Taxpayers stump up £12m for public sector workers’ bonuses

● Payouts to prison chiefs, NHS staff and public utility bosses on the rise

More than £12 million has been paid out in bonuses to bosses and staff in public bodies across Scotland in recent years, it has emerged.

Prison chiefs, council workers, NHS staff and public utility bosses have enjoyed payouts – with a top bonus of £92,000 at a time of swingeing austerity cuts across Scotland’s public sector.

And the payouts are on the rise, according the figures obtained through Freedom of Information.

They come despite official Scottish Government policy advice stating that such payouts should not be made, although ministers cannot dictate pay policy to taxpayer-funded bodies.

About £6.1m was paid out in each of the past two years in bonuses and performance-related pay by dozens of organisations. Publicly-owned Scottish Water led the way, paying out about £4.7m a year.

Opposition parties at Holyrood are now calling for action from the SNP government to address the situation, which comes two years after Deputy

First Minister John Swinney called for an end to the payments.

Tory finance spokesman Murdo Fraser said: “Despite promising to crack down on this two years ago, it seems as if the SNP have done little to curb the number of bonuses being paid out in the public sector.

“At a time when public sector bodies are facing increasing budgetary pressures, many people will be amazed to see that so much money is being spent on bonuses.”

The organisations making the payments also include theatres companies, leisure quangos, schools and courts. The payments made vary from as little as £50 to many four and five-figure payments.

The publicly-owned water giant Scottish Water paid out £4.7m in each of the past two years. The highest payment made was made to chief executive Douglas Millican in 2014 on top of his salary of £237,000 that year. This bonuses level fell to £82,000 the following year. Other Scottish Water directors also enjoyed bumper payments in 2015 with executive director Geoff Aitkenhead receiving £59,000, Peter Farrer, the chief operating officer, getting £59,000 and finance director Alan Scott also awarded £59,000.

The firm says although it is a public corporation, its performance is measured against the “best performing privatised water companies” south of the Border.

“Scottish Water is a high performance-driven organisation which is set extremely challenging targets in a range of areas by our regulators to deliver high standards and excellent service for the benefit of customers,” a spokesman for the firm said.

In total, £6.157m was paid out in 2015/16, the figures show. This up slightly from £6.134m the previous year.

Universities and colleges have also paid out millions of pounds in bonuses to staff, despite the bulk of their funding coming from the public purse, although they are “autonomous” bodies partially funded by fees.

The top payments were at Napier University in Edinburgh where a payment of £14,535 was made to one staff member, while £12,322 was paid by Glasgow Caledonian University. Strathclyde University made a payment of £9,000 the figures show.

Labour’s Jackie Baillie said: “SNP ministers in Edinburgh appear to have done nothing to stop millions of pounds of taxpayers’ money going to pay bonuses, in most cases to the highest paid staff.

“We need a full explanation from the SNP government about what action they have taken on this – at a time when our public services are under so much pressure.”

The Scottish Government introduced a pay policy several years ago, which applies to government staff and workers in some other public bodies, which stipulated that any “non-consolidated performance related pay” should be suspended.

Liberal Democrat Edinburgh Western MSP Alex Cole Hamilton said ministers must step up efforts to address the current situation.

“People will find it hard to understand how most salaries have been capped at a 1 per cent increase yet the government still splashes thousands on a select few,” he said. “The SNP government promised to end these bonuses yet we are still seeing them awarded. ”

A Scottish Government spokeswoman said last night: “Unlike the UK government, where we directly control pay we have continued the suspension of bonuses and have done so for the last five years. The annual pay awards to chief executives is in line with the SG Public Sector Pay Policy and with other employees within their respective organisations.”

Bonuses are always a hot topic, probably because that for the most part they are unusual to people, most people get paid a salary or an hourly rate and any bonuses play a relatively small part and are usually calculated to top up earnings to a reasonable level. However that changes at the very top of the money makers and there is huge interest generated because the sums can be very significant indeed.

Recently there has been growing disquiet over the disparity in the pay of the people at the top of very large companies and the ordinary workers, and there have been calls for the top people’s pay to be capped at a multiple of the company average.

But in the private sector there is probably a general acceptance that if a company is doing spectacularly well then it is fitting for the people at the top of that company to earn spectacular pay. And then there are the companies which are not doing particularly well, which need a particular set of skills to turn them around who have to pay big money to attract those with the skills and appetite for risk, and then have to reward success with decent returns.

All in all bonuses are quite an effective way to generate performance.

But then there are some areas which are greyer. There was a great deal of anger over the huge bonuses that a large number of bankers were receiving prior to the economic collapse of 2008, because it turned out that the bankers were not successful after all, in fact quite the opposite, and many others had to pay for it in a very literal sense. And post the collapse the subject of bankers bonuses became a political football, particularly here where two of the banks became part-owned by the state as they were bailed out. The industry claimed that because banking is an international marketplace and therefore they face competition for the very best from banks around the world, and any tying of hands in this country over bonuses would mean an unfair disadvantage and a talent drain to those unfettered over bonus payments.

And now there is further criticism after it was revealed that more than £12 million has been paid out in bonuses by public bodies across Scotland in recent years, going to prison chiefs, council workers, NHS staff and public utility bosses.

In the private sector, where banks belong, it is probably right that some go in to it to get rich. But the “must match private sector” argument for the public sector only really works if money is the sole motivating factor, but who goes in to the NHS or the prison service or local council to get rich? Surely once a comfortable standard of living is assured there are other factors that will be significant motivators for people like helping people, serving society, freedom to innovate, personal and professional development and even work-life balance. Those factors could attract people very suited for jobs, and the public would be better off with them, also in a literal sense. The Scottish Government should persevere in its desire to end big bonuses in the public sector.