MORE SECRET REPORTS SURFACE.

HERE IS THE CHAPTER AND VERSE OF THE FULL WARNINGS ISSUED BY THE MEMBERS OF THE EXPERT FERRY GROUP WHICH WAS DISBANDED AT CMAL’S URGING AS THEY WERE EXPOSING THE VERY DUBIOUS PRACTICES INVOLVED IN THE FERRY CONTRACTS PROCESS. WHAT WERE THE SCOTTISH GOVERNMENT THINKING? First published on YFS in April this year.

This happens so often. Scratch the surface and a wealth of new evidence appears. Below I publish the report from the Independent members of Scottish Ministers Ferry Industry Advisory Group which was sent to the Transport Minister in January and to the new Transport Minister about a month ago. The organisation has now been dissolved. All other members were civil servants or representatives of public ferry organisations or public transport bodies. Thus far neither Roy Pederson or Professor Alf Baird have had the courtesy of a reply. You can decide for yourselves why it was thought advisable to dissolve the expert body providing some scrutiny over the shambolic actions involved in the ferry debacle at this time.

Roy Pedersen was formerly Head of Transport and Communities for Highlands & Islands Enterprise (HIE, and its predecessor HIDB) and the inventor of Road Equivalent Tariff (RET) for ferries. He is also a former SNP Councillor for Inverness and former Transport Convenor in Highland Council, an author, historian and transport consultant. Professor Alf Baird (pictured above) is an international expert and specialist in maritime matters and is well known to my readers.

11 January 2022

Graeme Dey MSP ​​​​​Copied to:Kate Forbes Msp.

Minister for Transport​​​​
The Scottish Government​​​​Cabinet Secretary for Finance 
St Andrew’s House​​​​​​and the Economy 
Regent Road
Edinburgh
EH1 3DG

Dear Minister

Ferry Industry Advisory Group – Independent Member Report

On 13 December we received an email attaching a circular letter from Mrs Frances Pacitti, Transport Scotland Director of Aviation, Maritime, Freight and Canals, advising us that we should consider that the Ferry Industry Advisory Group had been wound up. As the group, originally the Expert Ferry Group, was a ministerial creation, it is right that we, the independent members, report our concluding remarks directly and formally to the current minister. In so doing we stress that we seek wholeheartedly to support the Scottish Government in securing the best connectivity to aid the economic and social well-being of our island communities commensurate with economy of public funds.

In her letter, Mrs Pacitti mentioned that “we did not reach consensus on all matters”, which is a considerable understatement. In fact almost all of the evidence-based recommendations made or queries raised by us have been ignored by Transport Scotland and its ferry agencies. Had they been acted upon, many of the present difficulties facing the Scottish state funded ferry sector would have been avoided, with very significant savings of public funds that could have been redirected to more productive purposes. For these reasons we have for some time had serious doubts about the value of our continued involvement with the group. We understand too that Mr Kevin Hobbs, CEO of CMAL has been lobbying for some time for the abolition of the group, seemingly to escape scrutiny of the multiple and expensive blunders made by that organisation.

We give some examples below of our experience in EFG/FIAG and highlight some unanswered questions. We then suggest where the fundamental problem lies and how it can be rectified.

The FMEL Debacle

Perhaps the most ill-starred of such matters was when the concepts of Glen Sannox and 802 were presented to the group, we queried the justification for such large complex 1,000 passenger capacity vessels with lavish crew provision, each vessel also requiring expensively reconfigured terminals which, as it transpires, will collectively cost in excess of a third of a billion pounds. We repeatedly stated to FIAG, that the entire 31-ship CalMac fleet could be replaced for less, as outlined in the blog by Iain Lawson:

HOW TO END THE MADNESS – YOURS FOR SCOTLAND (wordpress.com)

The Glen Sannox misjudgement actually predated the formation of the Expert ferry Group when the former CEO of CMAL erroneously discounted the catamaran design proposed by us and Messrs Sea Transport Solutions (STS) by grossly understating the vessel’s deadweight (i.e. payload). Had this robust and proven design been adopted, the capital saving would have been in excess of £100 million and the operating cost around half that anticipated for Glen Sannox; an operating cost saving of £5m per annum implies a further cost saving well over £100m over the 25+ year ship lifetime. The question remains: Was the misstating of deadweight a deliberate attempt to mislead or a genuine mistake?

The 1,000 passenger capacity 802, earmarked for the Little Minch services, is a different matter. When asked in writing how many times more than 350 passengers were ever carried on the intended services, no answer from Transport Scotland was forthcoming. The actual answer is never. Why then specify such an excessive passenger capacity and as a consequence incur the far higher cost of a disproportionately large crew? Again no answer. When Mr Pedersen’s Little Minch Ferry Options paper was presented to the group. It demonstrated (as almost unanimously recommended by island residents, local authority and others) that commissioning two simpler 80 car, 350 passenger, 12-14 crew vessels to be focussed separately on each of Harris and North Uist, would not only provide for much more vehicular capacity, plus offer more regular, frequent schedules and attract more traffic and revenue, but would be done for less capital and operating cost while offering more resilience at time of breakdown. Why then was the construction of 802 and the hugely expensive and amenity damaging associated terminal works proceeded with?

