Water Industry Commission for Scotland

The Water Industry Commission for Scotland (WICS) is the economic regulator of water in Scotland. It is a non-departmental public body appointed by the Scottish Executive The WICS is made up of a Chief Executive, Alan Sutherland, a Chairman, Sir Ian Byatt and four other members. The remit of the WICS is to set budgets for Scottish Water to deliver the Ministerial Objectives. Their statutory duty is to ensure lowest financial cost for the customers of Scottish Water, whilst still ensuring that the Ministerial Objectives set for Scottish Water, by Scottish Executive Ministers, are achieved. This is a balancing act that places on them a great deal of influence. Their influence can, and indeed has, led to tensions between different actors within the sector of water in Scotland.

Background

In 1999 the post of the Water Industry Commissioner (WIC) was created. Alan Sutherland was appointed and his role was to advise the Scottish Executive on charges that the Water authorities could/should set for their customers. After the Water Industry (Scotland) Act (2002) the Commissioner continued in this advisory role, though this time it was the newly formed Scottish Water that he would advise. The advisory role in itself was an influential role,. Since the Water Services (Scotland) Act (2005) this influence has been increased due to the act giving statutory powers to the newly formed six person commission to set the budget for the capital investment programme. That is to be implemented by Scottish Water. This has effectively transferred a great deal of power to shape the future of water provision in Scotland from Parliament to the WICS. In contrast, arguably, to the founding principles of the Scottish Parliament of accountability, openness, transparency and bringing parliament closer to the people. Moreover, it is a retreat from the cross-sector/society representation that the water authority boards had prior to the formation of Scottish Water in 2002. .

Neoliberal ideologues

Some of the members of the commission have links with right-wing free-market think tanks and institutes. These links are with organisations who advocate competition and free-market principles in every sphere of society, including water. The members of the WIC come from a similar background: which is rooted in economics and/or the private sector, either in the water industry itself or elsewhere. However, having the Commission made up of economists with an expert knowledge of the water industry is in line with recommendations by the Better Regulation Task Force (BRT), a government appointed body made up of business people. They said in 2001 that: ‘The boards of regulatory bodies should include both executive and non-executive members. They should be appointed for their expertise rather than to represent stakeholder groups’. This development has contracted billing and customer relations out to, currently, three different companies, as well as an offshoot of Scottish Water: though this may increase in the future. The companies now working in Scotland are Osprey, Satec, Aquavitae, and Scottish Water-owned Scottish Water Business Stream.

The commercialisation of Scottish Water has also been shown through the huge increase in the use of the private sector. Most recently this has manifested itself through Scottish Water Solutions (SWS): a joint venture between Scottish Water and two consortiums of private companies. SWS now carry out all of the capital investment work as part of the Quality and Standards (Q&S) programme of improving infrastructure. The capacity for Scottish Water to carry out this work has been cut and there is a fundamental reliance on the private sector to carry out this work. There are also over 20 Private Finance Initiative (PFI) contracts in Scotland operating treatment plants all over Scotland. They are exclusively run and managed by the Private Sector.

The Water Industry Commission for Scotland (WICS) is the economic regulator of water in Scotland. It is a non-departmental public body appointed by the Scottish Executive The WICS is made up of a Chief Executive, Alan Sutherland, a Chairman, Sir Ian Byatt and four other members. The remit of the WICS is to set budgets for Scottish Water to deliver the Ministerial Objectives. Their statutory duty is to ensure lowest financial cost for the customers of Scottish Water, whilst still ensuring that the Ministerial Objectives set for Scottish Water, by Scottish Executive Ministers, are achieved. This is a balancing act that places on them a great deal of influence. Their influence can, and indeed has, led to tensions between different actors within the sector of water in Scotland.

The Commission

• Ian Byatt was Director General of the Office of Water Services (Ofwat) between 1989 and 2000. In that role he was responsible for independent economic regulation of the water companies in England & Wales. From 1978 to 1989 he served in HM Treasury as Deputy Chief Economic Adviser. Since 2000 he has advised the World Bank and governments around the world on matters relating to the water industry. Sir Ian, who was an adviser to the Water Industry Commissioner from 2002, was knighted in 2000.

• Professor John K Baynard OBE. Professor Banyard is a chartered engineer who retired in December 2004 as an Executive Director of Severn Trent Plc following a career in the water industry.

• Professor David Simpson,Deputy Chairman. Simpson was economic adviser to Standard Life from 1988 to 2001. He was the founding Director of the Fraser of Allander Institute at the University of Strathclyde and is a Trustee of the David Hume Institute. Professor Simpson acted as an adviser to the former Water Industry Commissioner for Scotland from 2002.

• Dr Mike Brooker Dr Brooker is a scientist who recently retired as Chief Executive of Welsh Water following a career in the water industry in Wales. During his career he was Chief Scientist and subsequently Divisional Operations Director of Welsh Water before becoming Managing Director in 1996.

• Alan Sutherland, Chief Executive. Sutherland was the Water Industry Commissioner from November 1999, when the position was created. During that time, he developed a framework for economic regulation of Scottish Water. He has extensive experience in management consultancy andin the investment banking industry, being a former management consultant with Bain and Company and before that a Manager with Robert Fleming and Company. More recently he was a Managing Director of Wolverine CIS Ltd, a division of Wolverine World Wide.

• Charles Coulthard Coulthard retired recently as Managing Director of Ofgem (the Gas and Electricity regulator) in Scotland. He served as Deputy Director of the Office for the Regulation of Electricity and Gas in Northern Ireland between 1992 and 1999. He is also currently the Chair of the Gas and Electricity Consumers Council in Scotland.

Source, WIC annual report 2006

Lobbying and PR activities

Agencies retained:

• Porter Novelli Scotland, 2004
• GPC International, provided media training
• Greenhaus Public Communication

FOI

• Memorandum of Understanding Between the Water Industry Commissioner and the Water Customer Consultation Panels March 2003
• Sarah Chisnall (GPC), Letter to Alan Sutherland, Media Training Follow up 7 August 2003
• GPC, Invoice From GPC to WICS for Media Training 11th November 2003
• Devin Scobie, email to Katherine Russell Media Training 5th June 2003, 13.16.
• Sarah Chisnall e-mail to Katherine Russell re media training for Alan Sutherland July 2003
• Devin Scobie e-mail to Katherine Russell Re Media Training 5 June 2003, 15.43, Confidential.

Notes

1. ^ Better Regulation Taskforce,'Economic regulators', 2001,