The next item of business is a statement by Derek Mackay on the Clyde and Hebrides ferry services. As the minister will take questions at the end of his statement, there should be no interventions or interruptions.
14:40
I will update members on the Clyde and Hebrides ferry services contract procurement. The Scottish Government would rather that we did not have to tender the services; my party opposed the initial tender of the services in 2004. However, it has been demonstrated that European Union law requires the Scottish Government to tender them.
The requirement stems from a Council regulation that applies the principle of freedom to provide services to maritime transport in member states and from the relevant provisions of the Treaty on the Functioning of the European Union. Article 4 of the maritime cabotage regulation states:
“Whenever a Member State concludes public service contracts or imposes public service obligations, it shall do so on a non-discriminatory basis in respect of all Community shipowners.”
Furthermore, the Commission guidelines on the regulation state:
“The Commission … therefore considers that launching an open tender procedure is in principle the easiest way to ensure non-discrimination.”
Successive Scottish Administrations have attempted to achieve an exemption from tendering CHFS since 2000, when the Commission first wrote to ministers questioning the compatibility with EU law of the subsidies that were being paid to CalMac Ferries. In January 2001, the Scottish Executive announced a package of provisional proposals, which it submitted to the European Commission for consideration. The Commission responded in November 2001. It agreed to the tendering of the CHFS network as a single bundle but confirmed the requirement to tender.
In June 2004, Nicol Stephen, the then minister for transport, announced that, following discussion with the European Commission on the implications of the Altmark case, tendering of the entire CHFS network would proceed. Ministers held further discussions and exchanged correspondence with the European Commission between December 2004 and July 2005. The Scottish Executive concluded that tendering the CHFS network was a legal requirement and published its consideration of the requirement to tender in September 2005.
The CHFS contract was awarded to CalMac in August 2007, and the Commission began an in-depth state-aid investigation of Scottish ferry subsidies. The formal process began in April 2008 and concluded in October 2009. The Commission looked in detail at how contracts had been awarded and subsidies paid. Its decision that state-aid payments for CHFS were allowable and proportionate recognised that the contract had been awarded in compliance with the maritime cabotage regulation.
The Commission’s position on tendering can be seen clearly from decision C 16/2008 of 28 October 2009. In 2012, Keith Brown, the then minister for transport, wrote to Commissioner Almunia, the then competition commissioner. Keith Brown stated:
“I would therefore encourage a review of the requirement to tender ferry services to ensure that the rules are proportionate and appropriate to the sector and support the provision of these essential services.”
Commissioner Almunia replied:
“Consequently the Commission strongly advocates the widest possible use of open and transparent tendering procedures when public authorities entrust companies with a public service obligation.”
We are obliged to tender CalMac’s services. That was recognised by the previous Lab-Lib Administration. We recognise the outcome of the Commission’s investigations. We also recognise our legal obligations and are bound by the precedent that they set.
The Labour-Lib Dem coalition initiated the first tendering of the CHFS contract. Some Opposition members who supported the tender then appear to be suggesting that we should now break EU law, the consequences of which would surely result in challenge.
Let me be clear about why we will not breach the law. Were we not to tender the services, we would put at risk the services, our subsidy to them, the routes, the vessels and the investment. A free-for-all on Clyde and Hebrides services would see competition on some islands and a reduction in services to others, which is not what the Government wants. I do not believe that that is what the Opposition or island communities want either.
The National Union of Rail, Maritime and Transport Workers will undertake industrial action on CalMac ferry services today, tomorrow and on Friday. Action is being taken to support island communities and the travelling public at this time. As the Minister for Transport and Islands, I appreciate the full nature of those lifeline services.
The trade unions expressed concern about CalMac’s proposals for changes to the existing pension scheme and how pensions would be treated in the next CHFS contract. They also oppose the tendering process being contested by CalMac and Serco. Ministers have actively engaged with the unions to develop a tender that provides employment and pension protections to the current workforce. The Cabinet Secretary for Infrastructure, Investment and Cities and I have met the unions on a number of occasions and provided assurances that a fair, affordable and sustainable pension scheme will be written into the new CHFS contract.
