Competition without privatisation: the Scottish model of governance and regulation

The article examines the Scottish model of water ownership and regulation. Scotland's water and sewerage infrastructure is publicly owned and funded but comparative regulation and a competitive retail market have driven significant efficiencies, lowered prices and reduced water usage. When the new Scottish Parliament was established in 1999, it undertook a major inquiry into water and this has been followed by several pieces of primary legislation. First, the Water Industry (Scotland) Act 2002 amalgamated the three regional public water authorities into a single, national, publicly owned statutory corporation, namely Scottish Water. The Water Services etc (Scotland) Act 2005 established the independent Water Industry Commission for Scotland and gave it responsibility for determining the 'lowest reasonable overall cost' at which Scottish Water could perform its core functions. The Commission is, therefore, also required to determine the charges that customers will be required to pay.