THE cost of running Scotland's ferry services has risen by more than £100million in a year amid fears it will become unaffordable in the future, warn public spending watchdogs.

In a damning assessment of how the publicly-run ferry services are paid for, Audit Scotland warn the current contract which was only signed with Caledonian Macbrayne last year has already risen to £975million over it's eight-year lifespan.

Spending on ferries has more than doubled in the past decade, but the report warns that Transport Scotland has not developed a long-term strategy into future spending.

Ferry operators Caledonian MacBrayne's pension fund deficit has also soared to more than £41million despite an extra £3million a year being paid in by the public purse.

Audit Scotland has also expressed alarm at the soaring harbour fees being charged at some ports with Transport Scotland now paying £155million a year with some harbours such as Ullapool increasing charges by 78 per cent.

Transport Scotland is also criticised for having no record of any improvement work being carried out for the money and have no detailed account of the condition of the harbours that they operate in.

It predicts that substantial investment is required to bring harbours up to date but the full extent of this is "unclear."

The auditors also expressed concern at the taxpayer having to pay Lloyds Bank an annual fee to use the £42million MV Loch Seaforth ferry to Stornoway which the bank funded and lease back.

The current contract is due to end in 2022 and Transport Scotland will either have to pay Lloyds to own the ferry, renegotiate the contract or pay for another ferry to be built.

The report, published today (Thurs), urges Transport Scotland, the Scottish Government agency in charge of national transport spending, to cost out major developments that lie ahead, including reducing fares to the Northern Isles from 2018, and substantial investment in the country’s harbours.

The report says the full costs of these developments are unclear, underlining the need for a new, long-term strategy, covering the whole of Scotland to determine and prioritise future investment.

It also recommends that Transport Scotland improves its procurement arrangements for ferry services, after finding weaknesses in the arrangements for the recent Clyde and Hebrides contract.

As Transport Scotland only received one compliant tender, it was not required to analyse the 350 commitments made by CalMac in its successful bid.

The contract was awarded from October 2016 at a cost of £868 million over eight years but Transport Scotland expects this to increase to reflect planned timetable and other changes and estimates the current cost at £975 million.

Fraser McKinlay, Audit Scotland's Director of Performance Audit and Best Value, said: "Ferries provide vital links for Scotland's island communities and overall they are performing well.

"But it's critical that they provide value for money at a time when all public spending - on the islands and the mainland - is under pressure.

"As it stands, Transport Scotland does not know the full extent of future spending requirements on ferry services and assets and it will find it difficult to provide these services within its allocated budget.

"With so many developments ahead, Transport Scotland needs to make important spending decisions. Its future investment priorities must be based on ferry users' needs and good information on the benefits that services provide."

The report also found that ferry users are generally happy but want to be better informed and involved in decisions that affect their services.

Minister for Transport and the Islands Humza Yousaf said: “Since 2007, we have invested over £1 billion in our ferry services. We are proud of that investment, which has brought the introduction of new routes, the procurement of new vessels and the roll out of cheaper fares for ferry users.

“This Scottish Government was the first to undertake a comprehensive review of our ferry services, culminating in the publication of the Scottish Ferries Plan, which set out the way forward from 2013 until 2022.