We remain committed to further engagement and dialogue with the unions to ensure that appropriate employment and pension protections are included in the invitation to tender and subsequent contract to operate the CHF services. The cabinet secretary will meet the RMT in London to discuss the way forward. A number of meetings have been scheduled between the current operator—CalMac Ferries Ltd—and other trade unions to discuss the pension issue. We will also continue to encourage CalMac Ferries and the RMT to engage in meaningful and constructive dialogue in an attempt to resolve the current dispute.
The current tender process does not involve the Scottish Government selling any assets or controlling interests to the private sector. It is a tender for the provision of a state-aid subsidy to an economic operator for operating lifeline ferry services for a set duration of eight years. Of course, it is not possible or indeed appropriate for the Scottish ministers to predict or prejudice the outcome of the tender process. I emphasise that, no matter the outcome of that process, the Scottish ministers will retain ownership and control of all the vessels and ports that are currently under public ownership. We will set routes, timetables and fares as now and retain full control of the services that the operator provides through the public service contract.
Contrary to reports in the press, there shall be no cherry picking of routes, and successful bidders will not be able to cut routes. The specification that ministers set is designed to protect and enhance our lifeline ferry routes, not to diminish them.
This Administration has made significant investments to support lifeline ferry services, the commissioning of new vessels and harbour infrastructure since it came to power. A record £1 billion has been invested in port infrastructure, vessels and ferry services from 2007 to date. Support for the road equivalent tariff, which the Government delivered, will substantially reduce the cost of ferry travel for passengers, cars, coaches and small commercial vehicles on the CHFS network.
The accusation that the Government wishes to privatise ferry services is simply not true. I want the highest levels of confidence that the procurement process is fair and transparent. Therefore, I announce a further initiative in the procurement of ferry services in Scotland: the setting up of an independent procurement reference panel to ensure fairness, openness and transparency in the procurement process.
The remit for that procurement reference panel will include assurance that nothing is being done in the CHF services procurement that could be perceived as discriminating against either of the tenderers. The panel shall be invited to review and comment to Transport Scotland on the initial invitation to tender, which is due to be issued on 10 July 2015; the interim invitation to tender, which is due to be issued in autumn 2015; and the final invitation to tender, which is due to be issued in December 2015. Transport Scotland will take that independent procurement reference panel’s views into account and provide an undertaking to consider all relevant points that it makes. Any necessary changes arising from the panel’s assessment will be incorporated into the subsequent or final version of the invitation to tender.
Six groups have been set up to offer their insights into the procurement of CHFS. Those groups cover trade unions; local authorities; ferry user groups; tourism, economy and business; ports and harbours; and health, social care and accessibility. Because of procurement rules, the procurement reference panel cannot be involved in evaluating the bids or overseeing the appointment of the successful tenderer. However, it is proposed that a suitable representative from each of those six groups be invited to provide assurance to Transport Scotland and the broad ferry users community that the procurement process is being implemented in a fair, transparent and balanced way that represents local communities, various sectors and interest groups. The obligation to appoint the successful tenderer rests with the Scottish ministers, and it cannot be transferred in whole or in part to the procurement reference panel.
In the interests of openness and transparency, each version of the invitation to tender will be published on the Transport Scotland website and will thereby be available to the public. I also propose that the final views of the procurement reference panel, at each stage of the process, should be published.
I consider that the initiative is a positive step forward in ferry service procurement, and I commend it to the chamber.
I thank the minister for early sight of his statement.
From Oban to Stornoway and Uig to Lochboisdale, CalMac is the genuine face of public service: publicly owned; publicly managed; and publicly delivered. CalMac staff want the lifeline ferry services to stay in public hands and for certainty to be provided to staff, passengers and taxpayers.
Does the minister accept the uncertainty that was created when Serco won the NorthLink contract, which led to job losses, services being cut and the first industrial action in the service in 30 years? Some say that the idea of Serco being driven by a public-service ethos is like nominating Jeremy Clarkson to be the next Dalai Lama.
