Infrastructure and Capital Investment Committee

Meeting date: Wednesday, January 25, 2012

Official Report 458KB pdf

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Ferry Services (Draft Plan)

Under agenda item 2, we will take evidence from the Scottish Government on the Scottish ferry services draft plan. I welcome Keith Brown, Minister for Housing and Transport, and his supporting Scottish Government officials, who are from Transport Scotland: Graham Laidlaw, head of the ferries unit; Judith Ainsley, head of ferries policy and procurement; David Notman, economic adviser; and Cheryl Murrie, ferries policy officer.

I invite the minister to make a brief opening statement.

In carrying out the ferries review, the Scottish Government has been keen to be as inclusive and open as possible. People made representations during the review on wanting to have longer to respond. The draft plan was issued just before Christmas, so we have extended the consultation period to March.

The first round of consultation on the ferries review was conducted in the spring and summer of 2009 and was subsequently supplemented by an extensive data collection exercise, which included a household survey. A full public consultation exercise began on 10 June 2010 and closed on 30 September of that year. That consultation involved more than 40 events across the Highlands and Islands, including a series of public meetings, and a consultation document. We received 600 responses to that consultation from organisations and individuals.

The household survey, which was conducted in 2009, showed that communities are largely satisfied with their ferry services. They are least satisfied with the timing of the last return sailing, the winter timetable, fares and integration.

The ferries review public consultation in 2010 showed the need to improve the consistency of provision and to secure funding for future ferry services. Following that consultation, much work has been done on developing a needs-based assessment for each community to determine what it uses the ferry for—that point might sound obvious, but it is not—and what service level is required.

That work allowed us to finalise our review of ferry services, which made it possible for us to publish our draft ferries plan for consultation on 21 December 2011. The consultation closes on 30 March. We will consider responses carefully before preparing and publishing our final ferries plan later this year.

Before that plan is published, we will carry out a Scottish transport appraisal guidance-type appraisal of all the routes and services and of the options that are set out in the draft ferries plan. The views of consultees and the results of the STAG-type appraisal will allow us to determine what level of investment is required.

It is worth mentioning other areas of general ferries progress in the past year. First, in line with the European Commission’s decision following its investigation into support for ferry services in Scotland, Scottish ministers tendered for and appointed an operator to provide the Gourock to Dunoon ferry service. The specification set out in the invitation to tender was fully compliant with the terms of the Commission’s decision and a contract for the service was signed, with the new service beginning on 30 June last year. We appreciate that the new service has experienced some difficulties and we have made clear to the operator our disappointment. Since then there have been improvements in reliability and punctuality. We are monitoring the situation closely to ensure that those improvements continue.

On 29 November, we announced a further roll-out of the road equivalent tariff scheme. There will be a continuation of RET as a permanent feature in the Western Isles, and on Coll and Tiree, for passengers and cars, including small commercial vehicles and coaches. For larger commercial vehicles in the Western Isles, and on Coll and Tiree, RET will be replaced with an enhanced pre-RET discount scheme. There will be provision of greater inter-island connectivity by rolling out RET to services between islands, including routes across the sounds of Barra and Harris. There will be a roll-out of a further RET pilot for passengers and cars, including small commercial vehicles and coaches, to Colonsay, Islay and Gigha from October 2012, and a roll-out of a further RET pilot for passengers and cars, including small commercial vehicles and coaches, to Arran from October 2014. In addition, we will roll out RET to other west coast and Clyde islands within the term of this Parliament.

We are in the process of retendering the northern isles ferry service contract and will have a new contract in place in plenty of time for the new service to begin in July. We are currently supporting northern isles ferry services with around £40 million of subsidy a year. In taking forward the procurement of the new services, we are keen to further improve the services to meet the needs of the communities in Orkney and Shetland.

We have also announced that we will take forward the construction of two small next-generation hybrid vessels, costing more than £20 million. The vessels are world leaders in such technology and are designed for use on many of the short routes around the Clyde and the Hebrides. It was a matter of some satisfaction that the order went to a Scottish yard. The ferries will use some of the most innovative new green technology, including battery banks supplying a minimum of 20 per cent of the energy that is consumed on board.

We have also invested substantially in ports and harbours. Largs has received £4.2 million; Rothesay pier, £6.7 million; Port Ellen, £4.7 million; and Kennacraig £5 million.

Finally, we have invested £24.5 million on the new MV Finlaggan vessel serving Islay. That vessel can carry 550 passengers and 85 cars and will further enhance the ferry service to Islay, Jura and Colonsay.

Thank you for that statement. We will move to questions.

I know that the Government has undertaken a substantial degree of research and consultation on the ferry service as part of the review. Will you outline some of the issues that were raised during the initial public consultation and say how those concerns have been reflected in the draft ferries plan, and tell us a bit more about how the work around the research and consultation has influenced the content of the plan?

