NorthLink Ferries
The next item of business is a statement by Keith Brown on NorthLink Ferries. The minister will take questions at the end of his statement, so there should be no interventions or interruptions.
15:09
I am grateful for the opportunity to make a statement setting out the Scottish Government’s on-going commitment to ferry services serving our island and remote rural communities, focusing in particular on the NorthLink services and the possible disruption to those services over the festive season.
I am sure that members, particularly the local members who have quite legitimately raised these issues in the chamber and elsewhere, will share my hope that the employer and trade unions involved can work together to avoid the proposed industrial action. I hope that it will be helpful to members if I set out the background to the proposed industrial action and what is being done to try to avert it.
Scotland’s ferry services make a significant contribution to the social, cultural and economic wellbeing of our nation. Since 2007, the Government has allocated record sums of money to the ferry services in Scotland. In 2011-12, our support for ferry services totalled £118 million, including spending of £46 million on the northern isles ferry services—and that was as fuel prices continued to rise.
Earlier this year, we concluded our latest procurement exercise and secured a new six-year contract for ferry services to the northern isles. As members will be aware, tendering for our supported ferry services is a requirement under European law—indeed, under previous Administrations those services were also tendered. When we have to tender public services, we have an obligation to do so efficiently and effectively and to work within the current rules. That is the best means of ensuring the continuation of high-quality, sustainable ferry services, as well as ensuring best value for public money.
Following a lengthy tender process, we were delighted to have attracted four final bids from long-established and experienced maritime service providers—clear evidence of the strength of the procurement exercise. Even an initial challenge from one of the unsuccessful bidders only served to confirm the robust, transparent and fair manner in which the northern isles tender had been carried out.
Serco, which now operates on the northern isles routes as Serco NorthLink Ferries, emerged from the tender exercise as the successful bidder. The new contract commenced as planned on 5 July, after a well-managed handover period. The total value of the new northern isles contract represents a Scottish Government investment of more than £243 million over six years. Building on the good work of the previous operator, NorthLink Ferries Ltd, we have been able to secure commitments from Serco to take the northern isles ferry services forward. Passengers will see improvements to the journey experience, with improved ticketing arrangements and improved catering, hospitality and customer care facilities.
Following the announcement of Serco’s success in the tender, there were those who were concerned about a new operator running the services. I received representations from the trade unions about the position of their members. However, the contract that we put in place with Serco ensured the Transfer of Undertakings (Protection of Employment) Regulations transfer of all those employees who wished to transfer, with their terms and conditions intact.
Almost six months on from the start of the new northern isles contract, passengers and business customers have continued to experience good-quality ferry services, with more improvements to come. The same vessels serve the same routes and the Serco NorthLink staff continue to provide an outstanding service on board and onshore. The on-board facilities are excellent as well and the planned refurbishment of the vessels is now nearing completion, providing more—and more comfortable—seating for passengers who are travelling on the overnight route.
Members will be aware, however, that in October the National Union of Rail, Maritime and Transport Workers balloted its members among the northern isles crew on strike action over Serco’s planned revision of staffing arrangements. Following a ballot on 7 December, the RMT announced dates for a series of 24-hour strikes. The first day of strike action is due to take place tomorrow, 14 December, with further industrial action on five other days over the next couple of weeks, with the final day of action being 30 December.
Members will be aware that the dispute centres around Serco’s plans to reduce staffing levels. In recent years, the three passenger and vehicle vessels that are used on the northern isles routes have been operating at staffing levels that are higher than is required for a large percentage of the year. A number of bidders for the contract, including Serco, indicated during the bidding process that they planned to reduce the permanent staffing complement to a more appropriate level, in line with industry standards. Following a period of consultation with staff and trade unions, it has been possible to put in place a process for moving to the new arrangement in a way that means that there will be no compulsory redundancies. Agreement was reached with unions on the terms under which a number of staff have opted for voluntary redundancy.
In the current financial climate, I believe that it is entirely appropriate that we require major public contracts to be operated efficiently and cost effectively. Ensuring value for money for the public purse is a responsibility that the Government takes seriously. That said, it is entirely right that full account is taken of the interests of hard-working staff on our ferry services. Serco NorthLink, along with other ferry operators on our networks, has been able to offer favourable terms and conditions to its staff. It has committed to accepting the terms of a three-year pay deal that was made last year with the previous operator. That deal saw all seafaring staff receive a 4.25 per cent pay rise this year, nearly double the rate of inflation.
The resolution of the current dispute is rightly a matter for the RMT union and the ferry operator Serco NorthLink, and I expect both parties to work in partnership to do all that they can to avoid disruption. I have spoken to both parties in an effort to facilitate constructive engagement, and yesterday I discussed the matter with the Scottish Trades Union Congress.
