Ministers told to scrap CMAL to create ferries agency and keep CalMac

It says that state-owned ferry operator CalMac should benefit from a direct award of an extended ten-year rather than the current eight-year contract to run lifeline services on the west coast of Scotland.

The committee, which has been examining the future of ferries in an inquiry, says that consideration should be given to CMAL and Transport Scotland being merged to create a new Ferries Scotland agency which "could streamline decision-taking and improve the understanding and importance of ferry services" within the Scottish Government agency.

Ferries Scotland would become an arm of Transport Scotland, with CMAL merged with parts of the Scottish Government agency which is linked to ferry provision and services.

The inquiry report said that the current tripartite arrangement over control of ferries "is not working and must be reviewed" while suggesting the merger.

READ MORE: The 'scandal' of £300k bonuses and perks given to CalMac ferry execs

It said it would support such a move to increase the length of contract from eight to ten years as it was needed to "ensure continuity of service and avoid disruption" with the current contract due to expire in September, next year.

But it has also said it would be caveated on the Scottish Government, as the owners of CalMac ensuring it delivers "real improvements for communities".

The committee says it would have to be acceptable to communities and there would have to be no legal barriers over a failure to go to a public tender.

It comes against a background of major disruption to lifeline ferry services involving a ferry fleet where more than half of the vessels are older that the 25 year life expectancy.

The vote of CalMac approval comes after it received some £10.5m in poor performance fines in the six-and-a-half years since CalMac took the franchise - nearly eight times more than in its first nine years in charge of the weast coast fleet.

Two lifeline vessels MV Glen Sannox and Hull 802 are still languishing in the now state-owned Ferguson Marine shipyard, with delivery over five years late and with costs of their construction expected to soar to quadruple the original £97m contract.

The Competition and Markets Authority has previously warned about the "potential risks" of state control over the way ferries are operated, run and paid for in Scotland.

There has been concern over the management of ferries being cocooned inside three levels of Scottish Government-controlled bureaucracy.

This features the Scottish Government agency Transport Scotland as funders, the procuring and ferry owning company CMAL, and service providers Calmac. Add to that Ferguson Marine, the shipbuilding company that came under the control of Scottish ministers in August, 2019 when it fell into administration under tycoon Jim McColl's control.

Edward Mountain, who is convener of the net zero, energy and transport committee told the Herald: "We are saying the tripartite arrangement doesn't work and the Scottish Government has to review it. "While we have some reservations about CalMac being given the ferries award for the next contract, we are only a year away from that whole process, and the fact is when the last contract was given there was only one other bidder and it was not competent.

"To give stability and improvement in service, we need to sort out thd tripartite arrangement, give the award to CalMac but make sure that they understand that with it has to come a massive service improvement."

The Scottish Government-commissioned Project Neptune probe has already issued scathing criticisms of the existing governance structure and supported move to turn the ferry owners CMAL and operators CalMac into one integrated publicly-owned company responsible for the operation and the supply of vessels on the west coast of Scotland.

But the committee said there was a mixed response to this proposal during the inquiry and "remains to be persuaded this outcome would be optimal".

READ MORE: Fears for ferry fiasco vessels as Ferguson Marine 'considers' job cuts

Merging the vessel owner and ferry operator into a single organisation "appears to cement CalMac Ferries’ position as the provider of Clyde and Hebridean ferry services into the foreseeable future", it said.

A merger of CMAL and Transport Scotland would "at least partly address concerns the current tripartite structure enables a blame-shifting culture".

The report said the the future of CMAL should be considered adding: "The status quo is unacceptable. In this context, an evaluation of the improvements made to procurement processes for vessels by CMAL should take place."

It went on: "There is widespread agreement that the current tripartite arrangement for managing Scottish Government-funded ferries is not working effectively for the Clyde and Hebrides and is not adequately serving ferry-dependent communities. Change is needed."

But there were concerns from the MSPs that the inquiry was hindered by uncertainty as to whether the tripartite arrangement is, in some form or another, still required for legal reasons.

"The Scottish Government must make it clear in its response to this report whether it considers it would be lawful to merge CMAL and CalMac or to bring the functions and expertise of CMAL within the purview of Transport Scotland," the inquiry report states.

The MSPs which have concluded an inquiry into the future of ferry services in Scotland said it was concerned that the mechanism for the delivery of the Clyde and Hebrides services was "unclear" so soon before the end of the current contract "and may be behind schedule".

"We are aware the culmination of our recommendations in this area could result in a 10-year direct award to [CalMac]," the committee report states. "A direct award is a privilege and with it must come great responsibility for competent stewardship of Clyde and Hebridean ferry services during this period.

"This does not mean 'business as usual' for CalMac and should not set a precedent for future Clyde and Hebrides Ferry Services awards.

But the committee accepted that the Scottish Government was likely to offer the next contract for Clyde and Hebrides Ferry Services as a single bundle rather than split the routes up.

"We acknowledge there are benefits to a single bundle. These include greater service resilience, economies of scale, the ability to maintain relief vessels and to redeploy staff and vessels to deal with periods of disruption.

"However it does not believe these are being delivered on the CHFS network by the parties to the tripartite arrangement and this needs to change."

The report says Scotland's ferry services need leadership in the form of long-term strategic-thinking and investment if they are to reach an acceptable standard for the people of Scotland.

It says that island communities have found the level of churn in the role of Transport Minister unhelpful in addressing the root issues of an aging fleet, lack of resilience and a pass-the-parcel culture in governance structures.

It said the Scottish Government’s forthcoming Islands Connectivity Plan (ICP) ‘represents the chance for a genuinely fresh start’; that it must be based on the needs of ferry users; and include a clear timetable for delivery. The plan must be ‘comprehensive, cohesive and collaborative’.

CMAL said it wanted to see the details of the report before commenting.

A Scottish Government spokesman said: “Scottish Ministers welcome receipt of the report and thank the committee for its detailed work. In particular we support the strong emphasis the committee placed on hearing from the communities who use the services and we agree that the voices of ferry users need to be a focus of future ferries policy and investment.

"We will carefully consider the recommendations of the report and respond to the committee in due course.”