Scottish Ferry Services: Ferries Plan (2013-2022)

CHAPTER 5 - Who should be responsible for providing ferry services?

Introduction

1. In the Draft Ferries Plan it was noted that there is no single mechanism by which Scotland's broad network of ferry services are delivered. Some of these services are funded, tendered and managed by either the Scottish Government or Local Authorities. In addition, however, Scotland has a number of privately-run ferry services which carry passengers and freight all year round, operating entirely commercially. On a smaller scale, there are some ferry services which are seasonal and largely geared to the summer tourist trade.

2. What is clear is that existing ferry service provision is not necessarily best serving the island communities. We believe that there is a need to examine the existing situation and consider whether a more consistent approach might be taken to securing ferry service provision for the long term. A strong desire for greater consistency was evident in the responses we received to our earlier consultation on ferry services in 2010.

Scottish Government Involvement

3. The Draft Ferries Plan made clear that the Scottish Government is willing to take responsibility for any 'lifeline' ferry service. The Draft Ferries Plan makes clear what 'responsibility' will involve. This may be in circumstances where the current operator was unable to continue or where the operator otherwise considers it best if the Scottish Government assumes the responsibility. This could be the case with Local Authority, commercial or community-run ferry services. In the 12 months since the publication of the Draft Plan we have already made some progress in this area. Details of the progress we have made are set out below.

4. In considering any request to take over a ferry service, we will assess need on a case-by-case basis. We will take into account factors including: the lifeline nature of the route; the community served including its population; alternative routes; and historic carryings. Ultimately, however, it may not always be agreed that a transfer of responsibility goes ahead. In addition, the Scottish Government cannot guarantee to be in a position to provide any additional funding.

Kerrera

5. We have made clear that, for commercially run services, we will consider intervening where there is market failure and the service is considered to be lifeline. The commercially run service for Kerrera is considered to be lifeline and does not, at present, meet the needs of the community and is not sustainable either now or in a form that would meet the future needs of the community. We have therefore been working to plan a package of measures for the continued provision of ferry services on the island. Discussions are ongoing with Argyll and Bute Council regarding long-term investment in island infrastructure which will have a bearing on future ferry provision. In the meantime, we are working with the Kerrera community and current ferry operators to provide short-term grant support for ferry operation and urgent improvements to infrastructure. We anticipate this support will continue for around 18 months to 2 years, until a longer term solution is found.

Jura

6. The Jura Ferry is another example of where the Scottish Government has responded to local needs. In March 2012, we announced short-term funding to support a community-operated summer only ferry service between Jura and the mainland (Craighouse - Tayvallich). The service is operated by the Jura Development Trust and the funding has been provided jointly by the Scottish Government and Argyll & Bute Council.

7. As noted in the Draft Ferries Plan our intention was for this support to cease once other changes to services which affect Jura had been implemented. As noted in Chapter 3 of this document, it is no longer our intention to increase the number of services from Port Askaig, Also, we have noted that offering zero fares on the Jura - Islay service will be subject to agreeing with Argyll & Bute Council that they will transfer responsibility for this route to Scottish Government. It is therefore our intention, until we have concluded our discussions with Argyll & Bute Council, to continue providing financial support for the Craighouse-Tayvallich service. We currently fund this service jointly with Argyll & Bute Council. Our continued funding is dependent on Argyll & Bute Council's continued funding.

Local Authority Ferry Services

8. In the Draft Ferries Plan there was discussion of the potential for some Local Authority operated 'lifeline' ferry services to transfer to the Scottish Government. Our willingness to take on this responsibility, where requested, remains. As described in the Draft Ferries Plan, if we are asked to take responsibility for Local Authority ferry services, we will require an adjustment to be made to the Scottish Government's local government block grant, to ensure that we are in receipt of the revenue required to run these ferry services in the future. We may also require a transfer of capital funding to address issues with ageing vessels, ports and harbours. We are engaging with local authorities on the terms under which responsibility for ferry services might transfer and the local authorities have been provided with a set of principles that will apply should they wish to go ahead. (Principles attached at Appendix 5 ).

9. Engagement with the relevant local authorities is underway. This is an important process for the local communities and we must ensure that these small island communities are treated in a way consistent with other communities for whom we already have responsibility for ferries provision. It is also important that they be treated consistently with each other. We will therefore be working with the local authorities involved to first identify the needs of the communities in a consistent way. For those local authorities who wish us to take on responsibility for their ferry services we will then consider the financial requirements for us to do so. This whole process will take some time. It is our aim to conclude this exercise late 2013/early 2014 in order that any services which require to be included within the next tender for the Clyde and Hebrides Ferry Services can be further considered and specified as required.

10. We have provided details below of what progress has been made with each of the relevant local authorities.

Argyll and Bute Council

11. Argyll and Bute Council currently have responsibility for ferry services to Lismore, Luing, Easdale and Jura. In addition to these four services, we must also consider with Argyll and Bute Council who will be responsible for the long term provision of ferry services to Kerrera. All of these services are clearly 'lifeline'.

12. Argyll and Bute Council are at an early stage in the process, currently considering what data is held to evidence the type and level of need for ferry services in each community. We have offered to work closely with the Council throughout this process.

Shetland Islands Council

13. Shetland Islands Council have responsibility for all of their inter island ferries. These are all clearly 'lifeline' services. Services are provided to Yell, Unst, Fetlar, Whalsay, Bressay, Skerries and Papa Stour. The Council have indicated that they may be interested in transferring responsibility for their ferry services to the Scottish Government. The Council are still considering their position.

