The ferry fiasco needs a judge-led inquiry

One of the most experienced figures in the Scottish maritime industries, writing under a nom de plume for professional reasons, analyses the “deep malaise” which has created by ferries crisis and calls for a Judge-led inquiry….

Friday, 6th August 2021, 10:43 am
There is no evidence that progress on the construction of two delayed ships at Ferguson Marine has not improved since the shipyard came into the ownership of the Scottish Government

This is about the chaotic situation and political and managerial incompetence which has developed over many years in the ferry services to the Western Isles of Scotland, resulting in their non-performance.

These issues now need to be highlighted in order that the users of the ferry service and the general public can further understand the nature of the problem, the significance of it and what steps should be taken to resolve it.

It is critical to understand that unless urgent remedial action is taken, island communities are going to have to live with the same issues for years to come. The malaise runs so deep, and the governance structure is so dysfunctional, that money alone is not going to sort it.

A line needs to be drawn which is why I believe there should be a Judge-led inquiry into how we have got to where we are and the immediate replacement of existing boards with a single group made up exclusively of people with shipping knowledge and experience.

Much has been written about the two ships presently under construction in the Ferguson Marine shipyard in Port Glasgow. Much of what has been written is technical in nature and offers complex figures which are not easy to understand.

It might be useful to simplify the state of play:

1) The two ships are the wrong vessels.

2) They are of the wrong design.

3) They were awarded to the wrong shipyard.

4) They were conceived at the wrong time.

5) They were awarded at the wrong price.

6) They may never operate successfully.

It is important that the problems associated with these vessels are well understood but we also need to examine in greater depth the reasons we have arrived at the chaos in Ferguson Marine – the monstrous overrun in delivery times, the monstrous overrun in costs, loans to the shipyard and the eventual nationalisation, which has not had any effect on construction progress.

We need to look at the lack of strategy and planning which are failing the ferry service and also the lack of accountability of those responsible for the failures in the wider context.

The present structure looks like this.

*The First Minister.

*The Scottish Minister(s) responsible.

* Transport Scotland Ferries Division

* David MacBrayne.

* Caledonian MacBrayne Ferries (CalMac).

* Caledonian Maritime Assets Ltd (CMAL).

* Agencies and contractors to the business.

These ministers and quangos are mutually responsible for strategy and planning, policy, funding, ownership, procurement and operation of the ferries.

This complicated arrangement allows for lack of certainty, lack of accountability, vested interest and political control. It does not bode well for acceptance of failure or urgent recovery action.

Looking at the relationship and responsibilities between CMAL, as the asset owner, and CalMac, as the vessel operator, it would be remarkable if both these bodies were in agreement about important issues such as what ships are needed and best suited for each service, timing of vessel replacement and other operational matters.

Clearly, that ideal relationship is the exact opposite of the reality. Accordingly, there has been a hugely negative impact on overall performance due to major decisions not being in alignment.

I believe it is essential to consider the following “basics”. In the simplest terms, a shipowner is recognised as a shipowner because:

1) It owns vessels.

2) It finances vessels.

3) It procures vessels.

4) It manages vessels.

5) It crews vessels.

6) It carries passengers.

7) It carries freight.

That is what a shipowner does.

The risks and rewards of being a shipowner are

1) Reputational.

2) Commercial

3) Financial.

4) Operational.

5) Technical.

6) Environmental.

The present oversight structure of the ferry service has been responsible for blasting a hole through the first five risks, with the disaster we now see as the result.

It becomes clear on reviewing all of the Board members in all of the aforesaid quangos that there is not one individual in any of these responsible groups with any shipowner experience or effective ferry operation experience. Nor is there a single ex-mariner with a seafaring background on any of these Boards. In particular, it is extraordinary that no mariner or ship manager with seafaring experience is represented on the CalMac board.

Since there are accountants, lawyers and non-executive directors aplenty in these organisations, it is little wonder that politics takes greater precedence in this structure and environment.

Below are some, but not all of, the issues today:

The Ferries Plan was drafted in 2011, ten years ago, and is now no longer applicable.

- The belief that the ferries on these services can or should last for 25 or 30 years is flawed since it does not take unreliability into account.

- The fleet replacement plan was neither sensible nor deliverable.

- The procurement system in its present format is not viable.

- The belief that the Road Equivalent Tariff could be implemented without a significant impact on volume was wrong.

- The terms and conditions for seafarers are unrealistic.

- The two replacement vessels remain incomplete and in jeopardy.

It is also relevant that any competition to the existing services is frowned on, allowing the present subsidised business to continue at a level below any normal measure of competence.

The conclusion must be that the present ferry service is a failed business, which needs to be dealt with accordingly.

It is failed business because it does not meet any of the criteria outlined in the various documents produced by the oversight organisations in respect of performance and ambition, and therefore is not fit for purpose in its present form.

Here, as an example, is the Caledonian MacBrayne Mission Statement:

“Caledonian MacBrayne will provide lifeline ferry services which are safe, reliable and affordable to the Clyde and Hebridean Islands. CalMac will operate a high-quality service, focusing on customers’ needs and comfort. CalMac is committed to the highest management standards and aims to be acknowledged as the leading ferry operating company in the UK, providing value for money, supporting the economy, protecting the environment and providing a stimulating workplace for all its employees. “

Which begs the question: what do the people of the Western Isles think about this? Whoever is responsible and for whatever reasons, it is clear that Caledonian MacBrayne is incapable of fulfilling its own Mission Statement.

The two hulls in Port Glasgow and the shambolic nature of the Ferguson Marine process in commercial and technical terms outline a failed process from beginning to now, with no evidence of any control of the build or finance required to complete a project which was dubious from the start.

The lack of strategy and planning for fleet replacement is a shocking example of the failure to take the opportunity to deliver a modern fleet which is not only fit for purpose but which aligns in reality with all the management-speak produced by the Scottish Government and its agencies.

The only organisation which has come close to auditing this mess is Audit Scotland and, though it has done so in part, it has failed.

This is what should happen now.

1) We need a Judge-led inquiry into all of the above, commencing immediately.

2) We need to strip out all of the boards from the quangos and set up a single purpose group with a clear remit to create a worthwhile strategy and radical plan to recover the vision, which is a lifeline service, and deliver it.

3) We need to ensure that those responsible, whoever they may be, are fully accountable.

4) Following a review of the existing fleet, especially of the larger ships, we need to create a vessel renewal plan and implement it, considering all aspects including the long-term funding required.

5) We need to quickly arrive at a sensible procurement system and have the ships constructed in the most timely and cost-effective manner.

6) We need to engage all resources within the existing management group to ensure that the existing ships can operate in the most efficient way until newbuilds can be delivered. If the existing management in CalMac cannot manage the present situation adequately, then they must be reviewed. The recent run of breakdowns has not suddenly materialised but has been anticipated for years without being adequately managed or planned for.

7) The single-purpose group of ferry and shipping professionals must carry out an urgent review of the ongoing catastrophe in Ferguson Marine and identify what aspects of the project are valid in commercial and technical terms, both with the shipyard and the two incomplete ships.

8) The Scottish Government must accept responsibility for the failure of the ferry service and step back. It must now allow shipping professionals to manage the recovery.

Without addressing the professionalism and skill sets of the people involved in creating this debacle as well as the structures of decision-making and accountability, we are going nowhere.