CBI chief: sell Scottish Water to pay for bridge

Published on Saturday 17 January 2009 18:32

SCOTTISH Water should be sold off to pay for the new Forth road bridge, one of Scotland's most prominent business leaders will claim today.

The controversial suggestion will be made by CBI Scotland director Iain McMillan in a speech to a transport conference in Edinburgh.

McMillan will say the sale or mutualisation of Scottish Water would solve a funding headache for the Scottish Government by freeing up cash to help build the bridge using private finance.

The proposed 2.3bn Forth crossing is already the subject of a major funding row after the Treasury rejected an SNP bid to bring forward cash from future budgets to meet the bill.

With its land, assets and revenue from water charges, a sell off of Scottish Water could be worth around 2bn.

Mutalisation, on the other hand, would involve transferring the organisation to around 100 owners who would be banned from selling on their shares and run it in the public interest.

They would be allowed to borrow money to pay for repairs and investment, freeing 182m a year of taxpayers' money to pay for the new bridge.

McMillan will tell the conference: "This would be money that could be channelled into making a substantial contribution to paying for the vital new Forth crossing via a PPP-PFI model. Undoubtedly a win-win solution.

"This approach would mean no requirement for the Scottish Government to seek UK Treasury consent to borrow outside existing rules or possibly seek a much reduced level of borrowing.

"It would also ensure that there would be no forced cutbacks or delays in investment in other vital public sector projects such as transport, new schools and hospitals."

He will add: "I would urge the Scottish Government very strongly to reconsider their approach to funding as a matter of urgency. The current situation is not delivering what business and our economy needs and is unacceptable."

The Conservatives and the Lib Dems are in favour of mutualisation of Scottish Water. Yesterday Derek Brownlee, the Tory finance spokesman, said: "It would free up a lot of resources to the Scottish Government and that's something that should happen."

The Labour shadow transport secretary Des McNulty said:

"Scottish taxpayers and water charge payers have invested significant funds in Scottish Water and they should reap the benefits of it rather than it going to some bank."

The Labour UK Government's refusal to release the extra cash for the crossing has put it at loggerheads with the SNP at Holyrood.

Scottish Secretary Jim Murphy has asked Scottish ministers to attend talks this month, where he intends to raise concerns over their plans for a scaled-down crossing. Ministers opted last month to build a new bridge with only two lanes in each direction with a hard shoulder, rather than three.

John Swinney, the Finance Secretary, said: "The Scottish Government will build the new Forth crossing on time and on budget through traditional public procurement – giving the best possible value for money to taxpayers – as overwhelmingly endorsed only this week in a vote by the Scottish Parliament."