Mr. Douglas Millican:

I extend my thanks for the opportunity to share some of our experience in Scotland with the committee today.

To a certain extent, the arrangements for another country or company are a function of history and are a result of the way that decisions have evolved over time. What we have in Scotland is born out of the fact that water was in local control in Scotland until 20 years ago. Therefore, the basis for charging was linked to the way in which local authorities raised finance for their services.

Customers are charged by reference to what we call council tax bands, which is the property charge based on the size of the property. Although customers are charged on that basis, and their bills are raised and the money is collected by local authorities on our behalf, the charge levels are there purely to cover the costs of their water and wastewater services as set by an agreement between ourselves and our economic regulator. Both those charges and the cash that is collected from those customers is remitted directly to us. The points of commonality with local authority taxation are purely that we use a similar charging structure as it does through council tax bands. In addition, on grounds of efficiency, a customer or resident in a property gets one bill partly for local authority services and partly for water and wastewater services. When one looks at the face of that bill, it is very clear what the charge is for local authority services and, distinctly, what is the charge for water and wastewater services.

The second question was on using meters to drive down consumption and realise efficiencies. We effectively have no metered household customers in Scotland. We only have 600 out of 2.4 million households, which is negligible. Like Mr. Jones said about Wales, we have a large metering penetration among business customers. We have found that meters in district meter areas have helped us to understand leakage, drive down leakage levels and realise efficiencies. Metering is a powerful tool but it does not necessarily need to be done at property level and can be done at district level.