In my opening statement, I mentioned some of the more obvious concerns that were expressed, such as the time of the last return ferry at night and fares. On the fare structure, even calling it a structure is a bit misleading, as it has grown over time and the basis for it is not entirely obvious. We have tried to address that particular concern by saying that all fares will be based on RET. That is not to say that RET will apply to all fares, but RET will provide a base level for reference. For example, you would not want to introduce RET in Shetland, as that would immediately increase prices substantially, but using RET as a basis should bring some consistency to fares.

I mentioned that there were issues around punctuality and reliability. We are keen to ensure that the resources that we have—that is, the vessels—fit the services that are required. If you look through the draft ferries plan, you will see that we propose to increase the number of sailings on particular routes to address the concerns mentioned. You might be interested to hear from my officials about the methodology that has been used for the proposed improvements.

Basically, we looked at each route and asked what the need was. We asked whether the service was a lifeline service, mainly to promote tourism or mainly for freight. Of course, in many cases, a combination of uses is involved, but if we can identify the need objectively, that should give us a basis for saying what kind of service we should put in place. That led us to say that some routes do not work and that we should not continue to have vehicle services on them, for example, or that a service should be provided on more days of the week or at more times throughout the day.

I am happy for the officials to explain the methodology in a bit more detail.

They can do so if you feel that that is necessary.

The methodology is quite straightforward, in my opinion. We have tried to define the needs and how people in each community use their ferry service. We identified four key dependencies, the first of which was commuting and frequent business use. The second was personal dependency, which was really about very small island communities with small populations and how they use the ferry service. Because their islands have few services, they have to get on a vessel to access mainland services. We tend to find the opposite happening in the bigger communities: it is goods and services that arrive on the boat, as there is infrastructure on the island. The fourth dependency was tourism. That dependency goes across all the islands, as they are quite strong tourism communities.

We then asked what an ideal or model service would look like for each dependency. Depending on how they are measured, communities come out strongly in relation to some or other of those dependencies. That gives us the opportunity to design a model service for those communities. A community might have a commuting and a freight dependency—which was the third dependency—so it would score heavily for those two dependencies. We would then look at the model service for each, which would give us an overall model service, which we would then compare with the actual service. We would look at sailings per day and the operating day. As the minister highlighted, we tend to find that the service profile for quite a lot of communities is coming out a little bit short and, therefore, services to quite a few communities are being upgraded in comparison with what they currently receive.

Minister, you mentioned that many organisations and individuals said that they need more time for the consultation. Obviously people are interested in the consultation but, given that, as I understand, there was a major consultation on ferry services in 2009, why was it felt necessary for another consultation to take place?

That consultation was a very general, wide-ranging review of all aspects of ferry services. To give things further focus, we have looked at all the responses and we are now saying what we intend to do. There are some exceptions to that—for some places we have said, “There is an option to do this and there is an option to do that. Let us have your views”—but, by and large, this draft ferries plan proposes what we intend to do. People made general comments in the first consultation and rather than our just saying now, “This is what we intend to do,” we are looking for people’s views on our proposals.

The consultation will run during March. That feeds into the timescale for the new tender for the Clyde and Hebrides services. The review will give us people’s views on our proposals, which will allow us to have a finalised ferries plan later this year.

You have said clearly that the consultation will end in March and that the finalised plan will be published later this year. Do you have a more specific timescale, or is that still to be determined?

We expect that we will issue the finalised ferries plan around the end of the summer. That is what we are currently looking to do.

Okay. Thank you.

I would like to move on to the inquiry into ferry services by the Transport, Infrastructure and Climate Change Committee in the previous session. I was not a member of that committee, so I am going only on what I have read about it. I will read a couple of sentences from the committee’s report:

“It is considered imperative ... that these proposals are underpinned by a fully co-ordinated plan for the replacement or refurbishment of vessels and any necessary upgrades to or replacement of ports infrastructure. It is also considered essential that the strategy is supported by an implementation and delivery plan that includes a realistic and achievable programme of funding, which will give confidence to ferry users that it will be delivered.”

I want to home in on the two main points in that quotation. First, would you say that the plan is underpinned by the committee’s demand in relation to the replacement or refurbishment of vessels and ports infrastructure?

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It is probably a bit more complicated than that. I have mentioned some of our investment in infrastructure and some improvements that we have carried out at harbours. More of that is going on at the moment. I have also mentioned the purchase of the MV Finlaggan, at £24.5 million, and the two hybrid ferries.

Nevertheless, the previous committee was right to say that more requires to be done. There are issues there. First, because of the substantial pressure on the capital programme—as we are all aware, there is a reduction of about 32 per cent over the next three years—the issue is how we fund future vessel provision. At this stage, what we are doing is saying, “These are the services that we want. This is what the draft ferries plan is trying to do. These are the services and the frequency that we want.” There are references throughout the draft plan to requirements for additional ferries or, in some cases, additional crews. We have to fix exactly what kind of services we are looking to provide. We have our methodology first of all: “This is what the need is.” We then have the consultation: “This is what we intend to do.” It is then up to us to ensure that we provide the vessels, many of which, as the report points out, are ageing. We understand that there is a capital investment requirement for ferry services—infrastructure and vessels—so there will be fairly comprehensive consideration of that. However, the order in which we are doing things is the right one.

