Water services - investing in and paying from 2027: consultation

5. Consultation on Ministerial Objectives

5.1 Background

Scottish Ministers set objectives for Scottish Water as to the standard of services it provides in its core functions.^[2] These are referred to as the Ministerial Objectives. The draft Ministerial Objectives, which are subject to this public consultation, are provided in Annex A.

The Ministerial Objectives establish the standard of services Scottish Water must provide its customers and the type of investment activity it must undertake.

The Ministerial Objectives impact on what we all – as households or business customers – pay for the water and wastewater services provided by Scottish Water.

The services that Scottish Water provide are funded through customer charges and borrowing from the Scottish Government. Scottish Water’s independent economic regulator, the Water Industry Commission for Scotland (WICS), will determine the maximum amounts of customer charges for Scottish Water’s charges scheme for 2027-33. This maximum amount is based on the lowest overall reasonable cost for it to deliver the Ministerial Objectives.

In 2020 WICS determined that Scottish Water could increase customer charges by two percentage points above inflation, as measured by the Consumer Prices Index (CPI), on average over each year of the (current) 2021-27 regulatory period (1 April 2021 to 31 March 2027).

Scottish Water plans to invest around £6.2 billion which will contribute to the delivery of the Ministerial Objectives for the current regulatory period. Table 1^[3] breaks down this planned investment by primary service.

The glossary published alongside WICS’ final methodology for the Strategic Review of Charges 2027-33 defines the investment categories in Table 1.

Scottish Water invests in different types of work to maintain and improve services. Asset maintenance means looking after existing systems by carrying out repairs, refurbishment, or replacement so that they continue to perform as expected. Repairs fix faults, while refurbishment upgrades older equipment to extend its life. Asset replacement involves installing new systems when the old ones are worn out or no longer cost-effective. Capital enhancement focuses on improving services, such as providing higher treatment standards, reducing environmental impact, or improving customer experience. Growth investment expands capacity and builds new connections to meet rising demand from homes and businesses.

Investment in the Completion Programme covers projects from the previous regulatory period (2015-21) that are finishing in 2021-27, including those delayed by factors such as Covid-19 or scope changes, and those originally planned to complete during 2021-27.

Scottish Water plans to invest £2.5 billion in 2021-27 on asset replacement and planned maintenance and a further £1.4 billion on responsive maintenance – a total of £3.9 billion. Furthermore, it plans to invest £1.6 billion and £0.4 billion on enhancement and growth projects, respectively – a total of £2.0 billion. This illustrates that the investment required to maintain existing levels of service is greater than the amount required to improve services or expand capacity to accommodate future customers.

For the next regulatory period, Scottish Water has suggested that an £8.3 billion investment programme (2023-24 prices) will be needed. This would require, in its initial view, customer charges to rise by four percentage points above inflation (CPI) on average in each year of the 2027-33 regulatory period.

Scottish Water set this out in its draft business plan, which explains how it could fulfil the draft Ministerial Objectives from the Commissioning Letter. The Commissioning Letter was issued by Scottish Ministers in April 2024 and initiated the review. The draft Ministerial Objectives set out in the Commissioning Letter were a continuation of the Ministerial Objectives for the current regulatory period.

Scottish Water has received feedback on its draft business plan from Consumer Scotland, WICS and other industry stakeholders. The Scottish Government, Consumer Scotland, WICS, and Scottish Water’s own Independent Customer Group have all raised concerns around the affordability of Scottish Water’s draft business plan for its customers. Scottish Water is considering this feedback while preparing its final business plan which it must submit to WICS on 26 February 2026.

The draft Ministerial Objectives for 2027-33 are proposed in order to begin addressing the challenges faced by the water industry, e.g. ageing assets, adapting to climate change, and population growth and movements. Addressing these means Scottish Water can continue to deliver high quality and sustainable water and wastewater services. However, there is a need to balance ambition with the impact on customer charges.

As set out in the Commissioning Letter, the draft Ministerial Objectives for 2027-33 that we are now seeking your views on are an evolution of those currently in place. They cover a number of areas, as summarised below.

Standard of Services: Scottish Water must maintain or improve service levels compared to 2027, set performance targets with stakeholders, and ensure transparent public access to performance data.

Investment Planning: Investment must align with national infrastructure and environmental hierarchies^[4], support long-term asset value, service outcomes, and delivering value across generations.

Asset Maintenance: Scottish Water must prioritise maintaining and enhancing existing assets over building new ones, continue to develop an evidence-based strategy for asset health, and ensure sustainable investment to maintain service levels amid climate change.

Supporting Sustainable Economic Growth: Scottish Water must provide strategic capacity for housing and industry, optimise existing infrastructure before expansion, and support national planning while balancing domestic and non-domestic needs.

