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UTILITY WEEK | 16TH - 22ND OCTOBER 2015 | 9 Policy & Regulation Analysis T he Scottish government declared that Anglian Water was the "most competi- tive bidder" for contract worth up to £320 million over four years to supply more than 100 public sector organisations with water and wastewater services. The big loser is incumbent Business Stream, the business retail arm of Scottish Water. It has been described as "one of the big- gest deals since the [Scottish] market opened up", and marks a significant shi in the com- petitive landscape in Scotland. The knock-on effects will be keenly felt, both for Business Stream and the sector more widely in terms of competition and how future deals are handled. The tender process this time around was long and protracted. Originally due to be finalised in March, it suffered three delays before a winner was announced in October. That winner was Anglian Water Business, which now has a contract worth £80 million a year for three years with the option of a fourth. The offer put forward by Anglian set out £40 million-worth of savings, comprising immediate savings of £5 million a year and further yearly savings of £5 million from water efficiency measures. This trumped Business Stream's offer of a potential £36 million of savings over the same four-year period. The decision is unpopular in Scotland, especially with MSPs who have labelled it "embarrassing", "a real mess", and "deeply regrettable". In 2014/15 Business Stream posted revenues of £320 million, so losing £73 million a year, which the previous con- tract was worth, wipes out more than 20 per cent of its revenues at a stroke. A spokesman for the Scottish govern- ment, which owns Scottish Water, said it "maintains the no compulsory redundancy policy", although no specific guarantees have been given over jobs at Business Stream in light of the contract loss. Green Party MSP Patrick Harvie tells Util- ity Week the decision "will be a blow" to Business Stream and he is concerned about the company moving forward. "It will per- haps leave them in a weaker position for retaining work outside the public sector. That danger is there," he says. He calls for a "focus in the next few years to ensure [Business Stream] is in a position to retake this contract at the next possible opportunity". Business Stream chief executive Johanna Dow echoes that and says the company's "focus is firmly on the future". Recent contract wins in England, where Business Stream secured a two-year deal with three House of Fraser stores, testifiy that the company is not about to lie down in the face of competition. Dow says: "We remain the leading supplier in Scotland and we'll be looking to build on that position while acquiring more customers in England ahead of market opening up to competition in 2017." Consumer Futures Scotland manager Sarah Beattie-Smith tells Utility Week the loss of the public sector contract "is probably the biggest change since the market opened up in terms of the amount of money involved and the size of the contract". It is a sign that competition proper has arrived in Scotland, although others are not happy at the way the contract was put out to tender and are calling for changes. Trade union Unison says "Scottish [public sector] water should stay in public hands", and MSPs are urging the SNP-led Scottish government to make changes to the way it tenders contracts in the future. Scottish Labour's public services spokes- person, Jackie Baillie, says the SNP has "made a real mess" of the contract and that there were "options in the tendering pro- cess to break this contract down to deliver a better deal for the taxpayer and keep water management in public hands". That is something Green MSP Harvie is also calling for. "Conditions could be arrived at to make this rather less juicy for the pri- vate sector, especially if it is not awarded as single contract across the public sector," he says. "We should be offering this in a num- ber of separate lots rather than one massive contract. This would make it less attractive for large external private sector bidders." He adds that the Scottish government should "use the flexibility it has" to ensure the public sector runs public services". Anglian Water Business has taken the battle to Scotland and won. While changes to how the Scottish gov- ernment runs its tenders may happen in order for the Scots to buy Scottish, Business Stream is looking to continue its expansion when the English market opens and win con- tracts south of its homeland. The battle of business supply has begun. Johanna Dow calls for a level playing field, Chief executive's view, p6 Let battle commence Anglian Water Business has won the contract to supply all Scotland's public sector buildings with water services, leaving Business Stream stunned and MSPs aghast. Mathew Beech reports. THE DEAL IN NUMBERS £80m annual value of contract £320m contract value over four years £40m savings promised by AWB over four years "The system of retail water competition is the ultimate in market madness." "This is the best deal for Scotland under the rules that bind us" Dave Watson, head of Unison Scotland bargaining and campaigns Keith Brown, Scottish cabinet secretary for infrastructure, investment and cities