The situation at the moment, whereby the Government provides funding for subsidised ferry services, is extremely complicated. Those services sail to ports that may not be owned or controlled by the Government. The Government pays harbour dues as part of the subsidy, yet the Government is also asked to bear the cost of improving those harbour facilities. That does not seem a sensible arrangement to me, so that issue will be considered as part of the ferries review. For example we will discuss with port owners or controllers, such as Argyll and Bute Council, whether they want to continue to own ports or whether the Government should do it. That will of course involve financial considerations.

It is right that we do this logically and see what the need is, put forward our proposals for what the services should be and ensure that we have the vessels to carry out those services as best we can, given the financial constraints.

Okay. Thanks for that. Secondly, the previous committee’s report talked about having an implementation and delivery plan and referred to

“a realistic and achievable programme of funding”.

I realise that that is not as easy as it was a few years ago, but what can you say about the previous committee’s demand in that regard?

That is partly explained by my previous response. Alex Neil and I are looking at ways of getting the funding that is required. There is quite a lot that we can consider in respect of the procurement of vessels, although the main constraint is of course finance. Quite a bit of work is going on in the Government at the moment to ensure that we get the capital resources necessary to procure vessels. In the meantime, that has not prevented us from investing, as I have mentioned, in the MV Finlaggan and the two hybrid vessels. We are well aware that we will need to improve and refresh the vessel stock.

To some extent, it is possible that those tendering for some of the routes will have to make provision for vessels themselves, rather than us always doing so. We will consider that factor, too.

We all, I think, welcome the fact that an order has been placed for the two hybrid vessels, especially given that it is with a Scottish yard. We will be interested to see how those perform, and I am sure that you will, too. Will you do that before ordering other, similar vessels for those routes?

We will look at what capital is available for further orders. That is the main constraint. The technology for the two new vessels is kind of world leading.

As has perhaps been underlined in the case of the MV Finlaggan, there can be issues when taking on new vessels, especially with a bespoke order. We want to ensure that the vessels perform as we want them to and see whether any adaptations are required. We do not expect that there will be, but there will be close scrutiny of how the vessels are built. That will be easier to do because of where the yard is, which I think is a stone’s throw from the offices of Caledonian Maritime Assets Ltd. We want to observe closely the various trials on the two vessels.

Perhaps I should declare an interest here. My husband is a shipbroker and, although he does not broker for ferries, he has been asked in the past to find ferries for folk. I should probably put that on the record.

Vessels on many routes are ageing. There is also the possibility of increased fuel costs, not just from normal price increases but because of legislation that I think is due in 2013. Has anything been done to look at retrofitting some of the existing vessels to make them more fuel efficient and environmentally friendly?

That has certainly been looked at for new provision. Obviously, it is in the interests of the operator to make vessels as fuel efficient as possible. I remember travelling quite frequently on the previous Superfast Ferries service between Rosyth and Zeebrugge. Towards the end of the ferry run, the operator started to increase the journey time by an hour because that brought substantial fuel savings. That happens elsewhere when it is possible to do it.

Graham Laidlaw may be able to say whether retrofitting has been considered.

There are two or three aspects to the issue. Clearly, we are always looking to improve the efficiency of vessels, as that generally means less fuel use and less cost for us and the operator in the contract.

We have considered and taken forward two or three things. Besides the hybrid vessel, we have looked at slick paint, which in effect keeps the hull clean. It is a special paint that smoothes the vessel through the water and improves efficiency.

We have also looked at reducing sulphur emissions from vessels, which I think the convener was alluding to when she mentioned forthcoming legislation. We have considered that in relation to higher-grade fuel, which generally costs more, and retrofitting scrubbers on to the emissions system as a way of capturing the sulphur and other emissions to reduce the environmental impact. We are certainly open to all options, from innovation to technology, as ways of driving down cost and improving the efficiency of the vessels.

Has there been underinvestment? Obviously, you carry out planned maintenance and try to renew vessels, but is it the case that there has been underinvestment over a long period in planned maintenance and the replacement of ferries?

Graham Laidlaw can come in again on the detail, but the answer is no on planned maintenance. Ships have to be certificated as seaworthy, which requires that planned maintenance is carried out. I can give you my own impression of investment over the long term. Many of the vessels are over 30 years old, and there were times in the past, especially when capital constraints were not as bad as they are now, when investment would have led us to have an improved position. However, Graham will have a longer-term view than I do.

We work closely with our asset-owning company, Caledonian Maritime Assets Ltd, which has been closely involved in all aspects of the review—particularly the investment aspect, given that it owns a large number of vessels and a number of the piers and harbours that support the Clyde and Hebrides ferry services.

