Deputy First Minister set to bring welcome local engagement to ferry tendering processes

[8th August - Updated below in Responses] On 1st July, the Deputy First Minister, Nicola Sturgeon, sent a covering letter to the members of the Gourock-Dunoon Ferries Service Steering Group with the copy of the recently published feasibility study on a second vehicle and passenger service for this route.

In it, almost in passing, she laid down the beginnings of a commendable focus on opening up – democratising, if you like – the business of tendering such services.

The Steering Group members she addressed include representatives from the Dunoon Gourock Ferry Action Group, Argyll and Bute Council, Inverclyde Council with Transport Scotland.

Argyll and Bute Council is responsible for the Dunoon terminal, one of the two destinations for the service whose feasibility was being assessed; Inverclyde Council is responsible for the area of Gourock [with Caledonian Maritime Assets Ltd (CMAL) responsible for the Gourock terminal]; and the Dunoon-Gourock Ferry Action Group are local campaigners for the service in question.

Ms Sturgeon says, in paragraph five of the letter – and the emphasis on one passage is ours:

‘It was beyond the scope of the study to consider whether feasibility on paper will translate into commercial attractiveness sufficient for one or more operator to bid on this basis for a future tendered contract. Any potential operator will make their own assessment of the market potential and the likelihood and consequences of a competitive response. As I said at the last meeting, I am therefore keen for my officials in Transport Scotland to engage with potential operators, as they would in preparation for any new tendering exercise, and I indicated that I would like it to be open to the Steering Group to be involved in that process in some way. That is something we will take forward in the coming months.’

This makes it clear that the Deputy First Minister had already made a verbal commitment, now hardened up in writing, for members of the Steering Group to be involved, with Transport Scotland officials, in their preparatory engagement with possible operators of the potential service, during the pre-tendering discussions which occur prior to the formal tendering.

The precedent set here by the determination of the Deputy First Minister, acting as Infrastructure Secretary, to see this inclusive process will be widely welcomed  – and rightly so – by local authorities and by local ferry action groups across Scotland’s islands.

The involvement of representatives from these quarters envisaged by Ms Sturgeon with her Transport Scotland officials in pre-tendering engagement with service operators is a radical step towards a more open, team-based approach to local service contracting.

This appears to be in line with the First Minister’s own thinking. In Shetland recently, on summer tour with his Cabinet, Mr Salmond told The Shetland Times that he wanted to find a way of: ‘involving island communities before things happen, as opposed to responding to concerns after they happen’.

While there is the odd minefield to be negotiated [detailed below] – this has the potential to go a long way towards fine tuning such contracts to a nuanced understanding of local needs.

With the massive Clyde and Hebridean contract in the offing, this move by Ms Sturgeon could not be better judged or more timely.

This will be widely welcomed, not only by Argyll and Bute and Inverclyde Councils and by the Dunoon-Gourock Ferry Action Group but by:

  • Clyde Ferry Users Group
  • North Ayrshire Council [for Arran and the Cumbraes]
  • Islay’s campaigners for an innovative community ferry – and an interest in approaches to a better service for their sister Isle of Colonsay;
  • the Lochboisdale-Mallaig action group;
  • the Lochaber, Skye, Raasay and Small Isles Ferry User Group;
  • Highland Council;
  • Comhairle nan Eilean Siar;
  • Orkney Islands Council;
  • Shetland Islands Council;
  • etc

All of these have knowledge, experience, expertise and insights to bring to bear to enlighten potential operators and Transport Scotland officials alike – and will be very keen to play their part.

Highlands and islands MSP, Jamie McGrigor, seems already on to the potentiality of this move and has asked a parliamentary question on the specific forms of contact the Deputy First Minister has in mind.

Below, we look at a representative sample of routes and issues that will be positively affected by the proposed development.

The Islay example

The community of Islay has been energetically engaged in working up a proposal to operate a community-owned ferry as a supplement to the CalMac ferry.

The Islay Jura Ferry Group’s philosophy is based on local control; service accountability to the local community; sustainability; the achievement of an overall service flexible enough in response to meet the variety of local needs; an environmentally sensitive ship design; and an operational modus operandi that helps to repopulate the islands and saves the state money.