What reassurances will the minister provide to Parliament and to the workforce that history will not repeat itself? Will the minister, even at this 11th hour, go to Brussels to make the case to the European Commission that lifeline ferry services do not need to be tendered under the Teckal exception?
Mr Stewart must have been listening to my statement and he will have heard me say that this Administration and previous Administrations tried to get Europe to change its position, but Europe has not done so. That point was accepted by the previous Administration, which set the precedent that we are now bound by to retender the services in line with European procurement legislation.
Are Opposition members
“prepared to play fast and loose with the possibility that the Commission could order the cessation and recovery of subsidy to CalMac? Are they prepared to abdicate responsibility and place in jeopardy the lifeline services that the islands need”?—[Official Report, 14 September 2005; c 19033.]
Those are not my words; they are the words of Labour’s Michael McMahon MSP, showing the sheer hypocrisy of the Labour Party on this issue
It is important that we get the services running to the islands, so I assure members that we will continue to work incredibly hard to avert further industrial action and will ensure that we carry out this procurement process in accordance with the law, so that we can protect these lifeline services and get the best for staff and islanders.
I thank the minister for early sight of this statement.
I share the concerns of constituents and businesses—especially tourism businesses as we enter the peak holiday period across the west coast and the islands—about the economic impact of this very unwelcome industrial action, and I call on the RMT, even at this late stage, to get back around the negotiating table and cancel the strike.
Does the minister agree that CalMac has already made several serious concessions to the RMT in its bid submission, including a commitment on no compulsory redundancies, and is prepared to negotiate further on greater protection to employees on terms and conditions of employment? Given the progress that has already been made through talks, does he agree that a negotiated agreement is perfectly possible and must be a priority, and that the strike is not going to help?
Can the minister also give more details on how the members of the procurement reference panel will be chosen?
Mr McGrigor makes a reasonable point about the fact that the message that the islands are open for business will suffer as a result of the industrial action. That is all the more reason for CalMac and the trade unions to continue to engage and discuss matters. I believe that there is a way forward, and the cabinet secretary will cover more of that ground on Tuesday.
We have been meeting the trade unions, and I think that we can reach a resolution, which is what we all want. I will also meet other colleagues, including Fergus Ewing, to discuss what more we can do to support the tourism industry, which will be suffering as a consequence of the dispute. That is all the more reason for us to work together to avert any more industrial action and resolve the issues.
We have issued an assurance around pension entitlement, and we want to have a constructive relationship with the employer and the trade union to take these matters forward.
On the question about the procurement preference panel, I will write to the member with more thoughts on the composition of that panel, how people can be involved and how the members will be selected. That will, of course, be a matter of engagement with the groups that I have proposed should be included in the first procurement reference panel for ferry services.
I recognise the importance of the minister’s statement, and I am also mindful of the large number of members who wish to ask a question and the fact that we have no choice but to finish at 3.10. I therefore implore everyone to keep their questions and answers as brief as possible, and I will try my very best to get everyone in.
I welcome the minister’s statement. Does he agree that
“the tendering of the Clyde and Hebrides lifeline ferry services is required to protect these vital services”
as set out and debated in this chamber on 14 September 2005 by Labour and Liberal Democrat MSPs, including a number who are present this afternoon, and that accusations of privatisation from such MSPs are incendiary with regard to the dispute, do nothing to resolve it on behalf on island constituents and are wholly opportunistic?
I would, of course, agree with that sentiment. We want to conclude the dispute and move forward in the interests of staff, services and islanders. Many members, some of whom are present today, have in years gone past said that this exercise was necessary, and the fact that they seem to have changed their minds is, I suspect, more down to political posturing than anything else.
The minister insists that awarding Serco the contract does not amount to privatisation, but Angus MacNeil MP has been quoted in Am Pàipear as saying:
“We do not want to see a situation on Friday when government-owned Caledonian MacBrayne has its Hebridean boats tied up while the privately run Serco sails to the Northern Isles”.
In light of that, can the minister explain when privatisation is not privatisation?
As I have said, the vessels, the harbours and the service will continue to be in the ownership of the public sector.