We are also engaging with local authority partners, as they have the same issues—for example, on internal ferry services in Orkney and Shetland—to ensure that they are continuing to invest. It is a challenge. Capital investment is expensive and it is lumpy, but we are working with our partners.

We are working with CMAL on developing a long-term investment plan, which I suspect will be a feature of the final plan when it emerges. That leads back to Mr Chisholm’s comment in terms of having the investment plan, knowing where we are going and trying to map out where we will be over the next few years. That clearly helps the industry in gearing up for investment. It also helps the organisations that procure to know what they are procuring over the long term and where those vessels are going.

That is important because there is sometimes interchange of vessels. For example, when a new vessel goes on to a route, if the previous vessel on the route still has a life, it can be moved somewhere else. There is then a cascade issue, which involves sizing vessels into other piers and harbours until, eventually, something falls off the edge. We want to have a fully robust plan for the future, but there are significant challenges in that, particularly the money.

Do the Scottish Government, CMAL and other partners have a plan for where they would like to be in 2050, say, in terms of the portfolio and age structure of vessels?

Yes. The vessels do not last for ever, and some of them are already beyond what we would like. We are working with CMAL on financial planning and investment across our work to see where we are and what sums of money we will need for the vessels, piers and harbours. That will be an element of the final plan.

Has work been done on different financing options such as levering in pension fund or finance house money?

Yes. CMAL is already looking at a lease option. Last spring, it announced that it would try to have a lease option for a new Ullapool to Stornoway vessel. Three of the NorthLink vessels are on long-term leases from the Royal Bank of Scotland, and two of the cargo vessels are on a time charter from an external company.

The model is not fixed so that we will always buy vessels or put in capital investment. There are other options around such as leasing or procuring vessels from other sources. Sometimes, second-hand tonnage comes up, but the difficulty with that is that the vessels have to operate in some hugely challenging waters. The conditions at sea off the west and north coasts of Scotland are very difficult and it is difficult to get vessels with the right sort of certification to operate in that class of waters.

What comparative analysis has been done of how other maritime countries run their ferry services? Can anything be learned from them?

Yes, we have done a bit of that in the past. Part of the ferries review also looked at experience elsewhere. We have regular contacts; in fact, last night I had contact with someone from Bornholm in Denmark who is coming over to speak to us in May as part of our engagement with the Danes. We have also spoken to the Norwegians. Some people in our organisations have strong contacts; one of the directors of CMAL is Danish. We want to learn from elsewhere and we need to look outwith Scotland and see whether we can learn lessons about how to do things differently. If there are any lessons to be learned, we will take them on board.

It is probably more common in Europe to tender a contract and leave it up to the tenderers to come forward with their answer in terms of vessels. We do it differently here in most cases. That is another model on which we could draw.

You touched on fares during your opening remarks and in answer to a previous question. The draft report says that the roll-out of RET might result in things such as multijourney tickets being phased out. It is a complicated process. Could you provide a summary of where the Scottish Government is in terms of proposals for the development of the national fares framework for passenger and freight services?

As I said, it is complicated, although the idea behind RET is fairly straightforward, as it tries to equalise the cost of making a ferry journey with the cost of making a journey by road. To go back to the point that I made about Shetland, if the equivalent journey were made by road, it would be more expensive. That is why applying RET in a straightforward way to many of the services that go to Shetland would result in an increase in fares.

We are thinking about how to remove disadvantage wherever possible. The national structure that we are trying to apply is to say that, although RET will form the basis for the ferry fares, it will not always be applied in a straightforward way. Alex Johnstone is right to say that it is pretty complicated just now. The northern isles services have friends and family and various other discounts that we intend will continue. We will not review the fares structure for the northern isles services with a view to using RET until the next process, so it will remain in place for the tender process that we are going through at the moment. Elsewhere, it is our intention that every fare will relate to RET, which should make the fares structure much simpler to understand.

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You have already made a series of announcements about the introduction of RET for a series of other routes. I have been contacted by people on the island of Arran who are delighted about the introduction of RET, but who cannot understand why it will take until October 2014 to introduce it. What are the issues that prevent you from moving ahead with RET on a tighter schedule on such routes?

As far as Arran is concerned, I know from having met the ferry users committee that one of its concerns is how the infrastructure that is there at the moment will cope with what is expected to be a substantial increase in traffic to and from the island. We must ensure that we have the right infrastructure in place before that happens. We are looking at how we can improve matters, because the pier there is by no means ready to take on such additional capacity.

The case of Arran underlines that RET will have a different impact on different islands. For example, if the hauliers had been included in the RET scheme, there would have been concerns about how the transport infrastructure within Arran would have coped with a substantial increase in the number of haulage vehicles and the impact that that would have had on indigenous traders. There are different issues to consider for different islands.

One of the other constraints is, of course, finance. It is necessary to do things as resources become available, but we intend to see through our manifesto commitment to roll out RET across the Clyde and Hebrides. That will be done in a staged way, taking account of the particular pressures on particular islands, such as those that I have mentioned on Arran.