Their project is costed with revenue projections born from knowledge of local needs and usage and insights from experts with a first class track record in running successful private sector ferry services.

The ferry they have in mind would be cheaper to build and operate [in fuel costs and in staffing], in having no crew accommodation. Such accommodation is the traditional CalMac policy which has the unintended consequence of obstructing a more organic relationship between crews and the places they serve.

The Islay plan is designed to see crews and their families living locally – within ten miles of the ports, bringing more residents to the island, more children for its schools, more support for its communities. They see the crews then as working in shifts, being more locally engaged and more locally accountable for the service delivered.

The Islay Jura Ferry Group have been alienated by the extent to which they perceive the Scottish Government as wishing to frustate them rather than support them.

The group have clear ideas on the lack of financial efficiency in the operation of state controlled services and on the lack of connected decision taking in the system as it currently works. They cite asset owner, CMAL, as acting without consultation in simply announcing what ferry it planned to build for the Ullapool-Stornoway route for the Western Isles. They point to the fact that this unilateral decision to build what has been dubbed ‘the superliner’ [with crew accommodation] then incurred additional unplanned spending. Neither port could take the commissioned vessel without substantial reworking.

One of the powerful advantages of the engagement in the process to tender envisaged by the Deputy First Minister is that where there are occasionally conflicted situations like this one, both sides will get to know each other better and each will understand better the issues facing the other.

The Northern Isles example

The Northern Isles Ferry Services run to Orkney and Shetland, respectively from Scrabster on the north coast and Aberdeen on the east coast.

The three councils linked by these services – Orkney Islands Council, Shetland Islands Council and Aberdeen City Council – have much to bring to the collaborative formal pre-tendering proposed, as individual authorities and collectively.

Orkney and Shetland Councils’ experience of previous tendering of their lifeline ferry services points to the benefits of the developmental change in process Ms Sturgeon is to implement.

Even as local councils with formal statutory responsibilities for their areas, they have traditionally been kept at a distance from tender processes, with negative consequences for the services eventually contracted and provided – which, as Orkney and Shetland know, are not always the same thing.

The example of what happened in the last tendering of the Northern Isles Ferry Services is germane here.

Shetland Islands Council [SIC] and Orkney Islands Council [OIC] had both hoped for greater representation in the process than the limited engagement they were given.

Orkney made written representations during the process. They also had an officer seconded to HITRANS [Highlands and Islands Transport Partnership] for the final stage of the tendering, to support Transport Scotland during their discussions with bidders.

Shetland had two representatives in Edinburgh during this final period of the formal competitive dialogue process of that tender.

These representatives were allowed no access to the bidding operators nor to any discussion sessions – but they were physically accessible to provide answers to Transport Scotland officials where Shetland-related and Orkney-related issues and queries had come up between Transport Scotland and a bidder.

Were the Infrastructure Secretary to vary this practice in respect of offering more direct and formal access to potential operators, Orkney and Shetland Councils would have to have an interest in such a move.

The ‘arms length’ type of connection offered to these two councils last time around had its limitations. Transport Scotland officials knew when they did not themselves have the answer to questions raised by potential operators – and needed recourse to the island councils’ representatives.

But they could not know the textured information to offer to the bidding operators, to finesse their understanding of the context of the service; and most of the potential operators could not themselves be expected to possess this knowledge.

So the services contracted were less well tuned than they might have been – in matters [some evidenced below] often involving little or no inconvenience or cost to anyone concerned.

Shetland seafood industry’s needs

Shetland has a £300 million per annum seafood industry. Its absolute need is for fast delivery of the freshest possible seafood to its major markets at Billingsgate in London and elsewhere in England.

The imperative to transport as freshly as possible means that the providers need as much time as possible to pack as much product as possible and get it on the ferry each night.

Three evenings a week – on Mondays, Wednesdays and Fridays, the ferry from Lerwick in Shetland to Aberdeen goes via Kirkwall in Orkney. On the other four of the overnight sailings direct from Lerwick, the ferry leaves at 19.00. On the three nights it goes via Kirkwall, it leaves Lerwick at 17.30.

That takes an hour and half’s worth out of the volume of product the seafood producers can shift out of Shetland on each of those three days.

