Scottish Water under fire over £391m cash reserves as prices rise

Labour has hit out after it emerged publicly-owned Scottish Water built up cash reserves of £391 million while Scots faced rising water charges.

Scottish Water has been accused of holding back a stockpile of funds

Interim party leader Jackie Baillie has branded the figure "obscene" and accused the water regulator of getting its “sums wrong” when setting prices.

Scottish Water has insisted the money is earmarked for investment in infrastructure with much of it set to be spent by the end of March – and that this is separate from setting prices.

The figures have emerged in Scottish Water's latest accounts for 2020/21.

Jackie Baillie has branded the £391m figure "obscene"

The publicly-owned firm is responsible for delivering services to domestic and business clients, but the Water Industry Commission for Scotland (WICS) sets the charges which are part of council tax bills.

Ms Baillie said: "This obscene cash stash sits unused in a Scottish Water bank vault while so many customers are falling into debt because of the economic shockwaves of the pandemic.

"This revelation shows that Scottish Water cannot use all the money the regulator has been shovelling their way, thus over-charging customers."

She added: "Given how hard pressed so many families in Scotland are as a result of the pandemic, it is astonishing that the water regulator has allowed this overcharging to go on.

"It makes the water regulator’s recent decision to double water charges look totally ridiculous. We cannot have any confidence in figures they produce when this sort of error is revealed."

The annual accounts state that the closing cash balance forecast for last year was £70m, but in the end it came to £391.4m. The wider Scottish Water group had "cash and cash equivalents" of £531.6m.

A Scottish Water spokesperson said: “The cash balances within Scottish Water at March 31, 2020 of £391.4m are planned to be consumed significantly over the period to March 2021, under the agreed delivery plan for investment commitments initiated during the 2015-21 period, and in dealing with the impact of the Covid-19 pandemic.

“The cash balances in the Business Stream group at March 31, 2020 of £92.7m, together with a significant element of the cash balances within the Horizons group, will be used to enable Business Stream to support its customers during the Covid-19 pandemic.”

The company said both cash balances and debt rose during the year.

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