Water regulator chairman quits after Harvard spending row

Donald MacRae said he was "surprised" by the public body's spending on a Harvard Business School course for an employee

The chairman of Scotland's scandal-hit water industry regulator has quit.

Donald MacRae's resignation comes after the Water Industry Commission for Scotland (Wics) was accused of financial failings, including spending more than £77,000 on a course for a senior executive at Harvard Business School in the US.

A report by the auditor general also revealed the public body spent £2,600 on £100 gift cards for staff at Christmas.

Ministers said MacRae's departure would allow for a "reset" following "unacceptable" financial and governance issues.

Former Wics chief executive Alan Sutherland, who had racked up £130,000 in expenses since April 2019, resigned as Wics chief executive in December following the publication of the auditor general's report.

Wics has a statutory duty to promote the interests of Scottish Water's customers. It is funded via a levy on Scottish Water.

Acting Energy Secretary Gillian Martin has called for a "reset" of the public body

The body has also come under fire from MSPs for giving Mr Sutherland six months' pay after he stood down.

Mr MacRae told Holyrood's Public Audit Committee last month the payout was made because there had been no gross misconduct.

Acting Net Zero and Energy Secretary Gillian Martin told MSPs that the government was not informed about the payment until several weeks later.

The Times reported in June that two other senior managers also received more than £80,000 of funding each for education qualifications - including courses in Argentina and the US.

Further concerns have been raised about the use of public funds on dinners, business class travel and corporate credit cards without proper receipts.

'Unacceptable financial issues'

Mr MacRae, the former chief economist of Lloyds Banking Group Scotland, said he was "surprised" about the spending on the Harvard course because it was not reported to the board.

Martin said the government welcomed the resignation as an opportunity "to reset oversight of the Water Industry Commission Scotland in light of the unacceptable financial and governance issues that have arisen in the organisation."

The SNP minister added: “Once a new chair is confirmed, we will be clear with them and the board that they need to continue to work hard to deliver the changes required to reset the organisation so it delivers to the high standards I expect of a public body.”

Mr MacRae was initially appointed in 2018 and had been expected to remain in post until at least April next year. His resignation will be effective from 21 October.

Speaking to MSPs last month, Mr MacRae said that “Wics needs to accept the need for a greater focus on value for money and the need to operate to the highest standard of financial management".

Wics board members told the Public Audit Committee that they had been working to change their culture as well as their protocol for how expenses are dealt with.

The Scottish government has commissioned an independent review of Wics and an internal review of its sponsorship arrangements with the body.