Meeting of the Parliament

Meeting date: Tuesday, September 18, 2012

Official Report 767KB pdf

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Scottish Government Question Time

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Topical Questions

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Clyde and Hebrides Ferry Services (Tendering Process)

1. To ask the Scottish Government whether it plans to delay the tendering process for the Clyde and Hebrides ferry service. (S4T-00043)

The Scottish Government is absolutely committed to supporting our island communities and we continue to invest millions of pounds in new, cutting-edge ferries, ports and harbours that are fit for the 21st century. As I said in my statement to the chamber on 5 September, on the subject of ferries to Orkney, our next challenge is the replacement of the contract for the Clyde and Hebrides ferry services, which expires in October next year. We will announce our plans for the procurement of the next contract soon. No final decisions have been made regarding the Clyde and Hebrides ferry services tender.

I thank the minister for his answer, but I am still not entirely clear on the point. RMT officials have been told that the process has been delayed by three years and Transport Scotland has pointedly not denied that. Is it the minister’s intention to delay the tendering process for those vital routes by three years?

I think that I just explained that no final decisions have been made regarding the Clyde and Hebrides ferry services. I cannot be held to account for statements by RMT. I have said previously, as the member well knows, that we feel that the contract length for all the tenders for ferry services is too short. We made that known to the European Union when I met the European Commission in Brussels. However, as yet, no final decision has been taken regarding the Clyde and Hebrides ferry services.

With such a key decision, surely it is important that the Parliament is informed first about when the procurement process will take place. Will the minister give that guarantee? Will he also guarantee that in the procurement process—whenever it finally takes place—the recently given commitment by the First Minister not to debundle the routes for the services will still apply?

I must point out that that is not what the First Minister said. He said that we have no plans to unbundle the routes and that no case had been made for unbundling. That gives a fairly strong indication of the Government’s thinking. It is right that the Parliament, as well as the communities that are most affected by the services, should be told first, and that is of course what we will do.

CalMac Ferries is an excellent public service provider that has a special place in the hearts of Hebrideans and we must do all that we can to ensure its success as a company. Can the minister therefore assure the Parliament that CalMac, which is our company after all, is doing everything that it can to improve efficiency while maintaining the high level of service that the travelling public expect, so that the company is in the best possible position to win the west coast ferry contract, whenever the process happens?

We must bear it in mind that the tendering process has to be open and fair—we are obliged to do nothing but that. As the First Minister said recently and as the member says, we enjoy a fantastic service from the people at CalMac who provide services right across Scotland. Obviously, the awarding of the NorthLink contract was something of a shock to the system for CalMac. I know from speaking to CalMac that it has learned lessons from that and that it intends to apply those lessons to its application for the Clyde and Hebrides ferry services contract. CalMac is working to the October 2013 deadline, and it is working hard to ensure that it is successful in the next contract process.

Can the minister reinforce his guarantee that the open and fair tendering process will be able to accommodate the potential for bids from some of Scotland’s successful small ferry companies that would like to become bigger in serving the Clyde and Hebrides area?

The member has made that point before, as have Mike Russell and other members who have an interest in the issue. We will of course consider all those issues when we go out to tender. I can guarantee the member that the bidding process will be fair and transparent.

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Hall’s of Broxburn Task Force

2. To ask the Scottish Government what progress has been made by the Hall’s of Broxburn task force in relation to the company’s future. (S4T-00042)

The Scottish Government remains committed to ensuring that there is a positive future for the Hall’s of Broxburn plant and its workforce. The Scottish manufacturing advisory service has been working closely with the company and has identified savings of about £4 million. Those savings, along with energy efficiency and sales and marketing measures, could significantly improve Hall’s financial performance. Regular liaison has been established with key supermarkets to ensure business continuity during the process at Hall’s of Broxburn.

Along with the leader of West Lothian Council, Councillor John McGinty, I met Peter Beckers, the chief operating officer of Vion Food International, in Edinburgh on 7 September. I put a proposal to Mr Beckers that would involve the Scottish Government, working with West Lothian Council and Scottish Enterprise, purchasing and leasing back the Hall’s site on a commercial basis, thereby enabling significant capital investment to be made at Hall’s. Unfortunately, Vion has declined to take up the offer. The manufacturing advisory service is continuing with its work on site and the company will continue dialogue with any interested buyers. As I understand it, there has been a further expression of interest in Hall’s in recent days. The Government stands ready to engage with all interested parties.

In the next few weeks, the partnership action for continuing employment team will continue to deliver presentations to all 1,700 staff, in collaboration with Skills Development Scotland and Jobcentre Plus.