You mentioned freight transport. I am getting correspondence from hauliers who are concerned that they will not benefit from RET and who have serious concerns about what might happen to the fares structure. How do you respond to those concerns about the level of fares that might apply to road haulage vehicles?

I will respond, first, by talking to the people concerned. In the last day or so, I have agreed to meet representatives of hauliers who have been in touch with me to express such concerns. It is important that we do that.

You may remember that, when RET was introduced in the Western Isles, in Coll and Tiree, there was substantial opposition from hauliers, who preferred the previous discount structure to RET. Now that they have had RET, they are highly supportive of it. However, that was a pilot, and it showed that, although RET was hugely beneficial for the tourism industry and for individuals, the benefit from the subsidy that was paid to hauliers was not passed on to businesses or consumers. I think that that was true in more than 90 per cent of cases—the officials will be able to provide the exact figure. The benefit was not passed on to the end users, whether businesses or consumers. We have looked at that issue. The difference between the cost of what we intend to do and the cost of RET is around £1.5 million.

Another concern that the hauliers have mentioned to us is that the previous discount scheme was much more accessible to large hauliers than it was to smaller hauliers. We are looking at trying to change that. Officials are working on how we can better adapt the scheme to ensure that the smaller hauliers benefit.

We have listened to the concerns that have been expressed. Another point relates to the size of vehicles, which is a big issue. Smaller vans will continue to benefit from RET. I think that, at present, there is a restriction of 5m, which we are looking to extend to 6m. That will capture quite a lot of traffic.

In not taking forward the RET pilot for hauliers, we have not reverted back to the previous position. We have substantially increased the discounts for hauliers that were available before we started RET. Those issues are the subject of continuing discussion. I have at least one meeting set up with hauliers, and I have spoken at length with local representatives, which I will continue to do over the next few weeks.

Is the objective of the changes for road hauliers to achieve some of the things that were achieved by the previous regime in pushing heavy traffic on to night sailings when cars are less likely to be on the ships?

That is an issue of demand management. Yesterday, we discussed the extent to which it was possible to make improvements through that kind of shift. The issue is very much in our minds. As Judith Ainsley has been working on that, she might like to comment.

We want to make demand management more possible, especially in the new tenders. One of the previous committee’s findings was that it wanted such fare changes to be much more possible. There are capacity issues on the short crossing between Uig and Tarbert and Lochmaddy, and that might be a route where we should look at demand management closely.

Thank you. The final issue that I will mention is one that you have touched on more than once already—the implementation of RET on the northern isles ferry services. As you pointed out, the level of support that goes into the Shetland service in particular achieves better than RET already, yet that is a special case because of the distance, and the need for economic support there is as obvious as it is anywhere. What fare structure do you envisage that you will apply to the northern isles ferries, particularly the Shetland service?

You mentioned the support for the Shetland service. At about £40 million a year, subsidy to the northern isles services is as high as it has ever been. I make that point because the allegation is sometimes made that we have provided RET for some parts in the west but we have not provided it for the north. I think I am right to say—my officials will correct me if I am wrong—that the passenger pays about 40 per cent of the fare in Shetland, whereas in the west it is about 50 per cent, so in effect the subsidy is greater there. As in Orkney, it operates on the basis of particular discounts for family and friends, which have grown up over a period of time, and which work well.

We are involved in discussions about the new tender for services to Orkney and Shetland. A call has been made for us to look at RET for the northern isles, and we will do that, but not for this tender period. We did not commit to do that in our manifesto; we never said that that was what we were going to do. However, having listened to representations, and looking at the matter in the round, including considering the idea that we should try to have one structure that is a reference point for all fares in Scotland, we will look at that.

I ask Judith Ainsley to comment on the other points and say more about the fares.

We could add a distance-related element to RET. The RET fare is made up of various elements. There is a base element depending on whether the fare is for a passenger, a car or a commercial vehicle, and there is an element per mile after that. If someone is driving their car, it costs them proportionately more to go a short distance than to go a longer distance. We could build that element into an RET fare structure for the northern isles, for example. That is an example of the things that we are going to look at.

Although there was no commitment to roll out RET for the northern isles in the short term, we have a provision in the contract to allow us to do so if that changes.

Does that mean that there will not be consistency in the fare structure between the northern isles and the western isles, or are you trying to move to a system that will be consistent across the board?

As I said, the end point is to relate every fare to RET. As Judith Ainsley said, we will be able to do that under the tender, but our intention is to make the changes subsequently. That is consistent with what we said before the election. We said that we would roll out RET for the Western Isles and the Clyde and Hebrides, but we did not say that we would do it for the northern isles. However, we can look at that during the tender period, and we will take it forward during that time. It is a six-year tender period.

Thank you.

The draft plan mentions the kind of ferry services that should be funded, namely a mixture of lifeline, tourist and freight services. Chapter 4 concludes by stating:

“We are committed to an evidence-based needs based assessment for each community. At the core of this Draft Ferries Plan is a routes and services methodology which treats all communities on an equal basis.”

