Scottish Water chief executive Douglas Millican and First Minister Nicola Sturgeon.

By Bill Heaney

Scottish Water will make its own decision on whether it will freeze water rates for 2023-24 to help with the cost of living crisis, First Minister Nicola Sturgeon told the Holyrood parliament on Thursday.

Dumbarton MSP Jackie Baillie asked Ms Sturgeon to persuade to persuade the dripping with money quango to give consumers a break in light of the fact that the price of everything else was going through the roof.

However, the First Minister was having none of it – “Decisions on the levels of water charges are matters for Scottish Water’s board, and its decision must be taken with due regard to the principles of charging for water services, which are set by Scottish ministers and include the key principle of affordability,” she said.

Last year, the board took a responsible view and held charges to a real-terms freeze, and we expect it to take a proportionate position again, balancing affordability with critical investment needs to protect the quality of our drinking water and the environment.

“Of course, the average water charge in Scotland remains lower than the average charge in England and Wales, but we are committed to supporting people facing any issues with paying their water bills.

“That is why, as part of our overall package of cost of living measures, we have increased the maximum level of the water charges reduction scheme discount from 25 per cent to 35 per cent.”

Jackie Baillie, right,  responded: “Last year, inflation was running at about 4 per cent. Under the formula agreed by Scottish Water and this Government, water rates are charged at the consumer prices index plus 2 per cent. Last year, the Scottish Government intervened to hold water rates down, which was welcome, but this year inflation is at 11 per cent and water bills are set to increase by an eye-watering 13 per cent.

“With this acute cost of living crisis—the worst in many decades—will the Scottish Government freeze water bills for the next financial year? The First Minister has the power to do this—she intervened last year—but the question is: does she have the political will?”

The First Minister was resolute: “This is obviously a matter for Scottish Water’s board.  The board of Scottish Water took a responsible decision last year—we would expect it to do the same this year—to recognise the cost of living pressures, which remain intense and acute.

“However, we also expect and require Scottish Water to discharge other responsibilities to ensure that we have a well-maintained water system, so that the quality of our water services is high, and it is mindful of its wider obligations to the environment.

“If we did not have proper investment in our water infrastructure and, as a result, the quality of our drinking water declined, I am sure that Jackie Baillie would be one of the first to point a finger at this Government.

“We will continue to take responsible decisions on this issue and across the range of other ways that we are supporting people through the cost of living crisis—decisions and actions that continue to result in the Scottish people expressing high levels of trust in this Government.”

Meanwhile, Douglas Millican is to step down as Scottish Water’s Chief Executive next year, after 10 years in the role and 20 years on its board and executive leadership team.

Mr Millican, pictured at top of page, who receives a pay and pensions package of around £150,000 a year, will continue to lead the publicly owned organisation while his successor is appointed and to enable a smooth transition to a new CEO.

Since 2012 he has led Scottish Water as it became one of the highest performing water and wastewater companies in the UK, with sector-leading levels of customer service and sustained improvements in drinking water quality, efficiency and environmental performance.

The organisation employs over 4,000 people and is one of Scotland biggest infrastructure investors, investing more than £700 million annually on water and waste water services.

Mr Millican was previously Scottish Water’s Finance and Regulation Director and has worked in the water sector in Scotland for 25 years.

He said: “It’s an immense privilege to lead Scottish Water, playing a key role for 20 years in the transformation of an organisation that is vital to the health and well-being of people, communities, business and the environment across Scotland. I am proud of all that we have achieved and the consistent recognition in recent years of our leading levels of performance.”

Meanwhile, a look back at his remuneration reveals some eye-watering payments have been received by the CEO and his colleagues.

Three senior figures at the publicly-owned company previously pocketed nearly £250,000 in bonuses at the same time as prices were raised for customers..

The “incentive” top ups were worth around 35% of salary, with chief executive Douglas Millican receiving an extra £92,000.

Dumbarton and Lomond Labour MSP Jackie Baillie said at the time: “People will be appalled that their individual bonuses are more than most people earn in a year.”

The 2017/18 accounts showed that Millican received £92,000 on top of his £256,000 salary, chief operating officer Peter Farrer got a £67,000 bonus to supplement his £186,000 salary, while finance director Alan Scott took home £66,000 in AOIP.

The £225,000 in bonuses amounted to a near 7% rise on the top up payments enjoyed by the same three individuals twelve months earlier, which stood at £211,000.

As of March the year before, the same set of accounts show that Millican’s pension benefits were worth £1.4 million, while the equivalent figures for Farrer and Scott were £1.7 million. and £226,000.

In the years before this, the charges for water supply and waste water collection services rose by 1.6%.

The headline “group surplus” before tax was £22.4 million lower than the previous year at £71.8 million. This reduction, according to the accounts, was “primarily due” to a fall in a subsidiary’s surplus and an expected increase in non-cash pension charges of £16.7 million.

However, Scottish Water, on a “regulatory accounting basis”, generated a surplus before tax of £107.8 million, which was £8.3 million higher than the previous year.

Ms Baillie added: “This SNP government has got some cheek. The fact that they allow Scottish Water to award just three senior executives with eye-watering bonuses, adding up to almost a quarter of a million pounds, is shocking.

“There are expected to be significant rises for households and businesses with the cost of water in the future. The SNP need to make sure that Scottish Water spends less time topping up the already sizeable salaries of their senior executives, and a little more time supporting the hard working Scots that they claim to represent.”

Gary Cook, an organiser at the GMB Scotland trade union, said at the time: “It’s safe to say this six figure carve up among three already highly paid individuals will be met with scorn among our members and the hard-pressed public.

“This culture of excessive bonus payments in Scottish Water and in our wider public sector needs to be reined-in by Holyrood.

“As we enter a second decade of austerity and with our finances threatened further by Brexit uncertainty, this is an appalling waste of money.”

A Scottish Water spokesperson said: “Executive remuneration arrangements are set by independent non-executive directors on the Board of Scottish Water.”

Scottish Water will commence an internal and external search for a new Chief Executive shortly. Given these figures, there is certain to be a long queue of applicants for the job. It won’t be water they’ll be drinking if they land it.

Top picture: Scotland’s water of which the country is blessed with more than its share.

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