04 July 2003
Scottish Water has defended a controversial scheme to pay bonuses to all of its employees at a time when it is being criticised for soaring charges.
Politicians and business leaders claimed the bonuses – of about £650 each and costing a total of £3m – were unjustified in view of the increased water charges that are hitting businesses.
But the authority's chief executive, Jon Hargreaves, said bonus schemes had been in place for public sector employees in the water industry in Scotland for many years, including under the three former water authorities that Scottish Water replaced last year.
He said: 'The 2002/03 scheme formed part of our employees' overall remuneration package and was designed to reward staff for achieving very challenging performance targets to improve the overall financial and service performance of the business.'
Hargreaves stressed that the workforce had been cut by 600 to 4,600 in the past year.
'The bonus was funded out of savings from beating cost budgets and amounted to less than 3% of total employment costs,' he said.
However, the head of the Scottish Federation for Small Businesses, John Downie, described the bonus scheme as 'outrageous'.
He claimed Scottish Water was not providing an effective and efficient service and that small businesses would be 'furious' at the scheme.
The bonus controversy has coincided with protests over the increased charges to business customers of up to 500%. The rises are said to be necessary to allow Scottish Water to reduce its huge £2.2bn debt.
Business leaders claim firms are paying about £190m more than their counterparts south of the border.
Scottish Water argues that its prices are higher due to the scale of its debt and level of its investment programme, which amounts to £1.8bn over the next four years.
The row has resulted in claims that in England privatisation has produced a more efficient system and lower charges.
It has also revived controversy about the fact that the English authorities had their debts written off before they were privatised.
PFjul2003
