In an announcement full of interest, Transport Scotland have announced that:
- the Clyde and Hebridean Ferry Services will indeed be tendered as a single contract rather than unbundled;
- tendering will not begin until ‘Autumn 2014’;
- CalMac is to be given a three year interim contract;
- the Scottish Ferries Review – which will be the policy framework within which the tender specification and contract award will be made, will be published by the end of 2012.
The excuse for this degree of delay and for the three year interim contract for CalMac is: ‘to ensure a robust and thorough procurement exercise is conducted that will enhance ferry services across the Clyde and Hebrides routes and consideration of adding new routes currently being delivered by local authorities’.
The Scottish Government has, through Transport Scotland, already been engaged in the review of Scotland’s ferry services since 2009.
Given such a timescale, the Minister’s announcement is open to only two credible interpretations, each of which is serious cause for concern – that this is:
- an admission that even after the already lengthy review period, the Scottish Government is unable ‘to ensure a robust and thorough procurement exercise’ without an additional four year period – a total process time of seven years to 2016;
- a brass-necked move to put what they intend to do – the removal of CalMac with the breaking of long loyalties and uncertain futures for existing staff – out of the way of influencing the vote in the independence referendum for ‘Autumn 2014’.
In the first scenario, an independent Scotland governed with this sort of slomo capability – and how many other major issues does a government have to deal with simultaneously – would be going where, exactly?
In the second and the most probable scenario, no one should forget that this government has form in such a manoeuvre. The quality of the brass in its neck was clearly demonstrated in the unreasonable delay of the awarding of the contract for the Gourock-Dunoon passenger ferry service until after the 2011 Scottish elections.
The reasons advanced below for this scale of delay do not stand scrutiny. It’s not going to need three years to think and discuss whether or not to absorb into the bundle – say, Argyll and Bute Council’s little Islay-Jura ferry.
The Ministerial statement
Transport Minister, Keith Brown – now clearly reeled back into line with the First Minister on the matter of a single contract for the west coast ferry services, says of this massive governmental swerve on timescales: ‘Since my appointment as Transport Minister I have made clear my commitment to supporting our island and remote communities by ensuring we deliver safe and reliable services for ferry users.
‘We are providing record investment to deliver new cutting edge vessels [Ed: a matter to which we will return later], new ports and harbour infrastructure fit for the 21st century, and we want to see that continue.
‘To this end, I can confirm that we intend to take forward the procurement of the new contract for the Clyde and Hebrides Ferry Services as a single contract. We have looked closely at the options available to us to drive up ferry service standards and no compelling case that tendering individual routes – or ‘unbundling’ the current contract – has been put to me.
‘This decision will allay fears stoked by some that we are seeking to break up routes for individual operators to run.
‘To facilitate a thorough and robust procurement for the new contract, CalMac are to be awarded a new three year interim contract to deliver services when the current contract expires next autumn. CalMac’s status will not change – the company will remain under our ownership, delivering services on behalf of Scottish Ministers under the same terms and conditions. The services they deliver will not change. The new three year contract award will also provide certainty for CalMac staff and the local communities CalMac serves.
‘The interim three-year contract with CalMac will allow the necessary detailed preparation work required to finalise the scope of the new contract to be completed. This work includes consideration of the expansion of the Clyde and Hebrides Ferry Service to include some services currently being delivered by local authorities as outlined in our Draft Ferries Plan. This will also allow scope for further discussion with the Commission around the potential for raising the six year maximum contract length currently specified by the European Commission.
‘In this regard local community needs must be assessed and negotiations with councils taken forward. This interim arrangement with CalMac will also allow the next six year contract to fully incorporate the outcome of the Final Ferries Plan due to be published by the end of the year. This arrangement will allow this work to be successfully concluded, the scope of the tender specification finalised and then a full competitive procurement exercise undertaken.
‘Since 2007 the Scottish Government has provided ferry services with over £550 million of support and most recently awarded a new £242 million contract for Northern Isles ferry services – a contract already delivering enhanced passenger services to and from Orkney and Shetland.
‘We want to further improve on this how we have procure and deliver future ferry contracts. Our Final Ferries Plan – the Scottish Government’s vision for ferry services to be published by the end of the year, will provide a blueprint for ferry services right across Scotland over the next decade with the new Clyde and Hebrides Ferry Service contract at its heart.’
Extending the contract period
The issue raised above by Mr Brown – of possible discussions with the EC on extending the contract period from the current six years is a matter associated with capital investment inducements to or requirements upon a bidder, offering more time to recover and return on such investment.
Taken alongside the current state-owned asset holder, CMAL [Caledonian Maritime Assets Limited] having spent a considerable time ‘unbundling its single contract’ into a veritable fleet of individually contracted menu items, the picture looks very like am anticipated deal with Serco. Secro is the private sector surprise winner of the Northern Isles contract – with the bidder open to provide some new boats from its own resources. Without government funding for boats, the state owned CalMac would not be in a position to offer this desirable addition to its bid; and the scoring of the bids might well carry a weighting towards such an offer.
To a government that seems hell-bent on divesting itself of any direct responsibility to its electorate for lifeline services, this form of deal with Serco would have the additional benefit of setting CMAL on the road to being the last of the Scottish state owned companies closed down in the ferry provision spectrum. This historical footnote would be essentially complete.