Even at this late stage, I urge the RMT and Serco to make every effort to find a solution with a view to minimising the disruption that will be caused by any industrial action, and I am aware that talks are continuing. However, if that should prove not to be possible, Serco has put in place comprehensive contingency arrangements, which include an agreement with another ferry operator to ensure that all Serco’s customers can still travel across the Pentland Firth on any days that are affected by strike action. Serco has also ensured that there will be proactive engagement with passengers who are booked on the Aberdeen-Orkney-Shetland service to help them to reschedule their travel plans, and it has prepared a revised freight schedule that covers the planned strike period.
Serco has engaged extensively with all freight and haulage customers, particularly those who are transporting time-sensitive goods, which is an issue that local members have rightly raised. Serco has provided assurances to my officials that the revised freight schedule will fully address the likely demand and meet customers’ needs.
It is worth noting that, under the Serco contract, the northern isles are served—in addition to the three passenger and vehicle vessels—by an additional two freight-only vessels. Those freighters are unaffected by the dispute and will continue to operate as normal even if the action goes ahead.
At this time of year, the northern isles services are, of course, vulnerable to particularly bad weather. There is a yellow weather warning out for tomorrow, 14 December, which may impact on the northern isles services. NorthLink has been advising customers of the possibility of disruption for that reason.
I will say a few words about the context in which I am making my statement. Ferries are an essential part of Scotland’s transport network. The quality of our ferry services impacts on us all and affects island and mainland communities. The Government is fully committed to delivering high-quality sustainable ferry services to our communities, which will stimulate social and economic growth throughout Scotland.
In recognition of that, we have carried out the first ever comprehensive review of ferry services in Scotland, the results of which will be published shortly. The ferries plan will provide communities with an update on the progress that we have made in taking forward issues around the level and type of ferry services that communities should receive; who is responsible for providing those services; and how we ensure that all communities can be certain about the future of their ferry service.
The ferries plan will include details of the conclusions that we have reached on how we will improve and strengthen the ferry services that are provided to communities. However, that will be only the beginning of the process, and we will continue to review our approach to providing ferry services and continue to reassess the needs of our communities.
With regard to the current situation with the northern isles services, it is disappointing that strike action is still possible, particularly given the RMT’s successful campaigning for no compulsory redundancies, which is the issue on which the union balloted its members. I have previously spoken to Serco and to the RMT, and I spoke to the RMT again today. I again urge both parties to find a resolution to the dispute to avoid disruption to the services, particularly given that the proposed strike dates are in the run-up to and during the holiday period.
I thank the minister for his statement. Of course, we are concerned about the impact of the situation on those who rely on the lifeline routes that are provided by the northern isles ferry service. I am sure that those concerns are very much shared by the workers, who feel that they have been left with little option but to take such action.
What further steps will the minister take to ensure that Serco engages properly with the RMT, and that a reasonable resolution is reached? What is his response to the RMT’s concerns that, despite Serco’s assurances in June that existing seasonal crewing arrangements would be maintained, it announced three months into the contract that it would reduce staffing levels, which means 35 job losses for RMT members, many of whom live on the islands?
Does the minister now regret the shambolic procurement process for these crucial services—the aftermath of which we are feeling now—which involved bids being marked 80 per cent on price as opposed to quality of service? Does he regret instructing the previous operator, NorthLink Ferries, not to appeal the decision to exclude it from the process on a technicality?
Why did the minister say that he was unaware of the value of the CalMac bid because it could not be considered, when we now know from a freedom of information request that the bid had indeed reached the final round of scoring? Has he misled Parliament on that issue? Is it time for a full investigation into the process, which I have asked the Scottish Public Services Ombudsman to look into and which the RMT has described as a “botched privatisation stitch-up”?
Some of those statements belong in the realm of fantasy, to be perfectly honest, including the idea that the procurement exercise was “shambolic”, given that the previous procurement exercise for NorthLink Ferries had to be abandoned shortly after its conclusion. As Richard Baker knows, the recent procurement exercise was challenged in the courts and found to have been robust.
Richard Baker’s accusation about misleading Parliament is a very serious one. I fully stand by my previous statement to Parliament that I did not see the price of the bid to which he referred, because it did not get to the final stage, as it did not satisfy the criteria.
On Richard Baker’s points about what we can do regarding the two parties to the dispute, it is, quite rightly, my role to speak to the parties and to encourage further dialogue. There was a period during the past week when that dialogue was not taking place. I spoke to both parties, and that dialogue has now resumed. It is for those parties to resolve their differences. I recognise the interest of the local communities and local members in ensuring that the dialogue goes on, but it is right that it is for the parties to the dispute to resolve their differences.
If Serco’s proposals, which are similar to ones that the previous operator considered, go ahead, they will result in increased employment in local communities. As I said in my statement, it was a mark of the achievement of both Serco and the RMT that they managed to get to a conclusion in which there were no compulsory redundancies. I hope that that constructive process will continue and that we can still avoid the action that is proposed for tomorrow.
