So how do others run their ferry services?

Since 2016, Scottish taxpayers have donated more than half a million pounds to the ample coffers of Ernst & Young to tell SNP Ministers what to do about ferries. At the end of that time, we are none the wiser.
While BC Ferries in British Columbia have similarities with CalMac, comparisons should be treated with caution.While BC Ferries in British Columbia have similarities with CalMac, comparisons should be treated with caution.
While BC Ferries in British Columbia have similarities with CalMac, comparisons should be treated with caution.

The Project Neptune report published two weeks ago accounted for £156,000 of that total. It is a desktop exercise which cuts and pastes lots of facts and figures, then throws in some superficial analysis. And so onto the next Scottish Government contract.

As reported in last week’s Gazette, most of what Ernst & Young assembled on their desktop was rendered redundant in one sentence from the Transport Minister, Jenny Gilruth, when she introduced the report at Holyrood. “The First Minister”, she said, “has been absolutely clear that we will not consider privatisation or unbundling”.

This was in direct contradiction of the brief given to Ernst & Young by the Scottish Government in 2020 when they were told, quite specifically, to consider "unbundling of routes into smaller packages" as part of options for "decentralisation".

Whatever one thinks of “unbundling” or “decentralisation”, it seems remarkable that – having been given that remit – the consultants spent two years at substantial public expense considering options that had already been ruled out on the edict of the First Minister. So what is there left?

Much of the Ernst & Young report examines international comparators – i.e. how they run ferry services in Norway, New South Wales, Auckland and British Columbia. The first three are immediately rendered irrelevant by the First Minister’s pronouncement, as repeated by Ms Gilruth. Even what they do in Norway, so frequently held up to us as a role model, is not even worth learning from

And so to British Columbia. It is the only one which might meet the Sturgeon criteria with a large entity, BC Ferries, in public hands and responsible for both infrastructure and operations on major routes along Canada’s western seaboard. Even here, the comparisons are much less clear than Ernst & Young suggest.

British Columbia has a population of just over five million, similar to Scotland’s. However, close to one-fifth of that number live on Vancouver Island which also hosts the provincial capital, Victoria. BC Ferries operate 36 vessels that serve 47 locations, superficially similar to CalMac but with a vast preponderance of the traffic running between mainland BC and Vancouver Island.

This ensures that ferry operations in BC is a high profile political issue affecting a large part of the population, which is not true in Scotland. There are also many ferries serving British Columbia’s myriad rivers and islands which are contracted by the government to private operators. So while parallels with Scotland have some validity, they should also be treated with caution.

BC Ferries carries four times as many passengers a year as CalMac and turns over more than double the revenue. A very significant difference then appears. Whereas two thirds of CalMac’s revenue comes from subsidy, the proportions for BC Ferries are the other way round, with two thirds of income coming through the fare-box.

To some extent, this reflects the nature of the routes. However, it also stems from the relationship between the British Columbia government and the ferry company.

Whereas CalMac operate on an eight year contract and are always at the end of an Edinburgh shoestring, BC Ferries have a 60 year contract and almost total commercial freedom – including the right to build ferries where they choose, which is normally in Europe.

Not that this absolves government from political responsibility. Indeed, because ferries are so important to the province as a whole, there is constant scrutiny and it is within the power of government to “sack the board” if they are not delivering. This happened as recently as June this year, in response to myriad complaints about service failings.

The left of centre New Democratic Party government installed a major figure in British Columbian public life, Joy MacPhail, as the new chair. She was at one time the province’s NDP deputy prime minister and has continued to occupy major public roles and command a high level of public respect.

Last year, she was made a member of the Order of Canada “for her pioneering contributions to politics and her tireless advocacy of under-served and marginalised communities”.

In other words, exactly the kind of person whom the Scottish Government would move heaven and earth to avoid having anywhere near the running of CalMac’s operations within our own “under-served and marginalised communities”.

Here, through a process that might generously be described as ‘dubious’, a Copenhagen-based businessman – utterly unknown to 99 per cent of the population served by CalMac – has been installed as chairman of our ferry company. The idea of a Joy MacPhail-type “person of stature” in that role would be resisted to the bitter end in Edinburgh.

