New report highlights more ‘inappropriate’ spending at water regulator

A new report has revealed further “inappropriate expenditure” at Scotland’s water industry regulator, with public spending watchdogs finding almost £75,000 of spending was “not in accordance” with public sector spending rules.

A review of spending at the Water Industry Commission for Scotland (Wics) had found spending totalling £74,832 in 2023-24 fell into this category.

A new report by Auditor General for Scotland Stephen Boyle also claimed there was £20,355 of spending at Wics last year on business class flights and meals that, although it complied with Wics’ policies, did “not appear to represent value for money”.

And it said Wics should have “taken more time to consider the options available” before offering a settlement agreement to its former chief executive.

Alan Sutherland resigned from the post in December 2023, hours after Audit Scotland published a report revealing “unacceptable” spending at Wics.

With his departure coming at a cost to the public purse of £105,488, Tuesday’s report from the Auditor General said that “while it is disappointing that further inappropriate expenditure has been identified” at Wics, it was “reassuring” this had taken place prior to December 2023.

After a “challenging year” for Wics, Mr Boyle said that “significant work” was now under way to improve “leadership, culture and governance” there.

Here his report stressed “effective leadership” was needed from the Wics board and senior management team, with support from the Scottish Government to “embed a positive culture of best value”.

It comes after the Auditor General raised issues surrounding spending at Wics, highlighting how £43,604 which did not meet the requirements of the Scottish Public Finance Manual – which sets out guidance from the Scottish Government on the proper handling of public funds.

This included £24,000 paid as a retainer to a Kings Counsel, which should have been approved by the Scottish Government, the report said.

There was also £7,454 of staff expenses identified for which no itemised receipts or other proof of purchase was provided – again failing to meet requirements of the Scottish Public Finance Manual.

However the report went on to note that “significant work is under way to improve the leadership, governance and culture” at Wics.

It added that “actions are being taken to address the financial management and governance weaknesses raised”.

Mr Boyle stated: This has been a challenging year for the Commission. Action has been taken to address the issues I highlighted, with significant work under way to improve leadership, governance, and culture.

“The success of that work will depend on all parties – board members, senior management, staff, and the Scottish Government – working together to move the Commission into a stronger place in delivering its regulatory role.”

Wics has been contacted for comment.