'Crazy': Scots Gov body contradicts FM by devoting public funds to ferry route privatisation plan

The Mull and Iona Ferry Committee (MIFC) has decided to undertake a feasibility study looking at alternative ownership of ferries through a community company in the wake of concerns over continuing disruption to services with an ageing fleet.

The HIE agency has provided the full amount to cover the cost study into whether services could be run by the communities themselves as an alternative to what MIFC calls the current monopoly controlled by Scottish Government-controlled bodies.

The Scottish Government has already spent £156,000 with consultants Ernst and Young on the Project Neptune review of the ferry network, that looked into privatising routes - that raised concerns that the most lucrative would be sold to private firms. This led to concerns over the future for state-controlled ferry operator CalMac.

But the idea has been quashed by ministers.

Ministers and the First Minister have repeatedly stated there are no plans to unbundle ferry routes.

Nicola Sturgeon said: "We will not privatise our public service ferries and equally we have no plans to split up the CalMac network."

HIE says the study will help inform the "wider discussion across island communities on this important issue".

MIFC believe the study could provide lessons for a wider unbundling of services for other island communities.

The committee have used the money to prepare a tender for an independent consultant to examine the different forms a community-owned ferry company could take, and to assess the feasibility of such an undertaking.

They are then to present the findings to island communities for their views on whether they can take control of services for Mull and Iona with operating profits being invested back into the islands themselves "rather than being used to feather-bed the salaries and pensions of complacent central-belt quangos".

There has been concern that the services are "cocooned" inside four levels of Scottish Government control with the Transport Scotland agency as funders, the procuring and vessel owning company, Caledonian Maritime Assets Ltd (CMAL), the ferry operators Calmac and the now nationalised shipbuilders Ferguson Marine (Port Glasgow).

The Herald revealed earlier this year that global consultants Ernst and Young had been tasked by ministers to look into the "unbundling of routes into smaller packages" as part of options for "decentralisation" in its Project Neptune report.

The community takeover move comes after Pentland Ferries and Western Ferries called for ministers to consider the breaking up of Scotland's ferry network to improve provision.

One ferry user group official said of the funding: "It shows just how crazy the running of our ferries is when one part of the Scottish Government's web says no to unbundling and the other is happy to do even more work over feasibility. Why fork out money for something that is dead in the water."

It comes as the state-owned ferry operator CalMac is having to handle an ageing ferry fleet with new lifeline vessels MV Glen Sannox and Hull 802 still languishing in the now state-owned Ferguson Marine shipyard, with costs of their construction more than soaring from £97m to nearly £340m and delivery over five years late.

They say they are investigating the suggestion made by ferry expert Roy Pedersen in 2021, that a community-owned ferry company could provide a far better service at lower cost to the taxpayer.

He said: “With competent business management and the optimum vessel choice, my estimates show that the Craignure – Oban ferry service could be maintained with less than half of the subsidy that would otherwise be required if CMAL’s new ‘Islay type’ ferries were used on the route.

"That includes the cost of buying new vessels – which I recommend to be medium-speed catamarans similar to those operated by Pentland Ferries. In addition, by using shore-based crews the timetable and operating hours could be hugely improved. And on top of all that, profit generated from the ferry service could be returned to the community."

Ten years ago transport minister Keith Brown said "no compelling case" had been made that "tendering individual routes or unbundling the current contract" would lead to greater benefits.

Video: The ferry to Mull

This was repeated by then First Minister Alex Salmond who told MSPs in 2012 that the "case for unbundling, in our estimation, has not been made".

At that time, there was concern that it would hive off CalMac’s four busiest routes, as suggested in a 2010 consultation on future ferry services.

The concerns were that the Ardrossan to Brodick on Arran, Wemyss Bay to Rothesay on Bute, Oban to Craignure on Mull and Largs to Cumbrae were to be split off as CalMac's contract expired the following year.

MIFC chair Joe Reade thinks the apparent aversion to unbundling may be down to misunderstanding of what it actually means.

“When asked about unbundling, the government’s stock response seems to be ‘we are against unbundling and privatisation’, which deliberately muddies the water. Defenders of the status-quo put unbundling and privatisation in the same breath in order to raise fear and uncertainty that serves only to protect theCalMac monopoly.

"But unbundling is not the wild-west private ferry free-for-all that is implied by such a highly charged term.

"It’s just a more efficient and competitive way of allocating public ferry contracts. We already put ferry services out to tender to all-comers, but do it in one large whole-network bundle. Only big corporates like David MacBayne and Serco have the ability to bid.

"If the contracts were smaller, there would be more competition – not just allowing a community enterprise to bid, but getting better value for the taxpayer. Government have said they are against unbundling, but aren’t able to give any coherent argument for the alternative, which is the continuation of a protectionist monopoly."

“The last thing islanders want is for their ferry services to be left to the whims of market forces – our ferry services are essential public infrastructure, just like roads on the mainland. But just as independent private companies are contracted to provide public-service bus services or mend roads, independent companies could be contracted to operate public ferry services.

"If it’s good enough for Norway, it's good enough for Scotland."

Moray Finch, general manager at development charity Mull & Iona Community Trust believes the community ownership model could bring big benefits to the island. “Community empowerment is at the core of SNP policy, and rightly so. But that is contradicted by a controlling tendency and a central-belt focus.

"Backed up by advice from those organisations with a vested interest in maintaining the status quo, it seems that the idea of a community owned ferry is not palatable under the current system. We hope that this piece of work will identify a way for community ownership to deliver a better service for our community within the constraints of a modified Clyde and Hebrides Ferry Services contract.”

According to Dr. Alf Baird, retired Professor of Maritime Business at Edinburgh Napier University and one-time ferry advisor to Scottish Government unbundling is one of the main reasons Norwegian ferries are so much better than Scottish services.

“Norwegian ferries are far more reliable, more frequent, and operate for longer hours at far less cost to the taxpayer, yet they are still rigorously controlled in terms of fares and service levels by national government and local authorities through a rapid tender process. They achieve those higher service levels at lower cost because real competition is allowed when it comes to tendering.

"Prospective operators compete for public ferry contracts by offering improved services with newer vessels, provided by the winning bidders at the lowest cost to the taxpayer.

"Over the past 20 years some 200 new ferries have been built for tendered Norwegian ferry services by several private and community-based operators. This form of competition incentivises the ferry companies to operate efficiently and productively, including investing in their own ships for each route.

"The users get a better service and the taxpayer gets value for money.

"In Scotland however, the government seem to be wedded to the monopoly model in which only the state via CMAL provides the vessels which any winning bidder must use. This is clearly a failed model and a block to innovation and service improvement. The Scottish government seem bizarrely intent on delivering the Hebridean and Clyde ferry contract to David MacBrayne on a permanent monopoly basis."

Highlands and Islands Enterprise said: “HIE actively supports communities across the Highlands and Islands to undertake feasibility studies for a broad range of projects.

“This particular study is being undertaken against the background of the upcoming community consultation following the publication of the Project Neptune review.

“We expect its findings will not only benefit the people of Mull and Iona, but help inform wider discussion across island communities on this important issue.”