The same applies throughout Scotland’s quango system which deliberately excludes people who have the status and knowledge to challenge the power of Ministers and civil servants. If that doesn’t change with whatever kind of ferry company emerges, then the British Columbia parallel will be of even less relevance.

Another feature of the British Columbia set-up that would have Edinburgh recoiling in horror is that there is actually a BC Ferries Annual General Meeting at which customers and other stakeholders are invited to attend, either in person or on-line, to hold the board to account. The most recent of these took place in August and the prospect of widespread criticism may have prompted Ms MacPhail’s appointment.

The idea of any Scottish quango board, far less CMAL or CalMac, being exposed to such an experience is unthinkable.

If there is any intention of building on the comparison with British Columbia, there would have to be a revolution in the concept of public accountability. Is there any appetite for that among the centralising control freaks in Edinburgh?

Ernst & Young’s description of the Norwegian model is worth placing on record, even if it has already been excluded – lock, stock and barrel by Ms Sturgeon’s veto on “debundling”. So do we have absolutely nothing to learn from them about the value of decentralisation?

Norway has a fleet of 200 ferries across 120 routes, carrying 44 million passengers each year. They are procured through separate contracts by either the national Norwegian Public Roads Administration or by local authorities, according to whether the service forms part of a national route.

Of the 120 routes, 16 are currently “national”. Four private sector operators dominate the sector and in recent years operators have been required to procure low carbon vessels as conditions of their contracts, which has reduced the fleet’s average age to 26 years.

Ernst & Young comment: “Delivery is comparatively decentralised, with a majority of contracts being awarded and managed by local authorities…These characteristics have contributed to a competitive market dynamic in which participants, incentivised by the threat of competition, are more responsive to Government demands. The procuring authorities have leveraged this influence by behaving as an ‘active procurer’ to steer the sector”.

The report continues: “This approach is complemented at a national level by clear strategic direction in relation to Government priorities such as green vessel replacement. Central Government has also facilitated the decentralisation of ferry services procurement by investing in the skill set of local authority staff”.

To reject all of this, because it invites the labels “privatisation” or “unbundling” seems to me completely irrational if there is any serious interest in finding the optimum, long-term approach to providing the west coast of Scotland with a ferry network which both attracts the necessary investment and a degree of local accountability – neither of which exist at present.

It seems incredible that Ernst & Young did not even look at whether it really does make sense to preserve the historical accident of there being a single company, headquartered at Gourock, which arises from the merger of MacBrayne and the Caledonian Steam Packet Company, serving the Clyde, more than half a century ago.

Any serious review would at least consider a regional approach in which, for example, Outer Hebrides services could be a distinct package, with considerable power – and jobs - devolved to an appropriate level. Surely that should be an option?

I write that as one who has a history of defending the principle of a single, publicly-owned ferry network at points where break-up and privatisation were driven by an ideological agenda. The main argument used at these times was that “unbundling” would undermine the resilience and flexibility of the fleet.

However, times change and minds should be open. These campaigns to “save CalMac” have been betrayed by the failure to invest in new vessels so that the average age of the fleet has more than doubled since 2007. Even before that, they were undermined by the CMAL/CalMac split which was supposedly driven by European Commission insistence.

I have never really believed that. Back in the 1990s, I went to Brussels and met the relevant official in charge of competition policy. He told me very clearly they had no interest in who ran a small ferry company off the west coast of Scotland but – and I quote exactly – “if someone keeps waving it under our nose, we eventually have to do something about it”.

That is what continued to happen post-devolution and it was not politicians who “kept waving it” but civil servants who regarded CalMac as a costly burden and persistently promoted a competitive model that separated ferry ownership from operations, the root of many of today’s problems. Eventually, Ministers were genuinely left with no choice.

Putting CMAL and CalMac back together again will probably happen and makes sense but even that will take time and, in itself, is far from enough because the damage now runs so deep that it cannot quickly be turned around.

It is a completely changed environment in which all options deserve consideration – including the dreaded prospect that communities which depend on services might know something about how they should be run.

Before a token “consultation” begins, it would certainly be useful to know the limitations of what exactly is being consulted about!

And if Joy MacPhail’s origins are as Scottish as her name suggests, she might even be able to help us.

She certainly sounds like a better bet than Ernst & Young.