Top-level talks with Scottish Water 'not about privatisation'

Reports surfaced yesterday that high-level talks had been held over a possible sale of the last public water company in the UK as Labour accused the SNP government of yet another policy U-turn.

Business leaders have suggested the 150 million subsidy to Scottish Water could be used elsewhere. But Fiona Hyslop, the minister for culture and external affairs, said the discussions were aimed at finding any capital for the public company within its current structure.

She said: "Anybody reading Scottish Water's corporate plan would have seen that we are in discussion with Scottish Water about how to raise more capital differently within public ownership.

"Anybody having read the corporate plan properly would realise that what is in the newspapers today perhaps is incorrect. It is not about privatisation, not at all."

Scottish Water held discussions with the Scottish Futures Trust (SFT) over the past year, it was revealed, and considered outright privatisation or mutualisation of the company.

Last week, finance secretary John Swinney insisted the status quo would be maintained for Scottish Water.

Scottish Labour finance spokesman David Whitton last night said the future of the firm was on "very shaky ground". He said: "John Swinney must make it clear what is behind these talks and what his plans are for the company.

"Selling off Scottish Water would be an astonishing U-turn by the SNP who previously said they'd keep the company in public ownership. Ministers could be on the verge of breaking yet another promise as they scrabble to balance the books after squandering 1.5 billion of money held in reserve and canceling the Glasgow Airport Rail Link.

"The only people who will be happy to hear this news are their financial friends, the Scottish Tories, who can't wait to privatise Scottish Water."

Former Labour environment minister Sam Galbraith, in 2005, argued it was time to privatise the firm. But Labour insisted last night their current policy was "absolutely against it".

The Scottish Tories, however, backed the hints at a possible sell-off. Derek Brownlee MSP, shadow cabinet secretary for finance and sustainable growth, said: "If the Scottish Government had listened to us in 2007 and mutualised Scottish Water, we would be saving 150m a year."

A Scottish Government spokesman said: "There is no shift in policy regarding ownership of Scottish Water. Scottish Water is performing well. Domestic water charges in Scotland are below the average in England and Wales."