The timetables are set so that the ferry theoretically arrives at its destinations at the same time each morning, regardless of whether or not it routes via Kirkwall.

This seems a bureaucratic neatness which may not have any great practical value.

While the seafood goes south from Aberdeen by road haulage, in the interests of ferry passenger movements we checked the times of trains leaving Aberdeen at an achievable time after the Lerwick ferry’s arrival time of 7.00am. We focused on the likely destinations of Edinburgh. Glasgow and London.

In the cases of Edinburgh and London, a ferry arriving in Aberdeen 90 minutes later on three mornings a week – at 08.30, would leave southbound travellers taking a train that would get them to either of these two destinations 60 minutes later than the train they could catch if the boat got in at 07.00.

In the case of Glasgow, this might also be the case but a late arriving ferry – not unusual in the sea conditions obtaining in the North Sea – would see travellers get to Glasgow two hours later than is theoretically possible from a 07.00 ferry arrival.

This issue looks resolvable if potential operators and Transport Scotland officials have the opportunity to get the information direct from those who know. There is a positive value in this sharing of information and this problem-solving being a collective exercise, rather than a remote passing of information through the filter of mediating officials.

This sort of finessing will be facilitated by the constructive direct engagement of all major interested parties that the Deputy First Minister has in mind in the changes she is set to make.

Ferry fare structures

As it happened, there have been other unsatisfactory aspects of Serco’s delivery of the Northlink Services that might have been avoided had the local authorities, who live with the issues, been more involved from the outset.

For example, once in operation Serco unilaterally changed its fares structure, removing, without consultation, the group discounts that traditionally made it affordable for drama groups and sports teams to cross from Orkney and Shetland to the Scottish mainland to compete; and for special interest groups, like school children and archaeological groups, to go on educational mainland visits.

The social, educational and political impact of this change has been significant. The fewer realistic opportunities now for such groups to travel for such purposes, weakens the links between these remote island populations and their country at large.

There are other avoidable abrasions. The Shetland Times recently reported Allan Wishart, Chair of ZetTrans, Shetland’s transport partnership, as identifying a series of shortcomings in the Serco service. Mr Wishart cited: ‘… less reliable deliveries of freight including fresh food for supermarkets; the removal of discounts for some of the most vulnerable in society; higher fares, and “discriminatory” on-board offers including a fee-charging passenger lounge.’

He also instanced: ‘Various notionally minor changes, such as installing barriers preventing people from sleeping on sofas in the ships’ communal areas, have also done little to endear Serco to the travelling public.’

Those who routinely use overnight ferries anywhere know that sleeping on sofas is a norm. Transport Scotland Officials would not necessarily be aware of this but this and the other issues here would be fed in to joint discussions with potential operators that included local authorities and local interest groups.

Failure to deliver to contract

There was supposed to be a relief vessel available to cover potential technical breakdown, maintenance and scheduled dry docking. Orkney proved the unfortunate litmus test of the failure of the government to treat seriously this contractual requirement in what is a lifeline service.

The Orkney ferry, MV Hamnavoe, suffered a serious gear failure and was out of service for a month from the end of April to the end of May. No relief vessel was provided over this extended and commercially important period for the islands.

In this case, the private sector operator, Pentland Ferries, running from Gill’s Bay on the Caithness mainland to St Margaret’s Hope on South Ronaldsay in the south east of the Orkney island chain, coped with most of the additional loads – but the normal ferry port village of Stromness, away in the west was left beached for a month.

Here too, the direct involvement in pre-tendering of local authorities and local ferry user groups has value in conveying to bidders the reality of the impacts on island life of the absence of a relief boat. Transport Scotland officials nested in Edinburgh and unfamiliar with the realities of life on remote rural islands, can more easily allow operators to understand that there may be, as there were in this case, latitude in meeting such contractual requirements.

The minefield for the Deputy First Minister

There is one problem area for the Deputy First Minister in delivering what she wants to see happen in democratising the process of local service tendering.

This problem is largely centred on one single issue: how to offer any access to unelected local action groups while:

  • guaranteeing all proper commercial confidentiality;
  • removing any opportunity for the perceived influence of local bias amongst such groups to affect positively or negatively the chances of any potential operator.

