Page last updated at 16:34 GMT, Monday, 21 December 2009

Transport chief's 30,000 pay-off condemned

The rail franchise is worth about 2.5bn over 10 years

The head of a government agency criticised by MSPs was paid an extra £30,000 to leave his job early.

Dr Malcolm Reed was chief executive of Transport Scotland when the franchise for rail services was awarded to First Scotrail.

Holyrood's Public Audit Committee raised concerns about shares held by the agency's finance director Guy Houston.

Dr Reed was to retire in November but was paid six months salary to go early.

His contracted notice period was three months, but the Scottish government agreed to pay six months' cash totalling £61,000, instead of him working the notice.

The pay-off was revealed in Transport Scotland's 2008/09 accounts, and flagged up by Robert Black, the Auditor General for Scotland.

The move has been branded "astounding" by the audit committee's convener Hugh Henry.

I am astounded to learn that Malcolm Reed was given six months' salary in lieu of notice to leave early
Hugh Henry MSP
Convenor, Public Audit Committee

The committee had carried out an inquiry into shares held by Transport Scotland's former finance director Guy Houston and had branded the agency's handling of the issue "unsatisfactory".

MSPs had also sought details of any payments made on the departure of Mr Houston, but this information was refused by civil servants.

Mr Henry said: "I am astounded to learn that Malcolm Reed, the previous chief executive of Transport Scotland, was given six months' salary in lieu of notice to leave early.

"The Public Audit Committee expressed its concern that Guy Houston may have been given an additional payment on leaving, but civil servants have refused to provide the requested details.

"Once the Auditor General presents his report to the Public Audit Committee in January, I am sure members will want to look closely at both the arrangements and the reasons for this additional payout."

Franchise extension

Mr Houston resigned as finance chief at Transport Scotland after a watchdog's report revealed he attended meetings about a £2.5bn franchise deal - despite holding shares in First Group, which won the contract.

A Scottish Government spokesman said it would consider the issues raised.

He added: "Audit Scotland reviewed the remuneration arrangements and confirmed that they were in accordance with rules and regulations.

"An Audit Scotland report found Transport Scotland managed the franchise contract effectively and secured guaranteed investment of £73.1m as part of the franchise extension."

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