Eddie Barnes: Ageing infrastructure is a constant drain on the public purse

SCOTTISH Water is the last remaining publicly owned water company in the whole of the UK, responsible for carrying more than 700 million litres of water to homes across the country every day.

As the CPPR report notes, Scottish Water's financial performance has improved markedly in recent years.

Most of its income comes from the 1 billion a year raised from water rates, and a further 350 million from business customers.

At the same time, it has slashed its operating costs from 450m in 2001-02 to just over 250m in 2007-08.

As a result, the utility has consistently managed to run up a multi-million pound surplus while, at the same time, keeping increase in water charges down.

The average 370 cost is now among the lowest in the United Kingdom.

Nonetheless, the CPPR says that it still lags behind many English and Welsh rivals in terms of customer performance.

But Scottish Water is also having to spend billions of pounds on top of this restoring the country's antiquated system, dealing with hundreds of miles of broken pipes and replacing treatment plants like those at Fairmilehead and Alnwickhill which have supplied water to Edinburgh since Victorian times.

As the utility is in the public sector, all the cash for this huge nationwide restoration project is coming from the Scottish Government's budget, amounting to some 150m a year.

Critics argue that if it were taken out of the public sector, this debt could be funded from the private sector, freeing up the cash and handing ministers a huge annual windfall.