Subordinate Legislation
Draft Undertaking by the Scottish Ministers with the Consent of Northlink Orkney and Shetland Ferries Ltd<br />(SE 2002/97)
Agenda item 3 is an instrument of subordinate legislation subject to the affirmative procedure. We welcome Lewis Macdonald MSP, the Deputy Minister for Enterprise, Transport and Lifelong Learning, and David Hart and Jim Logie, who are from the Scottish Executive.
The draft Undertaking by the Scottish Ministers with the Consent of Northlink Orkney and Shetland Ferries Ltd (SE 2002/97) has been made under the affirmative procedure, so the Parliament must approve the instrument before its provisions come into force. Prior to our debating the motion that the minister will move, the minister may make some introductory remarks, after which members will have the opportunity to ask any questions of clarification.
Before we began this morning, I established with colleagues that this is, as I suspected, an unusual procedure. We require the approval of Parliament, by an affirmative resolution, to proceed with a commercial undertaking.
However, this is not the only such undertaking to have come before the committee. Members who were here in December 2000 will recall supporting a parallel undertaking to NorthLink Orkney and Shetland Ferries Ltd in relation to the passenger and accompanied cars lifeline ferry service. We come back today with a separate undertaking, again to NorthLink, but on a different matter. The difference is that the undertaking of December 2000 covered only the block subsidy payable in respect of that passenger and accompanied cars services contract. That undertaking, approved by this committee at that time, does not extend to the transport of livestock for the simple reason that the transport of livestock lies outwith the subsidy contract.
Under the tariff rebate subsidy scheme, we have arrangements to support the transport of livestock and freight in the Highlands and Islands. The undertaking that is before the committee today will enable NorthLink to claim subsidy under that scheme for the carriage of livestock from the northern isles.
The tariff rebate subsidy—TRS—was established in 1981. It is paid directly to a number of eligible shipping operators and enables them to reduce their charges. We agree with the operators a percentage by which they will reduce their charges and we then provide compensation for that lost income through the TRS. Payment of that subsidy is intended to assist economic development in the Highlands and Islands, by maintaining freight and livestock rates at an affordable level. However, the Highlands and Islands Shipping Services Act 1960 provides that any grant under the subsidy scheme of more than £10,000 in aggregate may be paid only in accordance with an undertaking, of which a draft has been laid before Parliament and approved by a resolution. That is what we are about today.
As members can see, the undertaking sets out the basic terms under which the grant is paid. The actual detail of the grant payments will be set out in an annual operations letter to each of the shipping operators with which we have an undertaking. That letter will cover the period for which the grant is paid, the terms and conditions under which it is paid and the rate at which it is paid. However, the undertaking provides the essential framework.
Initially, the rates of subsidy were established on the basis of discussion with the relevant local authorities. However, the rates have moved over the years and it is fair to say that the rates of support for livestock transport from the northern isles are fairly high—they reflect some of the costs that impact on the agriculture industry.
P&O Scottish Ferries has an undertaking dating back to 1984, under which it claims TRS for the livestock that it carries. Other shipping operators in the northern isles have received TRS in the past, but P&O is the only shipping operator in the northern isles that currently claims TRS for livestock. The terms of the undertaking to NorthLink that is before members today are no different from those that apply to previous such undertakings—except that some of the language may be rather more up to date than that of earlier undertakings.
NorthLink has a new method of carrying livestock. The company has obtained a dedicated freight and livestock vessel, MV Hascosay. The vessel has been specially adapted to carry on its lower deck specialised livestock cassettes that are being developed by the Scottish Agricultural College. Adaptation of the ship was required because the cassettes are provided with watering, lighting and ventilation systems that are wired in to the vessel. We expect that the use of the cassettes will allow the anticipated annual volume of livestock shipment to be carried on that vessel alone, so that there will no longer be a requirement—as there has been up to and including this year—for additional chartering in the peak season.
The cassettes are being designed to comply with the relevant health and safety, environmental pollution and animal welfare legislation. They may even anticipate future developments in the industry. We certainly agree that they represent the future for livestock carriage in the northern isles.
The undertaking is a necessary part of the arrangements that must be put in place before NorthLink can receive subsidy for the transport of livestock from Orkney and Shetland. Because of the complexity of the preliminary arrangements, the introduction of the service has been delayed until 1 November. P&O will continue to provide a conventional livestock carriage service until the end of October. We are keen to press on and put the service in place at that point. I hope that that explains the technical background to the instrument.
Is the tariff rebate subsidy for livestock only, or is it for freight in general?
It is a livestock undertaking.
When will the cassettes be ready?
The intention is that the Hascosay, using the cassettes, will take over the transport of livestock from 1 November. That is the arrangement that has been agreed with both companies.
Will there be a gap in provision?
Not at all. The passenger and accompanied cars subsidy, which, as I explained, is a separate entity, will be taken over by NorthLink on 1 October. As the peak for livestock carriage is September and October, it was agreed that introducing the new livestock carriage method on 1 November would enable P&O to deal with the peak under the current system and for NorthLink to take over at a less busy time.
I presume that livestock does not cover dead stock, such as harvested salmon?
That is correct.
I notice that P&O and Streamline have concurrent undertakings at the moment. Presumably, this undertaking would not preclude another operator on the same route being given similar grant assistance?
Not at all. The cassette system will be owned and operated by Orkney Auction Mart, which will let out to any operator cassettes for carrying livestock. NorthLink will shortly be in a position to do that, but there is nothing to prevent another company approaching us to use a current undertaking for the same form of livestock carriage or to seek a new undertaking for payment of subsidy.
Would they have to use the cassette system?
No.
Could you explain briefly what the cassette system is?
It is a system that allows animals to be transported in such a way that the time in which they are on board ship in the cassettes is not counted as time on the road.
It is a rest period.
The layerage, ventilation, watering and feeding are all of such a standard that they meet European requirements.
Until 1 November, through the summer season, are the animals and therefore their owners being disadvantaged?
Not in any sense relative to the situation in the past. Cassettes perhaps offer a new and higher standard. That is why we are keen for them to be introduced quickly and efficiently. However, the service that P&O will continue to operate between now and 1 November will be similar to the service that it has operated in the past year.
Do you have figures for the eventual destinations of the livestock after it has been transported to the mainland?
Not precisely. The main market for Orkney and Shetland livestock is likely to continue to be Thainstone mart in Aberdeenshire—that is where most of the beasts are sold. There is an expectation that fewer animals will be transferred via the Pentland firth crossing to Scrabster than in the past and that more will go to Aberdeen. That will be a matter for the operators to judge.
Motion moved,
That the Transport and the Environment Committee, in consideration of the draft Undertaking by the Scottish Ministers with the Consent of Northlink Orkney and Shetland Ferries Ltd (SE 2002/97), recommends that the draft Undertaking be approved.—[Lewis Macdonald.]
Motion agreed to.
I thank the minister, Jim Logie and David Hart for their attendance.
Meeting suspended.
On resuming—