Ross Finnie: "Best possible deal"

This year domestic water bills rose by 18.9% in the east of Scotland and 19.4% in the west of Scotland.

They also rose by 16.9% in the north - where domestic customers were hit by an average 45% increase in water charges the previous year.

The projected costs emerged following a strategic review of the industry.

The new pricing framework, and proposals to merge the three existing water boards into a single authority, Scottish Water, still have to be ratified by MSPs.

Mr Finnie announced the outcome of the review of the revenue needs of the Scottish water industry on Monday.

Charges capped

He said this had confirmed that the move to a single water authority was the best way of achieving value for money for customers.

And it estimated that, without restructuring, charges in Scotland's central belt would be 10% higher by 2005-6, and charges in the north around one third higher.

"Although we cannot say with precision what will happen over the four year period as a whole, I think the commissioner's own assessment that domestic charges in the east and west could rise by up to 25% in real terms over the period, with no significant change in charges in the north, is a reasonable one," said Mr Finnie.

Bruce Crawford: "Unnecessary and avoidable"

He said he had accepted commissioner Alan Sutherland's advice on the size of the cap that should be placed on what water chiefs want to charge their customers.

"The Scottish Executive's over-riding aim is that customers get the best possible deal from the water industry," he said.

"Massive investment needs - to improve drinking water quality and keep our rivers and beaches clean - means that charge rises are inevitable.

"But by accepting the water industry commissioner's advice on revenue needs, we will be keeping those increases as small as possible."

But the SNP has labeled the water charge increases as "totally unnecessary and unavoidable".

Debt write-off

The party's environment spokesman Bruce Crawford said: "I have already challenged the Scottish government to develop a twin track approach to keeping charges under control and securing the vital infrastructure improvements that are necessary for improved water drinking quality and environmental standards.

"Firstly, the new Water Authority should be given powers to issue bonds, restructure its current debt and raise the new financial resources it will require over a much longer period.

"It is just plain daft that infrastructure, which will last for many decades, is paid for over the short to medium term when it could be financed over a longer time thus avoiding the crippling charge increases that are being proposed."

Mr Crawford said that the Treasury in London should give the Scottish Executive permission to "write the debt off" before restructuring the water industry north of the border.