Other members in this chamber and other parliamentarians might be able to express a view on which of the two tenderers they would like to be successful, but ministers cannot prejudice that process and have to work in accordance with the law. We will put these lifeline services first, work towards a resolution in the interests of staff and do everything that we can to avert strike action, and I have made it clear exactly what the services will look like with regard to the ferries plan and what is proposed.
My constituents, many of whom use these services daily, will, like me, warmly welcome the minister’s definitive, clear and comprehensive statement, which will counter the Opposition’s cynical but very damaging mischief making.
As for the regrettably necessary tender, will the minister ensure that it emphasises experience and quality of service, not merely price, and that the new stakeholder group overseeing the process, which I warmly welcome, is chosen with that in mind to ensure that it can give practical advice on what my constituents need every day from a publicly funded ferry service and not simply look closely at what those services might cost the Scottish Government or anybody else?
That is a very important point to bear in mind, and I can advise the member that quality and cost will be taken into account in the tenders and the procurement process. As quality is very important to the islands, I can reassure Mr Russell that the matter is very much being taken into account. Moreover, the procurement panel will have a view and will be consulted on it.
I thank Mr Mackay for the courtesy of his statement. He was not in the Parliament in 2003 during its first session, but I can tell him that at that time his party advocated breaking the law, so I do not know where all of this is coming from today.
Does the minister accept that the RMT concerns leading to the strike that is affecting islanders have been fuelled by CalMac losing the Scottish Government’s Northern Isles shipping contract to Serco on unspecified and, frankly, unbelievable quality grounds, despite its bid being the cheapest, a fact that Audit Scotland is now bound to investigate?
Mr Scott might not have been in the chamber at that earlier stage—nor was I—but he was certainly in the chamber in 2005 when he voted for a motion that said:
“the tendering of the Clyde and Hebrides lifeline ferry services is required to protect these vital services.”
Indeed, Johann Lamont and other members said the same.
On the specific question, we will of course learn lessons from any procurement exercise, and we will do so in keeping with the letter of the law, delivering first-class public services on which people depend. We intend to protect the rights and interests of staff, and we will continue to engage with CalMac to ensure that the process is above board. We are convening the first procurement reference panel to assure people that there is a level playing field.
Coming back to the immediate impact of the strike later this week, I too am very concerned for my constituents and for tourism businesses in particular, in my constituency and further afield. Can the minister elaborate a wee bit on what he is doing to help to mitigate the effects of the strike?
The impact of the strike is likely to be varied across the network. CalMac estimates that, today and tomorrow, approximately 80 to 90 per cent of service provision is likely to be delivered.
On Friday, the main strike day, the major vessel routes are expected to be off, so my advice to the travelling public is to check with information sources such as CalMac. The Scottish Government resilience unit has met twice to discuss the subject. There has been ministerial involvement to ensure that the impact of industrial action is minimised, and we have put out extensive messaging on road and rail networks advising travellers of the impact of ferry disruption. We are asking people to check with CalMac, and we are trying to help individuals through what is a difficult time for the islands.
CalMac has issued more specific information on the revised timetables for the rest of the week. I hope that the on-going efforts will avert any further action.
This Government frequently tells us that the use of private companies in the national health service is privatisation. With that in mind, does the minister agree that to award the contract for lifeline ferry services to a private company is in fact privatisation, despite the Government’s frequent protestations? Furthermore, does he agree that the Government is simply dancing on the head of a pin in continuing to refute the assertion that those lifeline ferry services will be privatised?
I am trying to protect public services, avert strike action and support our island communities. I am not quite sure what the Labour Party is doing during this period.
I do not accept the charge that it is privatisation. I have already outlined that the vessels and the harbours will remain in public ownership. The specification on services that are to be provided is to be clear—[Interruption.]
Order.
Mary Fee hails from the west of Scotland, where the leader of Glasgow City Council has said that the operator will be able to cherry pick services and routes. That is not true. The dispute is being stoked by ill-informed comments from Labour politicians. They should stop that, so that we can get on with the business of providing quality services to our island communities, which depend on those lifeline services.