Drinking Water Quality: Scottish Water must address risks to water quality through investment and operational improvements, conduct system-wide risk assessments, and support efforts to eliminate lead piping.

Drinking Water Resilience and Demand Management: Scottish Water must improve supply resilience and, by 2028, report on options to close the 2050 supply-demand gap, including demand management and supply expansion, while promoting water-efficient behaviours.

Cyber, Physical and Personnel Security: Scottish Water must enhance security across its systems and infrastructure against malicious threats, guided by government and industry best practices.

Environment: Scottish Water must publish and deliver an Improving Urban Waters Routemap, maintain transparency on unsatisfactory discharges, and invest to improve bathing water quality in collaboration with SEPA.

Wastewater Treatment and Network Performance: Scottish Water must address compliance risks with wastewater regulations through investment and operational changes, provide public access to overflow data, and promote responsible sewer use.

Management of Rainwater and Flood Resilience: Scottish Water must collaborate to implement integrated urban catchment management, reduce sewer flooding and pollution, and create flood-resilient, nature-inclusive communities.

Climate Change, Adaptation and Mitigation: Scottish Water must assess climate risks to assets, adapt services to climate impacts, support biodiversity, and maintain progress toward net zero emissions in line with national adaptation plans.

Circular Economy: Scottish Water must align with Scotland’s Circular Economy Route Map, exploring resource recovery and sustainable reuse of bioresources and effluent.

5.2 Alignment with the Water Sector Vision

Table 2 sets out how the draft Ministerial Objectives are linked to the Water Sector Vision.

Table 2 : Alignment of the draft Ministerial Objectives for Scottish Water for 2027-33 with the Water Sector Vision

Water Sector Vision

We will keep services affordable by innovating and delivering the greatest possible value from our resources, helping those who need it most. We will serve all customers and communities in a way that is fair and equitable to present and future generations.

Relevant Ministerial Objectives

• Standard of Services;
• Investment Planning; and
• Asset Maintenance

Water Sector Vision

We will enable the economy to prosper.

Relevant Ministerial Objectives

Supporting Sustainable Economic Growth

Water Sector Vision

Together we will support the health and wellbeing of the nation. We will ensure that all of Scotland gets excellent quality drinking water that people can responsibly enjoy. We will involve and inspire Scotland's people to love their water and only use what they need.

Relevant Ministerial Objectives

• Drinking Water Quality;
• Drinking Water Resilience and Demand Management; and
• Cyber, Physical and Personnel Security

Water Sector Vision

Scotland’s wastewater will be collected, treated and recycled in ways that generate value and protect people and the environment. We will promote access to the natural environment and encourage communities to enjoy and protect it.

Relevant Ministerial Objectives

• Environment; and
• Wastewater Treatment and Network Performance

Water Sector Vision

We will be agile and collaborate within the sector and work in partnership with others to be resilient to the challenges that face us.

Relevant Ministerial Objectives

Management of Rainwater and Flood Resilience

Water Sector Vision

Scotland's water sector will be admired for excellence, secure a sustainable future and promote a responsible Hydro Nation.

We will transform how we work to live within our planet’s resources, work with the natural environment and maximise our contribution to Scotland achieving net zero emissions and adapting to climate change.

We are a vital part of a flourishing Scotland.

Relevant Ministerial Objectives

• Climate Change, Adaptation and Mitigation; and
• Circular Economy

5.3 Pressures on the Water System

The wider water system has a number of pressures. Not all of these are due to Scottish Water and the network it operates. However, investment in Scottish Water’s network is essential to respond to the pressures in the wider water system and maintain the levels of service customers expect.

For example, Figure 1 shows the pressures on Scotland's surface water bodies that did not achieve ‘Good or better condition’ in 2020, at the beginning of the current River Basin Management Planning (RBMP) cycle (2021-2027).^[5] Of the 1,164 surfaces water bodies identified as less than good condition, only 48 had pressures due to wastewater discharges (less than five percent). A further 30 had pressures due to public water supply related to flows and levels, e.g. water abstraction or storage.

5.3.1 Water challenges

Scotland’s weather is changing fast. Summers are getting hotter and drier, while winters are wetter and storms more intense. Summer 2025 was the UK’s warmest on record. This was particularly pronounced in parts of the north-east where mean temperatures were between 1.5 to 2°C warmer than the long-term average (1991-2020). Figure 2 illustrates that rainfall in the east was generally 70 to 90% of the long-term average. In the north-east, rainfall was generally 50 to 70% of the long-term average.

These changes mean less water in reservoirs during dry spells and more flooding during storms. For example, as of 31 October 2025 reservoir stocks in the east were lower than normal at 56% compared to an average of 85% at this time of year, with Scottish Water having to take a number of actions to mitigate risks and maintain public supplies.^[6] Low flows and warmer water encourage algae growth, making water harder and more expensive to treat. These global changes are outside Scotland’s control, but we must adapt to protect our water services.