I think the minister for an advance copy of his statement. We look forward to the long-awaited ferries review.
My understanding of this issue is that consultation started in October, that some of the 36 volunteers who opted for redundancy, given the generous enhanced terms, have already left, and that all staff are receiving a pay rise of 4.25 per cent this year, which is almost double the rate of inflation. I regret that the bad weather that is forecast for Friday may result in the cancellation of ferries, but I am delighted that mother nature may on this occasion have outmanoeuvred Bob Crow. Serco NorthLink has stated that there will be no compulsory redundancies. Why, then, is the RMT persisting in punishing families and businesses in Orkney and Shetland at this festive time of year? How will the minister ensure value for money and a consistent and reliable service for passengers, businesses and taxpayers in the contract?
I think that what I said in my statement regarding the process of voluntary redundancies and the fact that we have avoided compulsory redundancies addressed many of the points in Mary Scanlon’s question. [Interruption.] I did not catch the last point that she made, but many of her other points have been addressed.
It is true to say that the current dispute is between the two parties involved and that they must resolve it. Mary Scanlon talked about the impact on local communities, but I have made that point to both parties in the dispute, and they have recognised it. We will continue to speak to the parties. As I said, I spoke in the past couple of hours to the RMT about the issue and I am seized of its importance. However, it is the two parties who will have to come to a conclusion on the matter.
It is worth the RMT side considering that it has achieved a great deal by avoiding compulsory redundancies. I am told by the Serco side that there is further room for discussion and negotiation in that regard. As I said, discussions are going on—perhaps even now—and it is still my hope that we will get a successful conclusion from them.
I ask members to ask one question, and I ask the minister to reply as briefly and succinctly as he can.
The minister said that he has already had discussions. Will he remain available, even though it is coming up to the festive period, to discuss issues with Serco and the RMT in order to have the dispute resolved as quickly as possible?
Yes. Both parties have my contact details and I will, of course, play any part that I can to help to avoid the dispute continuing.
In answer to an oral question from me on 5 September, the minister stated:
“the ferry service in the northern isles replicates the best elements of what we had before and will further improve them.”—[Official Report, 5 September 2012; c 11061.]
Prior to July 2012—
Can we just get a question, Ms Murray?
—there was not an industrial dispute in the ferry services to the northern isles for 30 years. Does the minister agree that good industrial relations are essential to a good service and, if so, does he stand by his statement of 5 September?
Yes, of course. I think that the ferry services are important and that the improved quality of service since the handover will continue. I cannot prevent industrial disputes, but I can try to facilitate their resolution. I have tried to do that for the current dispute and I will continue to do so.
I call Liam McArthur. Mr McArthur, as you are one of the constituency MSPs and the matter concerns you greatly, my strictures about asking one brief question do not apply to you. However, do not test me too much.
Thank you. I will try not to do that.
I start by thanking the minister for agreeing to my request for a statement and for advance sight of it. My and Tavish Scott’s constituents face uncertainty, with many having to make costly changes to their travel plans over Christmas.
Does the minister accept that, despite the contingency arrangements, there will be reduced capacity and flexibility for those who are trying to bring goods into the islands? Is he aware, for example, that due to the appalling harvest, significant amounts of straw are being shipped in at present and that any disruption could badly impact on Orkney’s farming community?
I am aware of those points. It is to Serco’s credit that it has done as much as it can—I think that both local members have been briefed by Serco on that—to try to mitigate any effects. That is something that the company has given serious attention to. If there are further measures that the member believes can usefully be taken, I will be happy to take that up and broker that with Serco. However, I believe that it has done the right thing in what it has done so far to try to mitigate any effects. That might well have been beneficial in any event, even if there was no industrial action, given the bad weather that has been predicted for tomorrow. As I said, however, if there are further things that can be done, I am happy to discuss them with the member.
Does the minister agree that, if followed properly, the policy of no compulsory redundancies and the aim to meet seasonal demand from local and temporary labour could benefit the communities of Orkney and Shetland by providing more locally generated employment?
Yes. That is a good point, and one that I tried to address earlier. I am pleased that, following the period of consultation with staff and trade unions, it has been possible to put in place a process for moving to the new arrangement in a way that means that there will be no compulsory redundancies. As I said, that demonstrates common sense and good will on both sides.
I entirely agree that it is a welcome development that Serco is now recruiting locally. I understand that the staffing changes will have an immediate positive impact locally in both Orkney and Shetland as Serco sets about recruiting both a seasonal and a temporary labour pool that can be used to provide core crew succession planning opportunities in the future.
In the light of NorthLink’s reduction of winter sailings between Scrabster and Stromness from three to two a day, can the minister explain whether there is a drop in demand for winter sailings and whether that partly triggered Serco’s move to have fewer staff?