In order to help to put this red herring to bed—if that is not too mixed a metaphor—can the minister offer any detail on the efforts that successive Administrations have made to achieve an exemption from the EU rules on tendering ferry services?
I covered a great deal of that in my statement. If Mr MacKenzie would like further information, I would be happy to provide more of the detailed correspondence and information around the exchanges that have taken place to try to get an exemption for Scotland’s ferry services in that respect. Unfortunately, our efforts to stop the necessity of tendering our ferry services have not been successful, which was the previous Administration’s position, too.
However, lobbying by the cabinet secretary enabled us to secure an extension of current services, and procurement has not been unbundled. We have been able to make some progress, but not on the process of tendering itself. I am happy to share that information with Mike MacKenzie.
If the Government is determined to persist with tendering the contract, will the minister at least try to protect staff by decoupling the pension scheme from the tendering process; by including in the contract a guarantee of no compulsory redundancies; and by including a guarantee that no changes to staffing levels or conditions of service will be made without agreement being reached with the RMT? Quite frankly, the alternative is free rein for Serco to maximise profits and attack jobs and conditions if the minister gives the company the contract.
I restate that we cannot prejudice the outcome of the process, but the commitment is that we will work with the trade unions and the operators through the procurement exercise to try to get the best result and safeguard the interests of the employees. That willingness to co-operate and to work positively is most certainly there. We have, in good will, offered further meetings and we have set out our position on pensions being fair, affordable and sustainable.
We will continue to work constructively with the trade unions, but we have to comply with the law, because if we do not, the services will be subject to challenge, and that would be devastating for island communities and the staff concerned.
Presiding Officer, my wife works part time at CalMac, as I have previously declared in the chamber.
I welcome the minister’s statement and the introduction of the independent procurement reference panel. I would be grateful if the minister could provide all MSPs with more information on the panel. Also, will the Government consider extending the use of such a panel to other procurement exercises?
I have advised Parliament of my early thoughts on how the panel will work. This is the first time that an independent procurement reference panel has been used in the tendering of our ferry services. We will review and learn lessons from the impact of the panel on the procurement process and consider its application to future tenders. Engagement processes were already under way, but I am sure that the panel will add confidence that the process will create a level playing field for all who are involved.
I am sure that the minister will be keen to recognise that many RMT members are valued parts of our island communities as well. I am trying to understand who is in charge here. In his statement, the minister said that Scottish ministers will “retain ownership and control” and
“retain full control of the services”.
If that is the case, will he instruct CalMac to meet the very modest assurances that the RMT seeks in respect of terms and conditions, please?
Live discussions are under way, and we have encouraged CalMac and the trade unions to be positive and constructive in their approach. It is not for me to say that CalMac should accept all the demands from the RMT, but I believe that the potential for an agreement is very close.
I apologise for covering an area that has been mentioned already, but to go right back, my understanding from Neil MacCormick, who was an MEP at the time when the agreement was sealed, is that at the time of the discussions in Europe, other island nations asked for and got derogations in relation to competitive tendering for lifeline services. I hear that the case has been made, and I know that previous Governments declared to Parliament that they had made the strongest possible case.
Does the minister know whether there is a time for a review of this? It is a number of years since the agreement was made, and I think that Scotland was badly represented at the time, although not by anybody who was representing Scotland and certainly not by an MEP representing an island community—
I am sorry. You need to bring your question to an end.
In essence, the question was about efforts to pursue an exemption. Extensive efforts have been made and, in short, we will continue to make efforts to try to get an exemption for Scotland’s services. So far, we have not been able to do that, and neither was the previous Administration.
I ask Neil Findlay to be brief.
RMT delegates at its annual general meeting on Monday were scathing about the minister’s mangled protests and attempts to explain why privatisation is not privatisation. Can he guarantee that the public sector envelope will actually be opened this time?
That is a typically unhelpful comment from Neil Findlay. It is beneath contempt. He should join others in trying to find a positive way forward to genuinely help the employees’ interests and the island communities. We will undertake the process in accordance with the law and good practice, and in establishing our procurement reference panel we will give confidence that we have presented a level playing field and best practice to deliver a fully compliant procurement process that delivers first-class public services.