A case in point here is, ironically, the one in which the Deputy First Minister has chosen to initiate this regenerative procedural change.

There are senior members of the Dunoon-Gourock Ferry Action Group who are openly antagonistic to the hugely successful private sector operator of one of the two ferry services between Gourock and Dunoon – Western Ferries.

The feasibility study commissioned by the Scottish Government entered a major caveat to its cautious conclusion that a competing service between these two town centres, with a state subsidised passenger element and a vehicle service component run wholly at the operator’s risk – ‘could’ be feasible.

The caveat was that the consultants had made no allowance whatsoever in their calculations for any competitive response from Western Ferries to the introduction of such a service. They defended this omission by saying that they took no account of it because they could not be sure it would happen. They admitted, however, that Western had told them they would do everything necessary to protect their hard earned position.

Moreover, Western Ferries’ MD, Gordon Ross, has been overtly critical of bias in the feasibility study and has made an unchallenged allegation that critical material germane to the consultants’ formal remit was excluded from the report on the study at the behest of the Action Group.

All but a very few of the entire community of Cowal is very happy with Western Ferries’ service and its prices. The few who are hostile to it tend to be members of the local ferry action group who see Western’s successful presence as standing in the light of their wish for a competing vehicle and passenger service on the longer town centres’ route.

Given this known bias, a situation where members of this action group were engaged with potential operators [one of which might well be Western Ferries] and Transport Scotland officials, as the Deputy First Minister anticipates, has the capacity to become an express ticket to litigation under EU competition law, in introducing partiality to a tendering process.

Alongside this type of issue are the questions of just how representative of the views of the community at large any action group may be; and how it may be held accountable and to whom?

Action Groups can be formed with a narrow interest unrepresentative of the community as a whole. There are also instances of multiple local Action Groups opposed to each other. Islay is an example of this, with some wanting an equitable split of ferry services between Port Ellen and Port Askaig and others wanting to see all services based on Port Askaig.

In Dunoon itself, there are many who want only a reliable passenger ferry service to the Gourock railhead and are concerned that the focus on a competing vehicle service is obstructing the achievement of a solution to the passenger service issue.

Governments and local authority administrations are ultimately accountable at the ballot box. Action groups are a different organism.

CalMac would be a useful source of advice to the Deputy First Minister on this particular matter, with their long experience of dealing directly with all Action Groups on the west coast.

These are the IEDs in the path of Ms Sturgeon’s exciting intention to bring local engagement within the sweep of the process that ends in a formal tendering and award of contact.

There will be answers to such risks. Her commitment to making this happen stands to the Deputy First Minister’s great credit – and that determined drive is capable of helping the answers to be found.

This is an unexpected and very welcome move to transparency in a process central to life on the west and north coasts of Scotland – the provision of their lifeline ferry services to the islands.

With the Infrastructure Secretary’s public commitment in the letter to the Gourock-Dunoon Ferries Service Steering Group to taking her initiative forwards ‘in the coming months’ and mentioning that it would ‘be appropriate for us to meet again sometime after Parliament’s summer recess’, it looks as if this opening up of the process will be comfortably in place in good time for the tendering of the Clyde and Hebridean ferry services network.

Responses

The following invited responses to this article have been received – in order of arrival.

Jamie McGrigor, Highlands and Islands MSP and Scottish Conservative spokesperson for Communities and Sport

‘All of us want to achieve ferry services which are reliable, affordable and serve the needs of local residents, businesses and visitors. While I would be supportive in principle of moves to involve the local community and ferry action groups in the development of ferry services, I think Nicola Sturgeon and the Scottish Government need to set out in much more detail the type of involvement they are suggesting here and the specific role of the action group in any formal tendering process. We also need to know whether this new model will be replicated across Scotland for the many other ferry action groups that exist and which are campaigning for improved ferry services; it would be extremely strange, and disappointing to many other groups, if this type of involvement was only to be allowed in the case of Gourock-Dunoon.’

Stuart McMillan, West of Scotland MSP and SNP Convener of the Cross-Party Group in the Scottish Parliament on Recreational Boating and Marine Tourism

‘I welcome this position taken by the Deputy First Minister and it ties in with the local empowerment and regeneration agendas.

