Sceptical reception for Minister's water plans

Scotland as the Local Government Reform Bill came up for its second

reading in the Lords.

Amid growing fears that the Government intends ultimate privatisation

of water and sewerage in Scotland, he said that, while placing the

services in the private sector had proved ''outstandingly successful''

in England and Wales, it was a solution which, after extensive public

consultation, had been ''quite firmly rejected as inappropriate for

Scotland.''

He told the House: ''We propose instead to set up three public water

authorities -- not as a second-best or a halfway house, but as a

reasoned, practical and durable structure for the delivery of these

services in Scotland.

''They will be public bodies, they will be of a size to capture

economies of scale and they will be managed to maximise efficiency,

secure cooperation with the private sector and provide value for money

to customers.''

The Minister raised one or two eyebrows, however, when he said that

water and sewerage were, and increasingly would be, substantial

businesses in their own right, and that ''operations of this type need

to be run on a large scale and to be subject to all the financial and

organisational disciplines that characterise the best private sector

practice.''

As well as water, the Bill, which spent the best part of 200 hours in

the Commons, redraws the map of local government in Scotland and impacts

on education, tourism and the children's hearings system.

Lord Fraser insisted that the Bill had emerged from the marathon

session in the Commons both changed and improved, and that the

Government had listened to the arguments and responded to them in a

whole range of areas.

He said: ''The proposals contained in this Bill have been shaped by a

long and detailed consultation process and by lengthy and considered

debate in the Commons. The Government believes the effect of the Bill

will be to make local authorities more democratic, more accountable and

more closely identified with the communities they serve.''

From the Labour Front Bench, Lord Carmichael of Kelvingrove also

concentrated heavily on the proposals for the water industry. He said:

''The Prime Minister has not ruled out privatisation. It may be off the

agenda of the Scottish Office, but the Scottish people are very

suspicious that it is still in the orbit of Treasury thinking.''

The response to the referendum on water in Strathclyde belied the

Government's claims to be a ''listening Government'', and the people of

Strathclyde knew ''in their bones'' that something was wrong with what

was being proposed.

More generally, Lord Carmichael said: ''There is little to recommend

this Bill. It is a Bill for which there is no demand and little support.

The Government's decision to replace the present system is boundary

driven. It has little to do with the efficient and economic delivery of

local government services and more to do with the Government's shameless

attempts to create safe havens.''

From the Liberal Democrat benches, Lord Thomson of Monifieth argued

that with its low base of support in Scotland the Government was guilty

of audacity, some might say effrontery, in bringing forward the Bill.

He said such reforms were always disruptive, caused uncertainty for

local government employees, and should only be brought in where an

overwhelming case had been made that the present system had broken down

and could be shown to be failing to serve the citizens. No such case

could be made for the present Bill.