Thursday, December 21, 2017

Future of Vital Island RoRo Freight and Passenger Services Again in the Spotlight

Scottish Ministers Talk of Ceasing Tendering Process
Shipping News Feature

UK – Brexit it seems gets into everything these days. The announcement by Transport & Islands Minister, Humza Yousaf MSP that contracts for vital island RoRo freight and passenger ferry services will likely be awarded to incumbent operator CalMac without the need for an open tender will (or possibly will not) depend on whether the Scottish government can persuade the European Commission that the plans are State Aid compliant.

EU competition regulations currently restrict the automatic awarding of government contracts to in house companies but the bitter fight last year when CalMac was pitted against private outfit Serco for the Clyde and Hebrides services brought scars with it. The tendering process cost over £1 million according to the minister and unions fully supported publicly subsidised services and now backed calls for the Northern Isles contracts to be similarly appointed. Speaking at Holyrood Mr Yousaf said:

“It would be my intention to scrap future tendering processes (for Clyde and Hebrides) and appoint the contract to Calmac directly. In setting out the implications for the three ferry service contracts, our priority is to ensure the provision of the best ferry services possible to our islands and remote rural communities, while ensuring value for money to the taxpayer.”

Details of this ongoing debate were given in our story earlier this month and the minister went on to say that appointing an operator on the Gourock-Dunoon service was not currently a viable option and the tender process, currently suspended, would be restarted, and his overdue ferry procurement policy review will continue to discover if arrangements similar to those with CalMac for a direct appointment with government support was feasible.

Scottish ferries union, RMT, responded immediately to the news. The union is implacably hostile to the services falling into private hands which it says are a lifeline for all the islanders concerned and should not be at the whim of a company whose main concern is profits. RMT general secretary Mick Cash said of the announcement:

“Some of this is welcome and we note that the Scottish Government’s official position is for direct award of all public ferry contracts across Scotland. The further delay will allow the Scottish Government to persuade the European Commission that a Teckal exemption for directly awarded ferry contracts can satisfy State Aid Guidelines, including the Altmark 4 criterion, but it is inconsistent to pursue direct award on the Clyde and Hebrides but not on the Northern Isles routes.

”We do not believe that passengers and communities on Orkney and Shetland are implacably hostile to public sector ferries, particularly when 2018 fare cuts will be subsidised by the taxpayer. We look forward to making the case for public ownership and operation on the Northern Isles, along with the Minister in the New Year.”

The RMT’s views of the private operators, particularly Serco, are well known and Mr Cash’s position was echoed by the union’s National Secretary, Steve Todd, who commented:

“Re-starting the Gourock-Dunoon tender process is frustrating, but at least the public contract will now specify vehicles as well as foot passengers. That contract must go to Argyll Ferries. We also do not think that dividing ferry passengers, staff and communities by region is constructive, especially when we’re talking about lifeline public services which cannot survive without public subsidy.

”Direct award on Clyde and Hebrides routes will be welcome but the Scottish Government must Nationalise NorthLink at the earliest opportunity, preferably well before Serco’s extended Northern Isles contract expires in October 2019.”

Conservative and Labour interests differed strongly in their response to the news. Labour’s Neil Bibby asked for the minister to consider an expanded contract in the Northern Isles to cover inter-island services and increased freight capacity whilst Conservative Jamie Greene said a tendering process ensured the government was kept on its toes, adding:

“What we’ve heard today is that, despite over 18 months of intensive wrangling, the Government is no further forward in its pursuit of a policy to ditch open and transparent procurement of ferry services in favour of a strategy to directly award contracts to a government-owned entity, which effectively sews up future contracts, if given indefinitely, to Calmac.”