‘Opening up the process to have the Steering Group involved in some way is certainly welcome and I await further details as to how this will take place. I am sure the input of the Steering Group will continue to be invaluable.’

James Kelly MSP for Rutherglen and Scottish Labour’s Shadow Cabinet Secretary for Infrastructure, Investment and Cities.

Mr Kelly posted his response in the Comments section below so, rather than move it, we are flagging up its presence here.

Paul Graham, Islay representative on the Argyll and the Isles Tourism Cooperative and supporter of the Islay-Jura ferry groups

‘It is commendable that the Scottish Government (SG) has at long last seen that a common sense approach to this long running and expensive issue is what is required. It may appear radical and “out of the box” but what have they got to lose, the deficit grant for D.McBrayne Group is running at + £400m and appears to be the only SG department that is avoiding the chop (for now).

‘Giving empowerment to all vested interests is a bold move, however all parties must act responsibly & without particular bias to different geographical areas on their islands.

‘SG [Ed: Scottish Governement] must demonstrate transparency otherwise it will be seen as a “fudge”. Allow the communities access to potential bidders – that way a proper cost effective framework can be agreed prior to any tender being submitted and in the long term, reduce the burden on the tax payer.

‘SG must take control of the civil servants actions i.e. do not give them “carte blanche”  to build super liners with crew accommodation. Have crews and their families living in the communities they serve- what better way to improve relations and build trust between island users and operating companies. This would also help repopulate islands/encourage housebuilding and increase expenditure into the local economies of the islands.

‘The Northern Isles example of collaboration must be improved to make this work. Ensure a cross company/SG agreement on breakdown cover where required. Orkney is very fortunate to have Pentland Ferries, a fine example of local private company, which coped with the demand along with some freight being handled by Serco….it kept the islands serviced….this surely removes the need of the Lifeline Service tag that is applied to this route. (I am aware that EU law only applies to the identical route and not a route to the same island but different port).

‘Commercial confidentiality is a government blocker to any serious potential tenderer therefore it should be removed. Whilst CalMac Ferries is labelled an independent company is is well known that its parent company, The David McBrayne Group has SG ministers as its sole shareholders, hardly a level playing field.
As intimated at the beginning this empowerment is something new but lets hope it is genuine and local interests will be listened to and acted upon. This could be a new beginning for ferry provision to the Scottish islands and a more cost effective one.’

Transport Scotland – responding in place of the Deputy First Minister, who is in Aberdeen today [8th August] and looking after the country in the First Minister’s absence.

‘As set out in the Government’s Ferries Plan published in December last year, we want to ensure that communities continue to receive ferry services that meet their changing needs.  We are committed to engagement with communities, and the Ferries Plan was based on extensive consultation, research and many meetings with ferry users.

‘Within the plan we included a new procurement statement which said that we would ensure that effective stakeholder engagement took place so that, while respecting the statutory limits and the need to protect commercial confidentiality, those communities who had an interest in the ferry services were kept informed of the process throughout.

‘That committment remains.’

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13 Responses to Deputy First Minister set to bring welcome local engagement to ferry tendering processes

  1. Newsie a great piece and surprised that the action group is staying quiet.

    On the issue of the feasibility study the Action group admitted that they received responses from potential operators, and they expressed no interest in running the service.

    Would love to be a fly on the wall when the Action Group get to sit in a same room as Western Ferries, in fact I am sure that you could sell tickets for that meeting.

    I am sure that every island ferry group and local councils will be lining up to meet with tenderers, I wonder how happy the civil servants are with the DFM for letting councils and action groups play with their bath toys.

    Have you gone to the officials, mike Russell and the DFM?

    Hot debate. What do you think? Thumb up 11 Thumb down 4

  2. As the Action Group has ably demonstrated, its perfectly possible to let stakeholders take a strong position on demanding a level of service they want to see run but it easily results in an unconstrained wish list that is either unaffordable or unattractive to any commercial operator if it is to be opened up for tender (which it has to).
    It’s very easy to demand a wish list if you’re never likely to have to stand behind any unpalatable compromises because of real practical or financial constraints and are secure in the knowledge you’ll never be directly asked to pay for the full cost of the service or take any risk on operating it.
    I believe there should be much greater user involvement but this must be done in the context that those users are balancing their demands with realistic constraints. This means trade offs and compromises for which those making the decisions will take public criticism from those who disagree.

