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Boyack Plots Course For Future Of Highlands And Islands Ferry Service
23/01/2001
Scottish Transport Minister Sarah Boyack today announced details of the proposals for the future of Caledonian MacBrayne's ferry service network that she is to present to the European Commission tomorrow.
Under EC law the Executive has to put future ferry services out to tender. The Minister made it clear however, that the Executive will continue to subsidise the current ferry network and will ensure fares and levels of service are protected.
Caledonian MacBrayne will remain in public ownership.
Announcing her decision of the way forward, Sarah Boyack said in Parliament today:
"In April 2000, I announced publication of the consultation document "Delivering Lifeline Ferry Services" which sought views on options for putting our subsidised lifeline services out to tender in order that they can continue under European Community rules.
"We received a response of over 100 replies. I have considered all of the points made carefully, taking account the relevant EC Regulations and Guidelines on State Aid. I am announcing today a package of provisional proposals which have been submitted to the European Commission and which I believe will provide a robust framework for the continued delivery of high quality lifeline ferry services to the Highlands and Islands. The key elements are briefly summarised as follows:
- I regard all Caledonian MacBrayne ferry services which serve islands as being consistent with public service obligations (PSOs) and plan to tender these services in line with the requirements for these as set out in the European Community cabotage regulations and guidelines;
- I made robust representations to the Commission in relation to Caledonian MacBrayne's mainland-to-mainland routes, Gourock-Dunoon and Tarbert-Portavadie. I am pleased that the Commission has indicated it might be prepared to consider such services where land based transport would not provide a viable alternative. I regard Caledonian MacBrayne's present mainland-to-mainland routes as being consistent with this criterion. I therefore propose PSOs in respect of these routes also. In the case of Gourock-Dunoon, the PSO would be in respect of a passenger only service because of its integration with other modes of transport (as indeed is the approved service at present);
- On the packages of routes to be tendered, the Executive's strong preference, based on the results of consultation, is to tender the network as a whole. Overwhelming support was expressed for this option in response to consultation and we believe this would maximise service reliability for the communities served, simplify the process for management of vessels and provide economies of scale in company management, safety and quality systems. It also avoids cherry picking of routes and facilitates integrated transport through co-ordinated timetabling of services;
- On arrangements for future ownership of vessels, I propose to establish a publicly owned vessel owning company in line with proposals set out in "Delivering Lifeline Ferry Services". I believe this strikes the right balance between the need to ensure the efficient utilisation of the unique existing fleet and service reliability through this period of great change. Vessels will be leased to operators on a commercial basis and without subsidy in line with European Community rules that prohibit grants in respect of vessel replacement;
- I propose operators would be bound to the vessel owning company's existing vessels. However, I propose to allow scope for operators to bring their own vessel solutions where we have identified a need for new vessels to replace older ships or expand the range of services during a 5 year contract period. This will be decided on a case by case basis at the outset of each PSO contract period. In line with the Commission's guidance, the vessel owning company's functions would focus on bare boat leasing to operators as well as ownership and maintenance of CalMac's piers and harbours. I am considering the possibility of the vessel owning company, offering, on an optional basis, a management of maintenance package which might be attractive to some operators. We also propose the vessel owning company should act as an operator of last resort which will provide an important safeguard through this period of change;
- "Delivering Lifeline Ferry Services" made clear that the Executive would allow Caledonian MacBrayne to bid to operate the routes on a basis which ensured that the bid was prepared on a fair and full cost basis and evaluated transparently and equally with bids from other potential operators. We will honour this commitment. It will be for the company to decide how best to proceed and I will ask it to draw up proposals setting out details of its plans and to put these to me;
- the consultation paper invited views on the possible need for a new legislative framework. There was little comment on this aspect and I intend to consider this in the longer term drawing on the lessons learned through the first contract period and taking account of the possible future role of a Highlands and Islands Integrated Transport Authority;
- I wish to promote good consultative arrangements within the new framework. The Highlands and Islands Integrated Transport Forum was invited in Autumn 1998 to review the way in which passenger ferry companies consult the public and local communities over services and timetables. I propose to invite the forum to expand their review to look at the arrangements needed under the new framework;
- I gave a commitment when I announced "Delivering Lifeline Ferry Services" that levels of service and fares would be protected. We will be developing a detailed specification of services and will be consulting on this in due course;
- Caledonian MacBrayne currently operates several services which are outwith the Undertaking of approved services. I plan to take the opportunity presented by the tendering exercise to consider whether any of these Out of Undertaking Services should be brought within the Undertaking and hence safeguarded and made eligible for subsidy. I will also be considering whether any new routes ought to be added. We will require to take into account the affordability of proposals and we will consult on the service specification in due course when we have taken decisions on these matters;
"We are required under the European Community's rules to consult the Commission on the proposals and therefore they are provisional at this stage and subject to the Commission's approval and further investigation. The Executive is committed to maintaining these vital lifeline links to Scotland's islands and rural communities. If approved by the Commission, these measures would ensure that we will be able to continue to subsidise them in the future and safeguard the services on which these communities depend."
The Minister is to visit Brussels to present the proposals to the European Commission tomorrow, Wednesday 24 January 2001.
BACKGROUND
1. A Public Service Obligation (PSO) in any obligation imposed upon a carrier to ensure the provision of a service satisfying fixed standards of continuity, regularity, capacity and pricing, which standards the carrier would not assume if it was solely considering economic interest.
2. Calmac currently operates a fleet of 29 ferry vessels providing passenger, vehicle and shipping services to the islands of the West Coast of Scotland and in the Clyde Estuary. Nearly all their services are deemed to be of a lifeline nature and require Government support to keep them in operation. Under the terms of the current formal Undertaking between the Scottish Ministers and Calmac, approved by the UK Parliament in 1995, the Executive undertakes to advance monies to Calmac by way of revenue and/or capital grants. This is done to support approved services that, in the opinion of Scottish Ministers, are necessary to maintain or improve the economic or social conditions in the Highlands and Islands.
3. On 27 April, the Minister announced the publication of the consultation paper "Delivering Lifeline Ferry Services -Meeting European Union Requirements". This explained that the Executive would be amending the current arrangements in the light of EC requirements and sought views on options for tendering ferry services in line with EU rules.
News Release: SE0118/2001
23 Jan 2001