Government’s Euro appeal over ferry contracts

Scottish transport minister Keith Brown has appealed to the European Commission to relax restrictions on the length of contract the Scottish Government can award to ferry operators.

Mr Brown visited Brussels on Tuesday to press the Commission on the issue, which currently prevents the government awarding of a contract any longer than six years to operate Clyde and Hebrides ferry services.

Following a meeting with a member of the cabinet working for Commission vice-president Siim Kallas, Mr Brown said: “I believe that they clearly understood our concerns.

“I believe the contract limit causes extra uncertainty for those communities and businesses that are affected by tendering and re-tendering of contracts over short periods of time. People’s jobs and livelihoods are at stake and I would wish to look at alternative options to minimise those concerns.

“I also believe the limit is inappropriate for the ferry sector. Ferries typically have a working life of around 25 to 30 years, while ports and harbours longer still at 40 to 50 years.

“Ferry companies are unlikely to invest in new vessels or port and harbour infrastructure, as they are unable to fund those investments from short contracts.

“This results in the Scottish Government paying for vessels to charter to operators which in turn removes the possibility of ferry companies competing for contracts on the basis of incentives like innovative ship design, greener and cleaner vessels, and vessels which are more reliable in severe weather.

“If ferry companies are not incentivised to invest and innovate, ferry users are ultimately affected by the services which are delivered.

“The issue of contract lengths was recognised by the Commission when it supported the rules governing bus and rail services, where contracts of up to 15 years can be awarded. It would make sense if the ferry sector could benefit from the same changes.

“Ferries provide crucial transport links that support the social and economic viability of Scotland’s islands and remote communities and if we can reduce the cost of supporting ferry services it will allow us to reinvest that revenue elsewhere on the ferry network, driving up standards further.

“I want positive benefits to be felt by all the communities across Scotland who rely on ferry services, and have stated our case again today to Europe who have the powers to make common sense changes which will help us realise those benefits.”

The tendering process for the next Clyde and Hebrides Ferry Service (CHFS) contract will begin in the autumn of 2014, with the new contract taking effect two years later.

The current operator, CalMac Ferries Ltd, was given an interim contract to continue operating services until the new contract is awarded.