    Like or Dislike: Thumb up 10 Thumb down 1

  3. The objective of democratising the process of the development of ferry services is one worthy of consideration. Local people who use ferries are in a very strong position to provide expert advice on how best the operations should run for the benefit of local people. However, there is an element of confusion as to how this would operate in practice and the Deputy First Minister needs to set out how her statements would be taken forward in practice. The ferry operators and customers not just in Argyll but throughout Scotland need some clear answers and direction.

    Hot debate. What do you think? Thumb up 12 Thumb down 3

    • James Kelly MSP is Scottish Labour’s Shadow Cabinet Secretary for Infrastructure, Investment and Cities Strategy; and the presence here of his invited response [which he posted here] has been noted in the last section of the article above.

      Like or Dislike: Thumb up 5 Thumb down 2

  4. Another invited response has been added to the last section of the article above – from Paul Graham, Islay representative on the Argyll and the Isles Tourism Cooperative and supporter of the Islay-Jura ferry groups.

    Like or Dislike: Thumb up 5 Thumb down 2

  5. Another invited response has been added to the last section of the article – a spokesperson for Transport Scotland replying in place of the Deputy First Minister who is in Aberdeen today [8th August].

    Like or Dislike: Thumb up 2 Thumb down 2

  6. Well done Newsie, although I can’t imagine why the SNP decided to respond to your invitation when they have publicly stated that no-one reads this website!

    Like or Dislike: Thumb up 3 Thumb down 2

    • Look however at their statement, it says nothing.

      Their position in the Ferries Plan is not what the DFM said in respect to the Gourock to Dunoon route. She made a commitment about meeting with potential operators as opposed to simply being kept informed. Pathetic.

      Looks like the ferry has been re berthed to get a difficult passenger of the boat.

      Like or Dislike: Thumb up 4 Thumb down 3

      • This may just be Transport Scotland officials necessarily playing very safe in the absence of the boss on other duties.
        It is unthinkable that the Deputy First Minister would have chosen – unnecessarily – to repeat her verbal commitment in writing and as specifically as she did, if she had not been fully serious about carrying it through.
        Officials would be unlikely to feel themselves empowered to pronounce on detail without authority and would always tend to adopt a defensive position.
        Time will tell, of course, but this has to be the most probable explanation for an apparent retreat.
        It is not the DFM who has retreated and it was the DFM who gave the commitment.
        Proof of this interpretation of the Transport Scotland’s spkesperson’s response would be that the Ferries Review preceded the DFM’s commitment given to the Gourock-Duoon Ferries Service Steering Group and therefore cedes authority to the newer position.

        Like or Dislike: Thumb up 5 Thumb down 2

        • As you say time will tell.

          How does one get a straight and meaningful answer from either the DFM or the officials. Is it a matter of being involved in the process or getting scraps that are thrown from the master’s table.

          What about Mike Russell whose constituency takes in most of these ferry services.

          Another thought will the minutes of these meetings be made publicly available.

          Like or Dislike: Thumb up 4 Thumb down 2

  7. So, when is the Dunoon to Gourock tender due to be published (again) and are the rest of the routes likely to go out as one bundle, or be split into smaller or individual groups?

    Like or Dislike: Thumb up 3 Thumb down 1

  8. I started to yawn half way through , isn’t this all just shilly-shallying , the cynical amongst us would say that we are in the final year of a very very long run into the referendum and the SNP are opportunists. Withdrawning the Calmac Car Ferry from town centre to town centre , whilst blaming European competition rules , was a bad move in the first place…now they seem to be back-tracking. If the people of Dunoon and Gourock want their car ferry back…give them it…simple!

    Like or Dislike: Thumb up 2 Thumb down 5

  9. Not that simple David. Where is the need for two services? We already have a 4 boat service that provides a far more frequent service than most people have bus services. Yes, bring on a high speed reliable passenger service. That is what the town needs, not more of what we already have. Lets move on into the 21st century.

    Like or Dislike: Thumb up 8 Thumb down 2

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