CMAL would be en route to becoming no more than a maintenance facility for ports and harbours, although even at the moment, it is hard to see what else it does. The CalMac fleet passes though its accounts on a paperwork exercise to allow the Scottish Government to perform a reverse dance of the seven veils for the European Commission.
But the introduction of a private sector, single service provider also owning a potentially increasing number of its own boats, carries a threat to the scope of CMAL. Piers and harbours could logically be placed in the care of Transport Scotland.
The service threat from a single private sector operator
A single private sector service provider is also a substantial threat to some communities currently served by lifeline ferries, already under notice of change.
The RMT union as well as anyone else with a brain, is known to see the single contract for the current Clyde and Hebrides services as potentially unattractive to private sector bidders. There is the precedent of the tender attempt in 2004 which found no bidders at all, not even the state owned CalMac.
A private sector company exists to make a profit. It has shareholders to satisfy. Not one of the lifeline Clyde and west coast ferry services makes a profit when the state subsidy is subtracted. Even with the subsidy, what they can achieve is not the sort of return ambitious private sector operators are aiming at.
As it is, the bundle of route services for the Clyde and west coast has evolved according to the immediacy of need and supply. There are all sorts of ships with several different service functions, different crewing needs, different destination set ups and a variety of berthing arrangements.
As it is, this bundle embeds substantial overheads specific to its variety. Only certain boats can berth at certain destinations. Only certain crew are trained to the levels required by each type of boat. Several routes run between destinations where they are the sole service.
All of these elements – and there are others, prevent the integrated use of centralised or shared resources and inevitably drive up overheads.
Any ambitious private sector operator is going to want to see a much leaner, cleaner package, one that would offer the sort of economies sketched in above.
Scottish Government preparing the ground?
We see in the propositions of the Draft Ferries Review, signals of the Scottish Government’s work-in-progress to deliver this sort of all-in package, to have a chance of attracting a private sector bidder.
Take some Argyll examples of the planned Spring clean.
The Arran-Kintyre [Lochranza-Claonaig] service is listed for potential scrapping, alongside moves being made to attract Campbeltown to being given an extension of the Ayrshire-Arran [Ardrossan-Brodick] service. Only a desk-bound planner could imagine that there is serious traffic potential in this route extension. But it would be a way of offering greater subsidy to a private sector bidder; with reduced overheads through the parallel abandonment of the Lochranza-Claonaig service.
This service is intended to make Campbeltown think it’s got a bonus. In fact, all it would have been given, if it accepted the ‘offer’, would be another service whose inevitable failure would be laid at Campbeltown’s door as a graveyard of aspiration and of efforts to help it. This would be grossly unfair and of long term damage to the town’s prospects,
There are potential strategic assistances for Campbeltown which are attuned ti its organic development, with weighty private sector investment. These assistances would be left unexplored in the headlines and the cost of the backdoor proposals for the Ayrshire-Arran extension. We will shortly be looking to cost the differentials between these two options for development.
The Oban-Lismore service faces scrapping, with the island left to focus only on what can be done between Point and Port Appin to the north. Many residents of Lismore work in Oban and the ferry makes that commuting possible. A Port Appin-only service would remove job opportunities the island needs for its sustainability.
Both services between the Ardnamurchan peninsula and the Isle of Mull are under threat – Lochaline-Fishnish and Tobermory-Kilchoan. These are fully lifeline services and their removal would leave the entire Ardnamurchan landmass left to struggle to Fort William as best it could. It takes no more than a glance at a road map to show what these services enable and where their loss would leave Ardnamurchan – and Mull. The Lochaline ferry plays a substantial role in supporting residence in Mull, by enabling quicker transfers between Fort William and the island via the Corran Ferry at the narrows on Loch Linnhe.
The loss of these services would impact directly on Mull’s and Ardnamurchan’s joint tourism offer, which is uniquely attractive.
None of these aspects of the draft Ferries Review are about utility or need or service. They are about stripping out of the house the clutter that sustains normal life, in order to attract a new buyer.
With seven years to prepare, this is going to have to be flawless
The Transport Minister says above: ‘Our Final Ferries Plan – the Scottish Government’s vision for ferry services to be published by the end of the year, will provide a blueprint for ferry services right across Scotland over the next decade with the new Clyde and Hebrides Ferry Service contract at its heart.’
The decade in question looks significantly less substantial when you take out of it the three years now assigned to recovering the wasted thinking time of the last three years and the next two distracted by the imperative of shoring up the independence vote at all costs.
Only a week ago – a long time in politics – the Minister was himself proposing to tender the Clyde and Hebridean routes first and publish the Ferries Review policy some time afterwards – as an addendum and not as a guide – a matter on which we rightly poured scorn,
Now he’s done what we consistently predicted he would do – and gone for a major delay.
This can have real advantages no one should ignore or discount.
We will all have the final Scottish Ferries Review policy blueprint by the end of this year. We will then be able to decipher the government’s intent and to monitor its use in determining the future of the lifeline and other ferry services.
With a seven year gestation process, we will have every right to expect an unimpeachable and all embracing strategy and to monitor closely its demonstrable production of the tender specification, process, award of contract and delivery of these crucial services.
With the arrangements now proposed, there will be no hiding place – for government or for civil service officials charged with enactment. They will all have had their seven years.