The restructuring and reform of the Scottish water industry : a job half finished

It is now over two years since the Scottish water industry underwent its most radical restructuring in half a century. During that time the three public water authorities (PWAs) have taken great steps forward in integrating and improving the separate management and operating systems inherited from their predecessors - the twelve regional and islands councils. Yet they have also been troubled by issues which have hit the headlines in the Scottish press: issues such as the water contamination incident on the outskirts of Glasgow last winter, concerns over the state of Scotland's bathing waters, the large price rises fixed by the Secretary of State, reductions in staff numbers and industrial relations difficulties which have led to strike threats by employees. The restructuring and reform of regulatory arrangements in 1996, it would appear, did not eliminate the difficulties of delivering water and sewerage services at a stroke. The advent of a new Government, with an election commitment to conduct a thorough review of the industry, promised to address continuing public disquiet over the new institutional arrangements. In fact, the review did litde to disturb the previous Government's settlement Indeed the December 1997 announcement of its findings effectively put on hold the water industry policy debate until after the establishment of the Scottish Parliament. Against that background this paper seeks to reopen the policy debate by analysing the political economy of the reform and restructuring process to date. After describing the institutional changes it analyses the main benefits of reform, outlines the current challenges faced by the industry and goes on to consider the way in which the 'unfinished business' of economic regulatory reform and corporate governance might be brought to a satisfactory conclusion in the near future