By Democrat reporter
Scottish Water has built up an ‘obscene’ cash stash of £391 million – five times higher than the water regulator promised customers when setting water charges, Scottish Labour revealed today.
Once all of Scottish Water’s subsidiaries are taken into account, the cash stash balloons to £531 million – over half a billion pounds.
The revelation of the cash stash comes after trawling Scottish Water’s annual accounts released on the eve of Christmas, and following the water regulator announcing they were going to double water charges over coming years.
Scottish Labour has said that the build-up of the cash stash will come as a shock to millions of Scots facing rising water bills and suffering the cost of living crisis caused by the pandemic.
The size of the reserves demonstrate how thousands of customers have been overcharged by the water regulator to meet the investment plans agreed for the industry.
Scottish Labour finance spokesperson and deputy leader Jackie Baillie, pictured left, said: “This obscene cash stash sits unused in a Scottish Water bank vault while so many customers are falling into debt because of the economic shock waves of the pandemic.
“This revelation shows that Scottish Water cannot use all the money the regulator has been shovelling their way, thus over-charging customers.
“It’s all too clear that the water regulator has its sums badly wrong. The regulator promised customers cash reserves would fall when setting charges; now we see the cash stash is five times higher than promised.
“Given how hard pressed so many families in Scotland are as a result of the pandemic it is astonishing that the water regulator has allowed this overcharging to go on.
“It makes the water regulators recent decision to double water charges look totally ridiculous. We cannot have any confidence in figures they produce when this sort of error is revealed.
“Scottish Water has delayed publishing their annual accounts by seven months this year and it looks highly suspicious that this obscene cash stash was only revealed after the regulator gifted them even more money at the charge-payers expense.”
“This needs to be sorted and the Scottish government must tell the water regulator to start properly looking after the financial interests of water customers and not to take more from them than is necessary.”
Meanwhile, The Democrat can also reveal that Scottish Water’s Annual Report and Accounts for 2019/20 published seven months late and on the eve of Christmas [at a time when people were otherwise engaged] show that the Scottish Water Group has built up a cash reserves of £531 million.
Scottish Water’s reserves are over five times higher than the water regulator promised customers when it set charges for this year.
In this document they state – “The closing cash balance forecast in the Final determination for 31 March 2020 was £70.0 million. The actual cash balance at 31 March 2020 was £391.4 million (P.105)”
“As at 31 March 2020, Government loans totalled £3.9 billion and Scottish Water group held cash and cash equivalents of £531.6 million. (p.43)”.
It is the Water Industry Commission for Scotland (economic regulator) that sets water charges. This significant growth in excess cash has happened at a time when the regulator promised customers when it set charges for this five-year period (2015/2021) that:
- The charges it set would reduce cash reserves Scottish Water held while still meeting its investment targets.
- By 2019/20 the cash held should have been £70 million.
This discloses the fact that the regulator got its sums badly wrong and as a result, customers are being over-charged, paying much more than has been necessary to finance the agreed investment for the period.
The revelation comes at a time when the water regulator has just announced it will double water charges over the coming period.
Scottish Water report available here: https://www.scottishwater.co.uk/help-and-resources/document-hub/key-publications/annual-reports
Top of page picture: Scottish Water boss Douglas Millican with Scotland’s SNP environment secretary Roseanna Cunningham.