6. To ask the First Minister what the Scottish Government’s response is to reports that Scottish Water has issued bonus payments to executives in excess of public sector pay rules. (S6F-02515)

The criteria for paying bonuses to Scottish Water’s executive members are agreed by ministers ahead of each regulatory period. They are in line with public sector pay rules, which state that we need to attract and retain highly experienced personnel to run vital public services. The current remuneration package for the chief executive officer and senior management team is significantly smaller than that which is paid by comparable utilities, both for salaries and bonus incentives.

The Presiding Officer:

I call Stephen Kerr. [

Interruption

.] I apologise. I think that we can afford Pauline McNeill a supplementary question.

I nearly had a heart attack there. [

Laughter

.]

This week, it was reported that three Scottish Water executives had received nearly £1.1 million in bonuses in 2021, on top of a six-figure salary and despite the fact that there were 14,000 sewage spillages last year alone. That begs the question as to why those executives qualified for performance bonuses. The same executives are withholding a pay rise from their workers unless their staff accept a new pay structure, under which the poorest would be losing as much as £5,000.

I have to ask the First Minister: what has gone wrong? Why is a public sector body paying public sector executives who seem to be a law unto themselves vast amounts of money in an instance where there have been existing failures and customers have been asked to pay even more for infrastructure? Can the First Minister justify that in a public sector body?

The First Minister:

Pauline McNeill’s characterisation of Scottish Water is deeply unfair. First and foremost, I understand that pay negotiations are on-going and were on-going until the early hours of the morning. I am pleased that discussions are on-going and I hope that strike action can be averted, even at the last minute and the last hour, because the Government has a strong track record when it comes to ensuring that workers are paid fairly.

On remuneration, I mentioned that Scottish Water has to be competitive. We should compare the CEO’s salary, which is, of course, a high salary of £245,000, to the situation in Welsh Water, where the CEO’s base salary is £341,000, or United Utilities, where the CEO’s base salary is £971,000. Those figures are sourced from salary comparison tables for 2022-23. The reason why I mention that is because we have to make sure that Scottish Water is able to attract the best talent from across the country and, indeed, the world. The bonus element of any remuneration package is paid only in the event of outperformance of demand targets that are—this is crucial—verified by independent regulators.

The First Minister will be aware of the damning report on drinking water by the Drinking Water Quality Regulator for Scotland. Sue Petch, the regulator, called out a backlog of maintenance and neglect of the maintenance of assets, and said that that posed a real

“danger to human health.” The regulator has issued an enforcement order. The First Minister is accountable for Scottish Water. What will he to do to ensure that that enforcement notice is carried out and that the backlog is properly dealt with?

The First Minister:

We will ensure that Scottish Water invests significant amounts of money over the coming period. It will invest £4.5 billion from 2021 up to the 2027 period.

That investment programme is supported by Government borrowing of up to £1.03 billion, and £880 million was invested in 2022-23 to upgrade essential treatment works and water supply and sewer networks.

On Scotland’s water quality, we know from the Scottish Environment Protection Agency that 87 per cent of Scotland’s entire water environment is assessed as having either a high or good classification for water quality.

On the enforcement notice, which Stephen Kerr is right to raise, it is my full expectation that Scottish Water will comply with it.

The Presiding Officer:

There is much demand to ask supplementary questions. If members can keep their questions and responses concise, we will get more members in.

Sewage was dumped 14,000 times last year, faecal bacteria in Lower Largo was 50 times the legal limit, and there was dry sewage dumping in St Andrews. How on earth can the First Minister justify such whopping bonuses when those Scottish Water bosses are responsible for such failure?

The First Minister:

I have just mentioned the fact that 87 per cent of Scotland’s entire water environment is assessed by SEPA as having high or good classification. I have also made the point, which Willie Rennie clearly did not listen to, that, when it comes to the awarding of bonuses, they are, of course, for where performance targets have been met and exceeded, and they are independently verified by regulators. It is important that publicly owned companies such as Scottish Water are able to compete. The CEO’s base salary is far lower than those of many other comparative water and utility companies throughout the United Kingdom.

The Presiding Officer:

We move to general and Constituency supplementaries.