The Future of Caledonian MacBrayne Ferry Services

Bob Crow

On February 3rd 2005 RMT joined with the STUC and other Caledonian MacBrayne unions in organising a lobby of the Scottish Parliament. Workers at the lobby made direct representations to their local MSPs on the Scottish Executive proposals to tender ferry services.

Very shortly after the lobby the Executive put out a statement stating that they were proceeding with the tendering of the Gourock-Dunoon service. This came as a total and unwelcome shock to the unions. During the discussions in Parliament the Scottish Executive had not informed the STUC of their intention to proceed with advertisements to tender for this route.

At the current time Caledonian MacBrayne is a publicly owned and publicly accountable company that runs passenger and freight services in the Clyde and Western Islands. The Executive proposes to separate the ownership of the vessels, which is to remain with the Executive, from the operation of the ferry services. Under these proposals the ferry services will be put out to tender with private sector shipping companies having the opportunity to acquire the right to run services for the length of the contract period.

At the lobby on 3rd February, Caledonian MacBrayne workers outlined concerns on the effect of tendering on the services themselves and their future security of employment, terms and conditions. At the end of last year; in a vote on 8th December; Members of the Scottish Parliament rejected the Scottish Executive's proposals to tender Caledonian MacBrayne services. There has been a fear that the talks with the European Commission, which followed the vote in Parliament, was largely a cosmetic exercise with no serious effort being made to seek alternative options for compliance with the regulations. The news that the Executive was on the very day of the lobby issuing advertisements for tendering the Gourock to Dunoon service, seemed to confirm our worst fears.

It now seems possible that following the consultation the Executive will seek to proceed with tendering all the other Caledonian MacBrayne ferry routes without even bringing the matter back to Parliament. The votes against the proposals were principally from the Scottish Executive opposition parties, however many Labour MSPs abstained due to deep concern over tendering.

The Gourock-Dunoon route has been separated from the other Caledonian MacBrayne services which are to be tendered as one whole package. The Scottish Executive has stated that this has been done in order to comply with EU regulations. At the current time there is no Public Service Obligation and Western Ferries also operator on the route. However the fact remains that the route, which has been operated by Caledonian MacBrayne, is now to be the subject of a tendering process with all the consequent dangers this involves.

Interestingly the Executive has never sought to justify the proposals for Caledonian MacBrayne as a solution in the best interests of running efficient services or safeguarding the communities and workers themselves. Recent experience of privatisation of transport services has led to increased fears surrounding the proposed tendering and its possible consequences.

The most obvious example of the dangers of breaking up an integrated public service is illustrated by the mainline railway; The separation of railway assets from operations has led to a blame culture, poorer services, concerns over safety and spiralling costs arising from so many companies seeking to maxi mise profits. The part privatisation of London Underground has also led to similar concerns over value for money and fragmentation of decision making. Closer to home the tendering of ferry services to the Northern Isles resulted in increased levels of subsidy being given to the operator; Northlink. The contract can now no longer be fulfilled and will be re-tendered early.

Caledonian MacBrayne is of course not just any ordinary shipping operator as far as the workers and communities are concerned. This is because the lifeline ferry services are vital for sustaining the island communities, but also due to the fact that so many of the workers reside in the islands.

Rather than seeking to justify tendering on policy grounds the Scottish Executive have stated that they are being forced into tendering due to EU regulations. However; new evidence is now starting to seriously question this assertion. First of all in 2002 the Altmark judgement in the European Court of justice cast doubt on the need to proceed with tendering these essential lifeline services.

Caledonian MacBrayne is of course not just any ordinary shipping operator as far as the workers and communities are concerned.

The European Court of justice considered the case of Altmark Trans, a German Bus Company; and decided that it was not unlawful for the German city of Stendal to renew 18 licenses for the company without a tendering process. The Court stated that it was not unlawful for payments to be made to companies providing essential services and they should not always be seen as state aid, as long as the services being provided were clearly defined.

Unfortunately the Scottish Executive issued a statement stating that following consultation with European Commission officials it still intended to proceed with tendering. They stated that this was due to the fact that compliance with the EU Maritime Cabotage regulations was necessary; and therefore the Altmark judgement did not change this position as this related to separate regulations on State Aid.

However a further report relevant to this debate has now been published by Dr Paul Bennett from Edinburgh University. He has looked at tendering in public services and applied this to the position of Caledonian MacBrayne. The report states that the safeguards for employment and the communities are not guaranteed and in addition they also limit scope for changing or improving services which is meant to be one of the reasons for competition in the first place. In conclusion the report states that the regulations are not appropriate for imposing on peripheral communities like the Western Islands.

The Scottish Executive has responded to questioning on the implications of the Altmark ruling by indicating that it is not applicable, because the tendering is necessary to comply with the maritime Cabotage regulations.

Dr Bennett has also done some further research into the actual question of whether the Cabotage regulations have to be applied through tendering. He believes that it may now be possible to also satisfy the requirements of the EU Cabotage regulation by proving non-discrimination against Community shipping by applying the Altmark conditions also to this legislation.

RMT believe that if the Executive wishes to protect Caledonian MacBrayne services and the security of employment for the workers concerned then this costly and unnecessary experiment should be abandoned. Indeed if necessary the Scottish Executive should be seeking to challenge the exercise through the European Court of justice.

However first of all it is imperative for the Scottish Executive to conduct a wide ranging review of all possible options for satisfying the regulations which we believe could be achieved without tendering.

The debate in the Scottish Parliament on 8th December left many questions unanswered. In the interests of the future of the ferry services, and of those who depend on them, MSPs and the Scottish Executive should be fully exploring all the options before reaching a decision. Scodand's transport policy must have a serious commitment to a publicly owned and publicly accountable ferry service. This will ensure that the ferry service will continue to have as its primary objective services based on the needs of the community and not those designed to make maximum profits.

Bob Crow is General Secretary of the RMT trade union