Achi news desk-
State-owned ferry company CalMac, which provides lifesaving services to the Scottish islands, has seen its public subsidy increase by more than 60% in real terms since it won the islands’ deal for now first 16 years ago.
An audit of the finances of a state-owned ferry company shows that since 2008 real terms subsidy levels have risen by £67m while the number of passengers carried has fallen by 12% (680,000), the Herald revealed.
It is understood that there has been a sevenfold increase in Scottish Government support in the half century since Caledonian MacBrayne Ltd was formed in 1973.
Since 2008, the first full year of trading after restructuring CalMac won a six-year contract when the Clyde and Hebrides island rescue services went out to tender the subsidy, taking inflation into account, shot up 63%.
Then the grant to CalMac was at £68.541m which equates to £106.09m at 2023 prices.
And in 2022/23 that has risen to £173.03m – a jump of £19m in just one year.
But since 2008, the number of passengers carried by CalMac has fallen from 5.7m to 5.02m.
Roy Pedersen, a former member of the Scottish Government’s disbanded specialist ferry group who has told Holyrood in a submission that lifeline services policy is “clearly dysfunctional” and needs to be overhauled, says the services are not value for the taxpayer’s money.
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He says the original requirement that CalMac be self-financing has been found to be “futile”.
The idea, he said, was that profitable services would cross-subsidize those that were making a loss.
And by 1975, a deficit of £3.25 million had been posted which was covered by government subsidy, which has been the case every year since. That equates to £24.148m in 2022/23 prices.
He said subsidies had risen “unforgivably” since then and there had been no profitable services for some time.
The author said that the main reason for the “disproportionate” increase in the state budget is the high cost of operating the larger “large” ships of the fleet.
He highlighted flaws in past policy including sinking an £800m plan to revolutionize Clyde shipbuilding and solving Scotland’s ferry crisis with a fleet of 50 catamarans.
With Stuart Ballantyne, a Scottish naval architect and chairman of Australian maritime consultancy Sea Transport Solutions, whose designs are used in around 50 countries, the Clyde Catamaran Group has held meetings with ministers over the new ferries built over 20 years in Scotland that would cost a fraction of those currently being built.
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When revealed, it was claimed that the sinking project would be for 50 catamaran ferries to be used by Scottish Government-owned ferry operator CalMac for island rescue services off the west coast of Scotland and on for services to Orkney and Shetland costs only £250m more than it. It would cost to build four in Turkey and at Ferguson Marine in Scotland.
It would also be an alternative to the over £400m expected to be spent on the two ferries still under construction at nationalized Ferguson Marine, which have been wildly delayed by over six years. The contract for the ferries was set at £97m.
He said: “The main physical problem is over-complicated, inefficient and labour-intensive ships and terminals and in many cases operating on longer routes than necessary. which governs the current byzantine and dysfunctional system, which seems oblivious to the concept of value for money.”
He said Kevin Hobbs, chief executive of state-owned ferry owners and acquirers Caledonian Maritime Assets Limited (CMAL) claimed his stance oversimplified matters.
“I would respond with the oft-quoted saying, ‘if there’s an expensive and awkward way of doing things, CMAL will do it’.
“He insisted that building new terminals (to enable shorter routes) would be very expensive, Well, yes, if CMAL did it, but not if it was done by more cost-effective operators. While the new Brodick terminal and identified by CMAL as costing £30m (and so badly tilted as to be unsustainable in a strong easterly), Pentland Ferries’ two terminals cost around £2m each.”
A former officer of the Highlands and Islands Development Board and its successor, Highlands and Islands Enterprise has been calling for the adoption of a ‘Norwegian model’ for ferries based on the shortest possible sea crossings using ferries with minimal crew “living ashore” and high frequency schedules. .
It condemns “CalMac/CMAL’s appallingly poor productivity” and criticizes “inconvenient schedules, limited capacity and unreliability, along with very high levels of public subsidy”.
The Scottish Government is looking at giving CalMac the right to operate west coast island ferry services in perpetuity despite receiving around £10.5m in poor performance fines in the six and a half years since CalMac took over the franchise – almost eight times more than in his first nine years in charge of the west coast fleet.
A CMAL spokesperson said: “CMAL remains focused on providing a robust ferry service to island communities. An important factor in all vessel selection for the Clyde and Hebrides Ferry Service (CHFS) is compatibility with specific routes, as well as flexibility to meet vessel relocation needs across the network. The four vessels being built at Cemre to serve the Islay and Little Minch routes have been built to a standard specification to ensure this flexibility.”
A spokesman for Transport Scotland said: “The Scottish Government is investing in our ferry services and providing six new large ships to serve Scotland’s ferry network by 2026. We have invested more than £2 billion in our ferry services since 2007 and has outlined plans to invest around £700 million in a five-year plan to improve ferry infrastructure and benefit our isolated communities.
“We have been clear that CalMac is managing the challenges of an aging fleet. This means they are investing additional sums to improve fleet sustainability and to provide a more resilient service to customers and communities. However, the increase in subsidy they receive from the government is due to a number of reasons, including additional routes and services, lower fares, the purchase of the MV Loch Frisa and the charter of the MV Alfred, and not just maintenance.”
CalMac declined to comment.
