The industry has undergone a reorganisation

MSPs on Holyrood's Finance Committee said they were worried by the responses received during a consultation exercise.

Scotland's water industry underwent a major reorganisation last year, with the country's three water authorities merged into Scottish Water.

Water Commissioner Alan Sutherland has heavily criticised the industry in the final year of the old water authorities.

He said Scots paid higher water bills than England and Wales while performance on some measures, such as sewer flooding, were more than 10 years behind.

The committee was told that some problems remained after the merger.

'Pricing policies'

Briefing papers had been sent to the finance committee from Scottish Water, the trades unions and business users.

The Forum of Private Business in Scotland (FPBS) said there was a "democratic deficit" in the water industry in that neither the Scottish Executive nor parliament had "any real control over...operation and pricing policies".

Scottish Water's debt, which totalled �2.1bn in 2002-03, was a concern for the Scottish Trades Union Congress (STUC) which warned against rising charges to meet repayments and investment.

The STUC also voiced concern over staffing cuts, claiming "safety is compromised and customer service reduced".

Scottish National Party MSP Fergus Ewing called for the investigation to look into improved customer services, including a re-examination of the charging system for low income families.

Fergus Ewing: Seeking answers

He said: "It will allow us to suggest a fairer system of charging which would penalise excessive usage of water and provide a fairer deal for rural Scotland's needs and for those on low income."

He questioned whether Scotland was being "short changed" and pointed to evidence from the FPBS, which argued it was "unfair" that inherited debts for Scottish Water, written off for water regulators in England and Wales with privatisation in 1989, had to be paid off by the Scottish consumer via higher charges.

Scottish Water admitted the knowledge of assets it had inherited from the three water authorities was poor and improved understanding would lead to more efficient investment.

It also said it had inherited "a very poor state of customer data", but promised improvements with a "significant" investment in the development of staff.