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Lifeline... or millstone for taxpayer?

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Published Date: 01 October 2007
FOR Alastair Chisholm, it is a floating bridge.
The MV Loch Shira is the Cumbrae-based music teacher's sole link with the mainland as one of Caledonian MacBrayne's "lifeline" services.

He has been making the ten-minute crossing to Largs for 20 years, counts the crew as friends and is delighted
with the extra comfort brought by the new car ferry, which entered service this year to replace a smaller vessel.

However, while the journey is unusually uneventful for Mr Chisholm, 60, there have been years of turmoil behind the scenes at the state-owned ferry firm.

Following nearly a decade of uncertainty, CalMac will today start a new contract to run ferries in the Clyde and to the Hebrides after the Scottish Government was forced by the European Commission to stage a contest for the routes. The firm initially competed against two private-sector rivals.

The process, which started in 1999 and has cost £15 million, ended with CalMac as the sole bidder after its two challengers withdrew, claiming the contract was so inflexible it gave them no commercial incentive to bid.

To cap it all, the six-year contract finally awarded to CalMac will see its funding from the taxpayer jump by more than one-third from £31.4 million to £43 million in the first year. In 2004-5, the firm's subsidy was £25.9 million.

Some academics and the SNP when in opposition insisted ministers should not have given in to the European Commission's competition demands, which were prompted by CalMac being a monopoly recipient of public money.

However, since they took power in the summer, the Nationalists have argued that completing the process would be quickest way of protecting services.

Maritime experts said Scotland was now steering in the opposite direction to much of the rest of Europe in continuing to embrace state control of ferries rather than privatisation.

In addition, they said the inefficient way in which CalMac operated was likely to see subsidies continue to rise until it eclipsed the income from passengers. They added that the next CalMac contract, from 2013, could offer the opportunity for a radical shake-up.

Other experts pointed out that CalMac was not alone in receiving large amounts of public money to run transport. Some £31 million a year is paid to support NorthLink's ferry services to Orkney and Shetland from Scrabster and Aberdeen, while First ScotRail received £262 million this year to run trains on loss-making lines, including in the Highlands.

Professor Neil Kay, of the economics department at the University of Strathclyde, said: "To a large extent, the scope for efficiency savings are limited at CalMac because they will continue to operate much the same vessels, and staffing levels are fixed by safety regulations.

"However, the subsidy involved compares favourably with the rail network and NorthLink, and CalMac is having to service a range of thinly populated areas for lifeline reasons."

Ministers plan to cut fares under a scheme called road equivalent tariffs, but details have yet to be published.

Professor Alf Baird, the head of the maritime research group at Napier University in Edinburgh, said radical action was needed.

He said: "The increased subsidy does not follow through into reduced prices, so it does not benefit the economy. We no longer trust the state to run other forms of transport, like the railways, so why ferries? CalMac should be operating two smaller vessels on a route rather than one larger one. Some of its largest ferries are less than half full most of the time."

A spokesman for Stewart Stevenson, the transport minister, said the increased CalMac subsidy included £3.2 million for inflation and extra staff costs, reflecting the final part of a three-and-a-half-year pay deal which was agreed in 2005.

Another £1.9 million was added for leasing and operating new vessels on the Cumbrae and Rothesay routes.



The full article contains 656 words and appears in The Scotsman newspaper.
Page 1 of 1

  • Last Updated: 30 September 2007 9:32 PM
  • Source: The Scotsman
  • Location: Edinburgh
  • Related Topics: Caledonian MacBrayne
 
 

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