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Contract will result in huge efficiencies for public bodies
The new deal to look after water bills for Scotland's schools, hospitals and other public buildings will see millions poured back into public services.
Anglian Water Business (AWB) has emerged as the most competitive bidder for the contract, which will see Scottish Water continue to provide the water for the 96.5% of Scotland's population it currently supplies.
The new contract, managed from AWB's Edinburgh office, will bring jobs, apprenticeships and training to Scotland and protect any transferring staff, as well as creating savings for public bodies.
AWB's bid offered immediate savings of £5m a year compared to the nearest bid, and water efficiency support to reduce customers' water consumption. As well as helping the environment, these 'green' measures could reduce bills by a further £5m a year. This means the contract will save public bodies up to £40m over the next four years.
Cabinet Secretary for Infrastructure, Investment and Cities Keith Brown said:
"This is the best deal for Scotland under the rules that bind us, and this contract will save public bodies up to £10m annually for the initial three year period of the contract with the option to extend for a further 12 months.
"Legislation introduced by a previous administration to safeguard the public status of Scottish Water requires us to tender out these services.
"But we have ensured that Scottish Water remains in public hands, and we have secured the best possible deal to ensure Scotland benefits.
"New staff are being recruited in Scotland to manage the new contract and we have secured a Living Wage guarantee. In addition, AWB will more than double their Edinburgh workforce, as well as planning for new apprenticeships and trainees.
"AWB will also work with public bodies to reduce their impact on the environment and reduce their water consumption.
"But the biggest benefit of all will be the money that can be ploughed back into the services provided by those buildings – the schools, hospitals and public offices – throughout Scotland."
The existing contract with Scottish Water subsidiary Business Stream was due to expire on March 31.
AWB emerged with the most attractive bid but an extension was put in place to allow all of the bidders to consider initial feedback and provide on-going service to public bodies.
The current contract will be continued until December 31 to allow for a seamless transition to the new management.
- The contract is worth around £80m a year over four years.
- Scottish Water remains the wholesale provider – only the retail element is subject to competition (reading meters, processing bills and offering water efficiency support).
- Scottish Water will continue to provide the water supply for 96.5% of Scotland's population. The remaining 3.5% are connected to private supplies under their own individual arrangements.
- The Water Services etc. (Scotland) Act 2005 established the framework for retail competition. This framework introduced competition into the Scottish water market. When there is competition in a market, EU rules stipulate that public contracts must be competed, even when a publicly-owned company can deliver the service.
- By introducing competition for Business Stream's services, the 2005 Act forced public bodies to tender contracts for Water and Waste Water services, even though Business Stream is owned by the public.
- There is no impact on households as the provision of water to Scottish households is not open to competition.
- Ministers will ensure that Business Stream, as a public entity, maintains the no compulsory redundancy policy.
Donna Watson: 0131 244 5122 / 07786 661 926