Will you highlight the key changes to ferry routes that are proposed in the draft plan? What scope is there for further changes to those proposals before the final version of the plan is published?

I will defer to the officials to list them, but I will comment first, using the Jura services as an example. In the ferries plan, we propose to take away the penalty for people who have to travel from Jura to Port Ellen and then to the mainland by providing a free ferry service there. There are places where we say that vehicle provision is not currently well supported and that that should not continue to be the case. For one of the ferry services to Mull and one of the services to Bute, we are considering extending when the last ferry sails. People have said that they want to be able to travel to the mainland, go out somewhere on the mainland and return on the same day, so there is a need for a last ferry later than 8 o’clock at night. That is another of the changes that are proposed throughout the document. Judith Ainsley may want to mention some others.

We would probably be here for a long time if I were to list them all. I highlight the proposed change from a single-vessel service to a two-vessel service for Arran and Mull, which will provide more of a shuttle-type service that will increase the frequency. The vessels on the route will probably be smaller than the current one, but there will be two of them rather than one. I also highlight what is happening in relation to the small isles and Colonsay. Our needs-based assessment showed that the provision there was among the poorest that we have on the network just now. The report contains recommendations of what we would like to do for Colonsay and the small isles, which includes allowing people to make at least one return trip a week to the mainland during which they would be able to spend some meaningful time on the mainland. That does not seem an awful lot, but there are specific proposals for the small isles and Colonsay. We have tried to enable families to remain on the small isles. When children get to secondary school age, their families tend to leave the islands. Therefore, we have introduced provision that will allow schoolchildren to travel back and forth for weekends, which they cannot do at the moment. Those are just some of the proposed changes.

I believe that there was a proposal from local islanders to run a direct ferry service from Jura to the mainland, but they have had difficulty in getting planning permission for it. I am informed that part of the problem is the fact that Argyll and Bute Council operates the ferry between Islay and Jura and there might be a conflict of interests there.

I do not know whether the council operates the ferry service, but it provides support for it. We are looking to discuss with the council what we can do to help out with that. I am not sure about the other proposed service that you mention.

There is already a passenger-only, extended summer seasonal service that runs between Jura and the mainland. I am not aware of any planning difficulties for it, although it has had funding difficulties. We have confirmed that we would be prepared to provide financial support for that passenger-only service until such time as we can strengthen the link between Jura and Islay. We hope to have discussions with Argyll and Bute Council this week on how we can share the financial support for the passenger-only service in the meantime.

On routes and so on, from time to time, the question whether the northern ferries from Orkney and Shetland come into Aberdeen or hit the mainland sooner rears its head. Can you confirm that Aberdeen is still the port of choice for the Orkney and Shetland ferries? I know that you travelled on the Shetland ferry recently in fairly stormy weather. Would you rather have hit dry land on the mainland sooner?

What surprised me was the fact that nobody else thought that it was stormy weather—it was just me. I should not admit it, but I ended up with a full glass of wine all over me on the way back, although it was not a rough journey for those who make it regularly.

The tender process that we are going through just now will not change the fact that the services go to Aberdeen. As I have said to people in Shetland, the nine-week dry-dock period that they are about to experience, in which there will be a reduced service for nine weeks, is an eccentricity of the current contract and we will ensure that the situation does not happen under the future contract. There will be no change to the destinations. For the Orkney service, we have prescribed both the Scrabster and Stromness ports, not least because of the many millions of pounds of investment that has gone into them. There should not be that level of change, certainly for the service to Aberdeen.

10:45

The draft ferries plan states that the Scottish Government is

“willing to be responsible for all ‘lifeline’ ferry services in Scotland.”

What exactly does that mean?

I can probably best explain by giving examples. We have just talked about the northern isles, which have two ferry services across from the mainland. One is run privately by Pentland Ferries and one is provided by NorthLink Ferries. If that was reduced to one service only, we believe that that would be a lifeline service for people on the island travelling to the mainland, for commerce and for freight. For Orkney and Shetland, good freight links are crucial to the economy, particularly for the shellfish industry, which has to get its catch to market quickly. That is obviously not a lifeline service, but it is a key and important service. The industry in Shetland is doing extremely well through its electronic auction. It is absolutely key that the langoustines that are landed there get to the right place in Europe as quickly as possible. The loss of, say, 12 hours in that process would have a big effect on the market.

However, because an island does not have the same range of services as the mainland, when people need to get to the mainland—not least for medical attention but also, sometimes, for pharmacy services—that is extremely important. That is what we term a lifeline service.

Why has no final decision been taken on a ferries regulator?

We will consider a ferries regulator, particularly in relation to services that are not directly subsidised by the Scottish Government, to ensure, for example, that there is the right pricing and, possibly, the right provision of service. At present, the Westminster Government’s approach to the issue is unclear. That is a key point, because we think that it would probably have to legislate for a regulator, rather than the Scottish Government, or at least such legislation would have to be done in concert with legislation here. We are investigating that.

