Privatise water - or Scotland will go broke

• Former minister calls for water privatisation as bill to keep it public passed

• Sam Galbraith criticises myth that Scottish water is best

• Mr Galbraith: wages cost of 50% of Scotland’s budget unsustainable

Key quote

"Is the privatisation of Scottish Water inevitable? Despite our best efforts to prevent it the economics are not looking good" - Sam Galbraith, former Scottish enviornment minister

Story in full THE Executive’s pledge to keep Scottish Water in public hands suffers a setback today with a warning from a Labour former environment minister that privatisation is inevitable.

Sam Galbraith writes in today’s Scotsman that, under the Barnett spending formula, Scotland is "slowly going broke". He adds: "The only way to solve this is to reduce the public-sector wage bill. Privatise water and at a stroke the bill is cut."

His intervention comes the day after the Executive’s Water Services Bill, which aims to retain Scottish Water as a state-owned company and the sole provider of services to households, was passed at Holyrood.

Ross Finnie, Mr Galbraith’s Liberal Democrat successor as environment minister and Lewis Macdonald, his Labour deputy, both used yesterday’s debate to laud the benefits of keeping water in public ownership, despite it being in private hands in England.

But in a blunt message to his former colleagues Mr Galbraith, who maintains that he favours public ownership where it is possible, asks: "Is the privatisation of Scottish Water inevitable? Despite our best efforts to prevent it the economics are not looking good."

Taking a swipe at the Executive, Mr Galbraith adds: "There is no good jumping up and down and mouthing the usual meaningless political slogans that pass for argument every time this subject is raised.

"Ignore the false prophets who talk in long-past dogmas and who hide from themselves, and us, the realities of present-day life. We are faced with a difficult decision, not now but in the foreseeable future."

Continuing with his hard-hitting analysis, which will infuriate his former colleagues, Mr Galbraith adds: "Scotland lives on its myths and one of these is that Scotland has the finest water in the world. Like all our myths it is rubbish.

"At the end of the last century the very best water in Scotland was worse than the poorest water in England. Privatised Thames water was purer than West of Scotland water. It may taste awful but by accepted objective standards it is better." He adds: "Part of the reason for this is that the water industry is in the public sector. There are no votes in building water-treatment plants and certainly none in sewage-treatment plants.

"It never gets the priority it is due from politicians and over the years we have failed to invest in and neglected our water and sewage. The EU has come to our rescue by setting standards for the purity of water and the handling of sewage and forcing us to comply.

"It is costing us a lot as we pay for previous neglect but it should eventually get our water up to English standards."

Mr Galbraith says part of the problem is the Barnett formula, which guarantees Scotland a proportion of the budget in England in areas of spending which are devolved.

Because water is privatised south of the Border, there is no public spending on it and so no money coming to Scotland.

Mr Galbraith says that Scotland spends more than 50 per cent of its budget on wages, a greater percentage than in England and an "unsustainable" proportion.

His case was reinforced yesterday as the Executive announced that it was granting Scottish Water 800 million over four years for investment. Although the money is technically a loan, the sum is counted in the overall Scottish budget as spending.

Mr Galbraith writes that the water rates for business are "artificially high" with the money going to subsidise the general public - a fact that was recognised by the Executive yesterday in its statement on future water charges.

Scotland’s water commissioner, Alan Sutherland, will reduce the "imbalance" of 44 million between charges for business and domestic customers.

Last night the Executive mounted a robust defence of the public ownership of water.

Speaking at the end of a debate on the Water Bill, Mr Macdonald said: "Public ownership of the water industry works. That’s why we support it. That’s why we will work with Scottish Water as it is. It delivers efficiencies as great as the private-sector companies in England and Wales."

Rob Gibson, the SNP spokesman on water, said that his party favoured Scottish Water becoming a not-for-profit company similar to Welsh Water.

The Tory MSP Alex Johnstone criticised the decision not to open up domestic services to competition.

CASHFLOW

FROM economic growth to football, Scotland is used to lamenting its lowly place in international league tables. With water charges, however, Scotland sits near the top of the table.

For the past three years, Scotland’s water charges have been amongst the steepest in Britain. In 2004-2005, Scotland’s average water bills were the fifth most expensive out of the eleven UK water companies.

But yesterday’s statement should see Scotland slip down to seventh most expensive next year, with average bills of 280.