Orkney Islands Council

14. Orkney Islands Council operate ferry services within their island groups and they too are clearly 'lifeline' services. Services are operated to the South Isles of Flotta, Hoy, Graemsay, Moaness, Rousay, Egilsay, Wyre, Shapinsay and the six outer North Isles of Westray, Papa Westray, North Ronaldsay, Sanday, Eday and Stronsay.

15. Significant progress has been made with Orkney Island's Council to consider the type and level of service that each community would need. We must make sure that this work is consistent with the work yet to be done with Shetland Islands Council and Argyll and Bute Council. The work achieved with Orkney Islands Council provides a good model for the work required with the other Councils.

16. We will bring to a conclusion our work on identifying the type and level of service required by each community and agree with the Council whether they wish to begin looking at levels of funding that would need to be transferred if responsibility was to transfer. We also want to consider with the Council the correct split of responsibility going forward and discuss with them the need to transfer responsibility for their ports and harbours. These points are included in our 'Principles of Transferring Responsibility' paper provided at Appendix 5.

17. We are aware that the existing fleet of vessels serving Orkney's inter islands is ageing and in need of investment. As noted above our Draft Ferries Plan made clear that if the Scottish Government were to take on responsibility for particular routes it would be on the understanding that the appropriate amount of funding came back to the Scottish Government, via the local government block grant and that a transfer of capital funding may be required. Given Orkney Islands Council wish to consider a transfer of responsibility, this issue will be considered further as part of that work.

Way Forward

18. While the summaries above give an indication of engagement with these local authorities, clearly there is much work still to be done to define the service models required in each Local Authority area, as well as the funding transfers that will need to be put in place. As noted above our aim is to look to conclude this exercise late 2013/early 2014.

Procurement Skills

19. The Draft Ferries Plan noted that where the Scottish Government was not wholly responsible for the procurement of ferry services it might usefully have a role in promoting good ferry service procurement practice nationwide. In addition, we are always willing to provide support and advice to local authorities and others on the procurement of ferry services.

20. The Scottish Government is willing to provide advice on all aspects of public procurement. Anyone seeking advice should contact Ferries Unit in the first instance.

21. In addition the Scottish Government's website provides details of a 'Suppliers Journey' which will provide a useful source of guidance for anyone who is interested in tendering for a public contract.

22. The Scottish Government is set to bring forward a Procurement Reform Bill, scheduled to be introduced in the spring of 2013. The overarching aim is to establish a national legislative framework for sustainable public procurement that supports Scotland's economic growth by delivering social and environmental benefits, supporting innovation and promoting public procurement processes and systems which are transparent, streamlined, standardised, proportionate, fair and business-friendly.

Ferry Regulator

23. Consideration has been given to the issues around establishing an independent Ferry Regulator. The issues was discussed in the 2010 Consultation document and while some views were expressed both in favour of and in opposition to the suggestion of establishing a Regulator, there was not a strong body of opinion on this point. The Draft Ferries Plan outlined the existing regulatory framework in the maritime sector and the control mechanisms affecting Scotland's ferries and discussed whether any further layer of regulation - and legislation - was necessary. Limited support was expressed for a Ferry Regulator in consultation responses received.

24. On the latter issue, depending on precisely what range of powers an office holder of this kind may have, the establishment of a Ferry Regulator would likely require primary legislation in the Scottish Parliament and - under the current constitutional position - possibly also at Westminster.

25. We have examined the scope for introducing a statutory ferry regulator to monitor ferry services subsidised by both Scottish Government and by commercial operators. We have concluded that there are strong arguments against the establishment of any additional regulation of ferries. Put simply, it is unclear what a Scottish Ferry Regulator would do that cannot be achieved from current arrangements. At present, ferry services are regulated by existing means as described below:

• Statutory controls: the maritime sector is bound by international law and convention through a broad range of international, European and domestic laws. Domestically, for example, safety issues are already overseen by the Maritime Coastguard Agency (MCA) and environmental issues are regulated by SEPA.
• Contractual controls: all our subsidised ferry services are tightly regulated by means of the public service contracts which stipulate precisely how the services will operate (fares, timetabling, vessels, performance measures etc) thereby protecting the interests of ferry users.
• Policy Responsibility: this currently sits with Transport Scotland under Scottish Ministers or in the case of Local Authority controlled services, the relevant Local Authority. If an independent Ferry Regulator was to assume policy responsibility for these subsidised ferry services, the Regulator would then have power to direct and control services without being subject to any direct democratic accountability. Clearly this would be neither appropriate nor desirable.

26. Taking all of this into consideration, Scottish Ministers have therefore decided that there is no compelling case for the establishment of an independent Ferry Regulator and therefore this is not a proposal which will be taken forward at this time.

27. We recognise however that there is a great deal of interest in Ferries issues, mostly in the communities concerned but also further afield. There are also a range of views on how services could or should be provided and improved. We do not want this Ferries Plan to be the end of that process and are therefore keen to consider the best way for wider consultation on ferries issues to take place on an ongoing basis.

28. We are keen to involve key local expert interests in our arrangements for wider consultation. This will ensure that we have access to the widest possible expertise before key decisions are made. We will consider how best to take this forward, and issue further details on our plans to involve key local expert interests in the New Year.

Summary of way forward

29. Our plans are summarised below.

• We will continue to discuss with any operator, including local authorities, who wishes to consider transferring responsibility to the Scottish Government;
• We have made available our procurement guidance and will be happy to discuss any issues with those responsible for procurement;
• We will not at this stage seek to introduce a Ferries Regulator; and
• We will consider how best to include key transport professionals, academics and operators of ferry services as we deliver wider consultation mechanisms.