From recent discussions that I have had with the relevant United Kingdom minister, it is clear that the UK Government wants less regulation in relation to ports, rather than more. I have not raised the issue of a ferries regulator directly, but I have spoken with the relevant minister, Mike Penning, and it seems to me to be extremely unlikely that the UK Government’s stance will change. Prior to 2007, the previous Scottish Executive made an approach on the issue to the previous Westminster Government. Not only was there no indication of willingness to take up the idea at Westminster, but there was no response to the request at all. That shows that there is not a big appetite for such a move at Westminster, which leaves us having to consider what legislative provision could be made if we decided to proceed in that way.

How does the Scottish Government respond to the suggestion in a petition that the committee recently considered—I was not a member of the committee at the time—that an independent expert group be set up to consider issues relating to the provision of competitively tendered ferry services under European Commission law?

There is not much doubt about EC law, particularly in relation to the Gourock to Dunoon route, on which the European Commission intervened. As I said, our approach to that route fully complied with EC requirements. It is open to anybody to come back to us on that, through the draft ferries plan. It is open to people to say that they think that something should happen or to set out the extent to which they feel that we are not complying with EU law or whether we should comply with it. They have the opportunity to do that through the existing process.

Do you envisage that there will be any loss of jobs as a result of the changes that are proposed in the consultation?

No jobs have been lost so far. You will be well aware of the Scottish Government’s efforts to ensure no compulsory redundancies in its agencies and, as far as possible, in the agencies that we relate to.

As you may be aware, there were fears that the way in which the Gourock to Dunoon service went out to tender after the European Commission’s intervention would result in job losses. In the end it did not, although some staff were redeployed. Future bidders will have to observe the Transfer of Undertakings (Protection of Employment) Regulations and basic pension provisions. One does not always know what will happen with a tender process, but that has been our experience, and we are determined to avoid compulsory redundancies wherever possible.

With regard to the retendering process, will the Government make any allowance to enable the people who are tendering to consider employing the long-term unemployed or young people between the ages of 16 and 19 or offering them a modern apprenticeship?

By and large, as I understand it, we cannot prescribe that as part of the tender process. However, you make a good point about training and apprenticeship opportunities, and I will look at what we can do in that regard. We have asked for those training opportunities in relation to the new Forth road crossing. This situation may be slightly different, but we will look into it and get back to you on what the potential for doing that might be.

In fact, perhaps Judith Ainsley can clear up the matter just now.

As part of the current northern isles tender we have asked bidders what provision they would make in their human resources plans for exactly that type of thing. That will then be scored as part of our quality assessment.

The ability to insist on that is quite restricted by European Union law, but we obviously want to encourage it.

An accessibility report that was published in 2010 made a number of recommendations for improving disabled access, including the establishment of an accessibility investment fund to help operators with the extra costs of implementation. Can you provide more information on the size and scope of the ferries accessibility improvement fund?

We intend to move forward on the general issue of accessibility. We can build that in opportunistically to some extent as new vessels come in, but otherwise it will involve retrofitting. We have examined the issue of accessibility in the ferries review. I think that Graham Laidlaw wants to come in on that.

It is an important issue. It is quite difficult with older vessels and older piers and harbours to get the level of provision that would be built into a new design, but we do our best on that. Operating companies such as CalMac Ferries do a lot of staff training in that regard. The Finlaggan vessel, which entered service last year, is fully accessible: it has lifts and access to toilets and all the other facilities. We take access very seriously, and we will insist on moving forward further with regard to new vessel designs and new ferry contracts.

I was looking for a wee bit of a ballpark figure for what will be provided.

That will be based on what we get back with regard to the ferries plan. I mentioned the sequential way in which we are dealing with the issue: we will try to identify which services we will provide, which will give us an idea of the vessel configuration, and when we know what that is, we can see where to go. If new vessels are to be procured, we can build accessibility in from the start, and with older vessels, we can get an idea of what we will need to retrofit. Over the next few years, some vessels that are in service just now will no longer be around. However, we will not have a clear idea about that until we go forward to the next stage.

If that information is of interest, I am happy to supply it to Adam Ingram and the committee as soon as it becomes available.

We touched briefly on environmental issues such as sulphur emissions. The strategic environmental impact assessment that accompanies the draft ferries plan mentions, besides increased greenhouse gas emissions, an increased risk of ferry collisions with cetaceans—whales, dolphins and porpoises—and a possible increase in coastal erosion. How were those conclusions arrived at? Are the officials who are involved in ferries fully involved in how the Marine (Scotland) Act 2010 functions and in the marine planning partnerships? I was previously convener of the Rural Affairs and Environment Committee, which considered that legislation. It is important that those who are involved in ferries are fully involved in the MPPs.

We are working closely with the UK Government on sulphur emissions to determine what we can do to protect the interests of the industry and, at the same time, protect the environment.