As the member will know, it has long been recognised that there are strong seasonal variations in demand for the services. On many winter sailings across the Pentland Firth, passenger numbers are very low. Serco’s decision to reduce the number of off-peak sailings was based on a detailed analysis of demand and it carried out good local consultation before the decision was made. The change in shift patterns that Serco is introducing will allow the vessels to sail safely and efficiently according to the anticipated passenger complement.
It is worth noting that Serco was not the only bidder that recognised the need to introduce variable passenger muster lists, which are really an industry standard and are more in keeping with the position of most other ferry operators.
To many people, it seems ridiculous that we are having a strike at all, given that there is no requirement for compulsory redundancies and all 36 employees who are involved have applied for voluntary redundancy. I feel that passengers and people in the islands will blame the minister for not having brought about a settlement.
The minister talked about helping passengers to use other operators and about those who are booked on Aberdeen-Orkney-Shetland services. Can he give me some more details on that?
On Jamie McGrigor’s last point, I have already mentioned that provisions have been put in place as a result of discussions between Serco NorthLink and another operator to ensure that passengers can be served where that is possible. The arrangement has been made by the two operators.
It is perfectly possible that other people will blame me for this. That is one of the things that I have to accept. All that I will say is that I believe that the right role for the Government to play is to ensure that the two parties keep on talking, especially when it seems that they are not talking, and to try to encourage both parties to understand the impact on local communities of what is happening. I have done that and I will continue to do it. That is the right role for the Government in the process.
I call Tavish Scott. Mr Scott, my comments to Mr McArthur apply to you, too.
I thank the minister for the advance copy of his statement and I welcome his active involvement in the matter. Is he aware that a Shetland family who contacted me today now face £1,000 of extra costs because they were due to travel on one of the strike days? Does he understand the need for him to assess his role in the contract given that, at the time when it was signed, there must have been some indication that Serco costs were going to reduce and the potential therefore existed for the islanders to be held to ransom in this way?
As I have said, many of the changes that are being made by Serco were proposed by other bidders; in fact, some of them had already been—if you like—signed up to by the previous operator and the workforce, and that process has continued. I therefore do not think that this has happened because of the contract. There is no doubt that there are questions whether there was overcapacity on the routes that are being served; indeed, almost everyone seems to acknowledge that there was overcapacity in some respects and that the issue had to be addressed.
As I said in response to Jamie McGrigor, it is right that we encourage the parties not to do this. I very much regret the loss that Tavish Scott’s constituents might incur and, again, my response is that we continue to encourage both parties to take action to avoid the strike action, even though it might not now avoid the expense that has been incurred by the family the member has mentioned.
Will the minister comment on the timing of the strikes? Does he agree that it would be appropriate for both sides of the argument to set aside their differences at what is an important time of the year both for families trying to make arrangements to get together and for our communities?
The member makes a fair point that I think underlines Tavish Scott’s comments. The timing of the proposed strike action is extremely unfortunate and is another reason why I have urged both parties to continue the constructive dialogue that I understand is now taking place and to resolve their dispute. If we can achieve that—and I still hope that it can be achieved—others will be prevented from being inconvenienced in the period leading up to the festive holidays.
Is the minister aware of the research carried out by the magazine Ethical Consumer, which criticised Serco for tax avoidance and its poor industrial relations record, not least in Plymouth’s Derriford hospital and Cornwall’s out-of-hours service, where staff numbers have been slashed? Will the minister support a full investigation into the awarding of the contract and, more important, ensure that future ferry contracts have a 50:50 balance between price and quality to protect the workforce and ferry users?
I answered the member’s question on the management of the process for awarding the contract when I responded to Richard Baker. I remain convinced that the process was robust and stand by it.
Richard Baker also suggested that this was privatisation. It would be useful to know the Labour Party’s definition of privatisation, given that it went through exactly the same process for tendering these services that we did, which we have to go through under European law and the result of which we have to abide by. Is the Labour Party saying that it would have overturned the decision at the end of the bidding process and awarded the contract to someone else? It is a fatuous argument from the Labour Party, which should really be focusing on the implications of the current dispute for local people instead of going back to issues that are largely irrelevant to the dispute.
Given that there were no compulsory redundancies, is the minister surprised by the threat of strike action? Striking on the weekends in the run-up to Christmas is more likely to have a negative impact on the public’s opinion of the RMT and will therefore be counterproductive.
As I have said, I am disappointed rather than surprised in the decision to continue with the strike action, not least given the movement that I understand the employer has made to meet certain continuing concerns. For example, I understand that Serco has made a commitment that staff’s terms and conditions will not be revisited in the forthcoming period. I hope that the RMT will take on board such reassurances to reach a positive conclusion with Serco and thereby avoid tomorrow’s action.