A guest blog hosted on the Scottish Parliament Information Centre website in October 2025 highlighted that people in Scotland use more water than most other countries – 180 litres per person every day, compared to around 145 litres in England and Wales, 125 litres in Ireland, and 85 litres in Belgium. This high use adds pressure on supplies and increases energy and carbon costs for treatment.

Scottish Water’s Climate Change Adaptation Plan 2024 sets out that by 2050, provided water continues to be used at current levels, the demand for water will exceed supply by 240 million litres per day during dry periods. There will be a deficit of 100 million litres per day in key population centres in the east (City of Edinburgh, the wider Lothian region, Dundee and Fife). This risk is made worse by population shifts from west to east and economic growth, which increase demand where water is already under pressure. For example, the National Records of Scotland projects that the population of Scotland will increase by 6% between mid-2022 and mid-2047. This will vary across council areas with the population in Midlothian projected to increase by 35% whereas the population in Inverclyde is projected to decrease by 16%.

Meeting future demand at current usage levels would require building new reservoirs, water treatment works and pipes. This would be costly and harmful to communities and the environment, so using water wisely to reduce Scotland’s need to build more infrastructure is essential.

5.3.2 Wastewater challenges

Scottish Water’s Improving Urban Waters Routemap sets out how it is transforming its wastewater systems to deliver environmental benefits. The Routemap commits up to £500 million of investment to increase monitoring and reporting of sewer overflows, reduce overflows, improve water quality and reduce sewer related debris in the environment.

Customer habits also affect the sewer network. When items like wet wipes, sanitary products, and fats are inappropriately disposed to sewer these cause blockages. It costs Scottish Water, and ultimately its customers, to clear these blockages and they can lead to sewage spills into rivers and beaches. As reported in Scottish Water’s Annual Report and Accounts 2024/25, around three-fifths of environmental pollution incidents in the sewer network were caused by items such as wet wipes and sanitary products that had been inappropriately disposed to sewer.

At the same time, new homes, roads, and paved gardens create more hard surfaces, so rain runs off quickly into drains, raising flood risks.

We all have a part to play in respecting and managing our water resources and environment. Simple changes – like shorter showers, water butts, and putting rubbish in bins – can help protect Scotland’s water and limit the size of future charge increases. Scottish Water’s focus is on managing the pressures on our water and wastewater service networks in order to continue to provide high quality, affordable services for customers.

The Ministerial Objectives focus on the areas we think are most important for managing those pressures, maintaining the delivery of Scottish Water’s services and ensuring Scottish Water is playing its part in achieving the Water Sector Vision.

In setting the Ministerial Objectives we have considered how they work together across the wider water system and will drive investment across Scottish Water’s networks to manage the pressures in the system. For example, the drinking water resilience objective may require Scottish Water to invest to increase the connectivity of its water infrastructure to ensure it can continue to provide a reliable supply of drinking water to its current and future customers. However, investment in Scottish Water’s infrastructure is only one solution to this problem. Another less costly way to solve this problem is through customer behaviour change, which links to the demand management objective around behaviour change.

There is a balance to be struck between increased investment and more efficient use. Decisions we make in this statutory review of charges will not make the challenges facing Scotland’s water sector go away but must put us on the correct course to start addressing them. As such it is essential that we work together – Government, sector, communities – to decide how we strike that balance, to make sure that we protect these services.

We expect Scottish Water and its regulators to ensure that it operates efficiently, targeting action where it maximises impact and value for money.

Question 1: To what extent do you agree that the Ministerial Objectives identify the type of investment activity Scottish Water should undertake in 2027-33? [Strongly agree / Agree / Neither agree nor disagree / Disagree / Strongly disagree]

Question 2: Which areas should Scottish Water be investing in that are not covered or are there areas that are not required? [free text]

5.4 Standard of Services

The Ministerial Objectives establish the standard of services Scottish Water must provide to its customers in 2027-33.

The draft standard of services Ministerial Objective requires Scottish Water to maintain or improve the standard of services it provides to its customers in 2027-33 compared to the position at the end of the current regulatory period on 31 March 2027.

Information on Scottish Water’s performance is published annually by Scottish Water in its annual report, and on specific areas of its performance by its regulators. For example, WICS published its annual report on Scottish Water’s performance in 2024-25 in November 2025.

Furthermore, in its draft business plan^[7] for 2027-33, Scottish Water forecasts its performance against outcome measures proposed by WICS. These forecasts may change when Scottish Water submits it final business plan to WICS on 26 February 2026.

An overview of Scottish Water’s performance in the cycle so far can be viewed in the introduction to this consultation.

Question 3: What do you value most about the water and wastewater services provided by Scottish Water? [free text]

Question 4: Do you have any concerns about the water and wastewater services provided by Scottish Water? [free text]