We are not yet as fully involved as we could be with other directorates on making progress on the matter. That raises the issue of a maritime policy, as opposed to a marine or ferries policy. We are actively considering that.

Perhaps the increased risk of collisions with cetaceans is testament to the vibrancy of the wildlife around the Scottish coast.

I am not sure who can answer on coastal erosion.

If anyone here can answer it, it will be Cheryl Murrie. We may need to come back to the committee on that.

As we drafted the plan, we worked closely with our colleagues in the environmental unit who deal with the matter and who drafted the strategic environmental assessment. However, we probably need to come back to the committee with specific details to answer the questions that have been asked.

I suggest that the risk of coastal erosion is fairly low, but it is considered a risk.

What about involvement in the functioning of the Marine (Scotland) Act 2010?

Our colleagues who drafted the strategic environmental assessment obviously have a lot of knowledge of the 2010 act and have worked closely with their colleagues. However, we have not been directly involved in that work ourselves.

Margaret McCulloch mentioned a petition. PE1192 calls on

“the Scottish Parliament to urge the Scottish Government to state how it is supporting and promoting independent … ferry routes between the islands and the mainland and how the planning system is playing a constructive role in supporting the economic and social future of such routes.”

We agreed to ask the minister about that and here is the opportunity. What is the Scottish Government doing to support independent, non-subsidised ferry routes? If new routes emerge, how will it ensure that they are properly regulated?

I point out that we are talking about two separate petitions.

We will produce a response to the Public Petitions Committee on the issues that that petition raises.

It is perhaps stating the obvious to say that if people want to run ferry services independently, that is a matter for them. Obviously, the regulations on maritime safety and practice would apply. The Scottish Government is not responsible for many of those regulations; they are the UK Government’s responsibility. However, the frequency of services and the level of fares are matters for the operators.

If we did not operate the services that we subsidise in such a way that they did not infringe the rights of independent operators, we would quickly be brought up before the European Commission. That is the body that safeguards such services.

I am not sure what the reference to planning refers to, unless it is to do with the infrastructure on either side of a route. That would be—not exclusively, but mainly—a matter for the local authorities concerned.

Very few routes are commercially viable. I believe that there are some, but they are few. Therefore, the vast majority of ferry services in Scotland will need to continue to be run under contract with a subsidy. That is how we protect and regulate them.

We have a couple of good examples of routes that are successful and commercially viable. However, one of the concerns that has been expressed is that the fees that CMAL charges for the use of piers and harbours may deter independent operators. How can we ensure that that is not allowed to happen in future?

11:00

That matter is straightforwardly regulated by the European Commission and anyone who is concerned that that is being done in a way that acts against their interests has a remedy—apart from the legal remedy, of course.

I have already acknowledged the complicated network of ports and harbours and the fact that the fees will be set by the harbour authority, which might be the local authority, CMAL or some other organisation. We really have to address the issue, because we seem to be paying in three different ways. At one end, the Scottish Government provides a subsidy to a ferry service that, among other things, allows it to pay its harbour dues to a harbour authority, which, at the other end, requires the Scottish Government to come in and improve harbour facilities. There is scope for rationalising that process and we intend to do so. However, as I have said, those who feel that the fee structure is disadvantaging them have remedies to deal with that.

Will dealing with the objective of avoiding having to pay subsidy at both ends clarify the fee structure and make it easier to understand for potential private operators?

That is my intention. Although in certain circumstances you might end up paying the same amount as before, you will make payments in a transparent way. I do not think that this applies to certain cases that Mr Johnstone might have in mind, but let me give an example. The Scottish Government provides a subsidy for a certain service to whoever wins the tender. That subsidy includes a contribution for harbour fees that are taken by, for example, a local authority, which then asks the Government to carry out improvements to the harbour. I am not sure that that is the best way of finding out the true cost or whether the best incentives are in place for the right people to get the best outcomes. If we move towards the mechanism that I have proposed—indeed, as I have said, we are already discussing it with one local authority—we might have a much more clear-cut situation, which I think will be to everyone’s benefit. We will be able to see the money that is going in, the effect that it is having and the resulting improvements in services.

Will that clarity apply to CMAL-owned facilities?

Again, we could be providing the subsidy at both ends. We have not necessarily fixed on how exactly we do this across the country. After all, you know as well as I do that the situation has been going on over a long time. Some of the harbour authorities have been in place for 300 years and we certainly do not intend to change those that are working well. Nevertheless, my concern is with public money, which CMAL and some harbour authorities receive, and I want to make the process as transparent as possible.

I quite agree with the minister that we should not be changing arrangements that have worked well for 300 years. [Laughter.]

I am talking about only the ones that have worked well.

As members have no further questions, I thank the minister and his officials for their evidence. We look forward to receiving the extra information that has been promised and will of course return to the matter when the plan itself is published.

I suspend the meeting for a changeover of witnesses.

11:03 Meeting suspended.

11:08 On resuming—