Exclusive:‘Eye-watering’ Scotland quango chief salaries in breach of public pay rules - Scottish Water, Scottish National Investment Bank, Ferguson Marine

Scrutiny of chief executive salaries attached to Scotland’s quangos has kick-started The Scotsman’s week-long series

The heads of major Scottish quangos have been accused of acting with impunity by enjoying “unacceptable” and “eye-watering” six-figure remuneration packages that breach the ceiling set out in Scotland’s national public sector pay strategy.

A data-led investigation by The Scotsman – the first part of a week-long series looking at the stewardship of finances across Scotland’s quangos – can reveal more than half of the quango heads have higher salaries than government ministers, with several earning more than outgoing First Minister Humza Yousaf, sparking calls for government intervention.

Several of the best remunerated heads have seen their organisations embroiled in scandal and criticism, while some stepped down or have been sacked in recent months. Others have been tasked with wielding the axe at their organisations to address crippling deficits.

An analysis of the pay received by the heads of 117 bodies shows that cumulatively, they are earning up to £14.1m based on their basic salaries. Including other benefits, such as pension top-ups and car allowances, their total remuneration package is as high as £16.1m.

Amid ongoing concern about the state of public finances in Scotland and the impact on cash-starved public services, the extent of the six-figure salaries being given to these senior managers has also reignited criticism about the pay gaps between those at the top and lower paid public sector workers, with at least 20 quango heads earning more than £150,000 a year, and 69 with a salary in excess of £100,000.

The head of Scotland's largest public services union accused the chief executives of hypocrisy and urged ministers to step in and “curtail excessive executive pay”. Lilian Macer, UNISON’s Scottish secretary, said: “How can leaders have any understanding of people’s needs when they earn one thousand per cent more than the average wage? These CEOs who claim public funds are tight show none of the restraint they demand from others. Workers have seen their real pay eroded over the last decade.

Ms Macer added: “Leadership undoubtedly matters. However, it’s questionable if CEO pay relates to their success or the complexity and size of the services they run. The Scottish Government should be brave and curtail excessive executive pay. We need leaders with a public service ethos who understand how corrosive inequality is.”

Alex Plant, Al Denholm, and David Tydeman

Several chief executive salaries are far higher than the ceiling set by the Scottish Government’s pay strategy framework, which specifies that base pay must not exceed £224,500. Alex Plant, the chief executive of Scottish Water, who warned customers earlier this year of future rate hikes, has a salary band of £290,000 to £295,000. He is one of 11 executives at the public corporation earning more than £135,000.

Al Denholm, chief executive of the Scottish National Investment Bank, an executive non-departmental public body previously criticised for executive bonus payments, has a salary of £240,000. Until his sacking in March, David Tydeman, the chief executive of Ferguson Marine, the state-owned firm behind delayed and over-budget CalMac ferries, earned £275,000. Alex Hynes, the managing director of publicly owned ScotRail, who was seconded to the UK Department for Transport in March, earns £330,000 to £334,999.

Other top-earning quango heads include Calum Campbell, the chief executive of NHS Lothian, which faces a £133m budget gap. He received up to £195,000 in basic salary. Until December, Alan Sutherland, who served as chief executive of the Water Industry Commission for Scotland, had a pay package worth up to £180,000. He stepped down after the Auditor General stated the “financial management and governance issues found at the commission fall far short of what is expected of a public body”.

While Mr Yousaf has a salary of £176,780, which includes both his roles as first minister and as an MSP, a dozen heads of quangos earn more than him. Some 44 quango heads earn more than the £126,452 received by Cabinet secretaries, while 64 command salaries that exceed the £106,185 paid to ministers.

Across Scotland’s 24 health bodies, the cumulative remuneration for chief executives is nearly £3.9m. All but four health chiefs earn more than health secretary Neil Gray. A clear gender imbalance is also evident across the top of the organisations. Compared to 74 men at the helm, there are just 40 female bosses. Among those earning £100,000 or more, 28 are women, while 44 are men. Of the 20 best paid chief executives, meanwhile, 15 are men.

The analysis, which does not take into account Scotland’s 32 local authorities, nor other public bodies such as further education colleges, has raised questions for the government and its public sector pay strategy. It specifies the salary and pay range of chief executives is expected to lie within certain bands. The top band spans £113,621 to £153,684, but has an even higher ‘ceiling’, set at £224,550. The strategy states “in all cases, the proposed pay range maximum must be within the ceiling of the relevant pay band within the framework and is expected to remain so”.

STUC deputy general secretary Dave Moxham said: “At a time when frontline public sector workers have seen real terms pay cuts, it is unacceptable for bosses to be paid over and above the ceiling for chief executive salaries set out in the government’s own public sector pay strategy. Frankly speaking, this information makes a complete mockery of the government.

“It cannot be one rule for the workers – those who are routinely demonised for simply asking for their pay not to be cut during near record rates of inflation and a cost-of-living crisis – and another rule for the head honchos, who seem to act with impunity.

“We need to see a rebalancing of income and wealth across our society. The public sector and the eye-watering sums the chief executives take home are not exempt from this.”

Andrew Speke, a spokesman for the High Pay Centre, an independent think-tank focused on executive pay, said: “It's concerning to see the pay of so many executives of public bodies being paid sums which exceed the Scottish Government’s public sector pay strategy. It does lead one to question how seriously the issue of fair pay in the Scottish public sector is being taken.”

A Scottish Government spokeswoman said: “Public bodies have a vital role in delivering the government’s objectives and are key in areas such as health services, administering the justice system and supporting sustainable economic growth.

“The aims of the government’s approach to public sector pay are for it to be fair and progressive, with specific controls for higher earners to help ensure pay remains affordable and delivers value for money. All remuneration packages are assessed to ensure they are an appropriate use of public resources to deliver the public services needed.”