not. It is true that at privatisation, the Treasury wrote off £5.1 billion of debts. The sale proceeds brought in £3.9 billion, meaning the net cost to the taxpayer was £1.2 billion, or about £50 per customer. In Scotland, the former regional council water services were combined to produce three water authorities - East, West and North - in 1995. To smooth this transition, the Treasury wrote off £700 million of regional council debt, or about £300 per customer. So the Scottish water consumer got a better deal.
The real explanation of our high water costs - according to the industry commissioner - is that "Scottish Water is monumentally inefficient". Jones says that public opinion wouldn't support privatisation. Surely that's because most people in Scotland don't pay taxes. Ideally, voting should be restricted to taxpayers. In the meantime, Companies are "seriously likely" to pull out of Scotland because of soaring water bills and business rates, according to CBI boss Digby Jones.

Atlas is shrugging.