Does the cabinet secretary agree that Vion’s decision not to accept the Government’s substantial offer is extremely disappointing? Although the plant is in Fiona Hyslop’s constituency, it is a short distance from my constituency of Edinburgh Western, and I am concerned about potential job losses in the area. Would the Government be open to alternative bids if a company came forward and was willing to accept the Government’s offer?

I stress to Mr Keir—I make this point very publicly—that the Government stands ready to provide assistance where we can to support continuity of employment at Hall’s of Broxburn.

Employees at Hall’s of Broxburn are predominately resident in the area adjacent to the Broxburn site, with a concentration of employment that is quite unusual given the labour mobility that exists in today’s society. Therefore the economic impact on a specific labour market in West Lothian would be significant, were the plant to close. I have already met one of the groups of bidders and my officials have talked to two others, which makes three interested parties at this stage, and the Government will be only too prepared to advance dialogue with those parties to find whether there is a way to maintain employment at the Hall’s of Broxburn site.

I welcome the fact that the Government is pursuing talks with bidders, but will the cabinet secretary provide an assurance that everything will be done to stand by the employees in the event that a future operator cannot be found?

The process is difficult. At this moment, we must concentrate on two particular outcomes. One is finding an alternative bidder—the Government and our agencies will engage in active dialogue to identify an alternative bidder and to put together the type of proposition that makes investment in Hall’s of Broxburn attractive to other parties and interested individuals.

The other side of the work must be to focus on the interests of the employees of the plant, who are clearly going through a very uncertain time. Officials from Skills Development Scotland and Jobcentre Plus are actively involved on site, and Vion has been entirely co-operative during the process. Advice is available through the two agencies, one of which is responsible to the United Kingdom Government ministers and the other to ministers here, and both are working together on site to provide the support required by individual employees. Although we wish to avoid any closure of the plant or large-scale job losses, we are ensuring that members of staff are given the advice that they need during what is, clearly, an uncertain time for them.

I want to put on record my genuine thanks to the finance secretary and the Labour leader of West Lothian Council, John McGinty, for their joint efforts and their innovative plan to secure the whole site. In rejecting the proposal, it now seems clear that the biggest obstacle to saving the plant is the owners, Vion. What further encouragement will the finance secretary give to prospective parties with an interest in buying the site and to those who work there?

I welcome Mr Findlay’s remarks. During the whole process, the Government has worked effectively with West Lothian Council, other stakeholders and our agencies, and with parliamentary representatives including my colleague Fiona Hyslop, and Graeme Morrice, who is the constituency MP, both of whom have been a tremendous support to the task force, with Mr Findlay supporting Mr Morrice into the bargain.

The key to resolving the issues lies in the combination of the ability to excite and interest bidders in the plant, and in Vion being prepared to be a part of that solution. Clearly, Vion will have to incur a significant cost to close the plant—I estimate that to be in the order of £17 million to £25 million. That is a pretty negative cost, but some of that could be avoided or reinvested if there was a managed and orderly transfer of responsibility—providing the necessary assurance to the workforce about their future—to a third party. In that respect, the Government, our agencies and, if I may say so on its behalf, West Lothian Council, would be willing to be a part of the brokerage of a solution.

The closure of Vion will clearly result in a cost to the public purse—there will undoubtedly be an increase in benefit payments in the vicinity—and, although avoiding that cost does not benefit the Scottish Government, it is important that we do not lose sight of that potential impact on the public finances and that we act to keep people in employment as much as we possibly can.

I also place on record the fact that we have had outstanding co-operation in the task force from the representatives of the Union of Shop, Distributive and Allied Workers and also from non-union members of the Hall’s of Broxburn workforce. That has greatly assisted the progress that we have been able to make, although unfortunately we have been unable to conclude an outcome at this stage.

Given the clear direction that the cabinet secretary has outlined in his answers, does the Scottish Government know whether Vion, the owner of Hall’s, is considering sale of the company as a whole or whether it will consider selling off the various parts of the company as individual components?

Those are issues for Vion to address. I have made it clear to Peter Beckers and to Peter Barr, the UK chair of Vion, that the Scottish Government wishes to engage constructively and actively with the company. We do not underestimate the scale of the challenges that it faces. As a Government, we have been acting to support business continuity at Hall’s of Broxburn. As I indicated in my answer to Mr Keir, the Cabinet Secretary for Rural Affairs and the Environment is maintaining a regular dialogue with supermarkets and customers of Hall’s of Broxburn to assure them of the Government’s determination to deliver business continuity.

The Government is keen to be as supportive as we can be in resolving these issues for the benefit of the workforce of Hall’s of Broxburn, and for the wider benefit of the West Lothian and Scottish economies.