The Catamaran Aversion

Without listing the many occasions on which our evidence was ignored, to the detriment of policy and practice, it is worth drawing your attention to the internationally acclaimed paper presented by Professor Baird to the October 2018 Interferry conference in Cancun, and an earlier version published by ferry journal Shippax, which demonstrated the overwhelming superiority, in terms of capital and operating cost, payload, fuel economy and operational reliability, of a medium-speed ROPAX catamaran, as exemplified by Pentalina, compared with a typical CMAL/CalMac monohul in the form of Finlaggan. While one would have expected those latter named bodies to have taken note and consider seriously how the demonstrable benefits of the catamaran model could be incorporated into future planning, instead they complained to the conference organisers about what they saw as an attack upon their reputation. This is not the first or last time CMAL and CalMac have sought to suppress evidence of more efficient industry practice and indeed to denigrate the bearers of such evidence. Whenever opportunities were presented to CMAL/CalMac to adopt catamaran solutions, these have been discounted on spurious grounds in favour of expensive inefficient monohulls as well as higher cost port infrastructure needed for monohulls (e.g. longer and deeper piers). How can this almost pathological anti-catamaran prejudice be overcome?Even in late 2021 the Minister appeared to be briefed to suggest on BBC Radio Scotland that the new 60m catamaran that Mull & Iona Ferry Community wanted the government to buy would not be MCA-compliant, yet without any evidence on this whatsoever, despite repeated requests by us to provide this evidence.

Productivity Shortcomings and Solutions

In August 2020, we set out a representation of concerns which sought to summarise the shortcomings of the then and current ferry policy and practice within the Transport Scotland/CMAL/David MacBrayne Group and to offer some pointers as to how this may be addressed. In essence it highlighted long-standing poor productivity because of inefficient over-manned vessels, overly complex labour-intensive terminals and concomitant high berthing charges, infrequent and inconvenient scheduling, etc. The net result is inordinately high and growing financial deficits coupled with inadequate service levels to the detriment of island economic and social well-being. We then summarised how these issues should be addressed by adoption of best practice as demonstrated by efficient Scottish and overseas operators. A copy of the document is appended.

When, after a couple of reminders, a telephone conference was eventually arranged to discuss the matter, Mrs Pacitti confirmed that there was little in the document with which she would disagree. This notwithstanding, no effective change in policy appears to have taken place. Why not?

Stakeholder Consultation

We noted that in her letter, Mrs Pacitti referred to the “improved and standardised” approach to community engagement for new vessel projects, as evidenced only by ‘positive feedback’from the Islay community on their new vessels. While it is undoubtedly true that many in Islay will welcome the appearance of (any) new vessels, not having themselves to contribute to their financing or operation, most other island communities are left with little to celebrate. Furthermore the consultation process left a number of serious unanswered questions, viz:

1. While the passenger capacity of the proposed new ferries has been reduced to a more realistic 350, compared to excessive 500 plus capacity of previous vessels, a crew compliment is proposed of no less than 27 including 11 catering – for a two hour crossing. As a comparison, it has been pointed out that other operators’ vessels of similar or greater capacity, and in some cases operating on longer and more exposed passages, typically have crew compliments of half that number. On asking of CMAL (copied to Transport Scotland) why this excessive crewing is planned, no answer has been forthcoming. Why has there been no response?

2. In presenting vessel options, it was plain that CMAL already had a favoured option such that an enigmatic catamaran design was discounted on grounds of its assumed 5 metre draft, high fuel consumption and inadequate crew accommodation. These characteristics are wholly at variance with all known norms for medium-speed catamaran designs. Pentland Ferries Alfred has a loaded draft of 2.8 metres, markedly superior fuel economy compared with any equivalent monohull and crew accommodation more than adequate for a delivery voyage half way round the world. Despite repeated requests, no general arrangements of the catamaran comparator have been provided such that it is impossible to ascertain whether or not fair comparison was made. Why has this concern not been addressed?

3. The creation of an “overland” system for Islay, whereby Jura would be used as a land-bridge with a short frequent ferry crossing between Lagg and Keills would require substantial road upgrades, but would be less costly in the long term while providing more capacity, greater frequency, shorter overall journey times, less cost to the user and significantly less CO2 emissions than the two large ferry option. Why has this option for improved connectivity been ignored?

The Roots of the Problem

As submitted in our representation of August 2020, we assumed Transport Scotland, as advisors to ministers, custodians of taxpayers’ funds and paymasters of CMAL, the David MacBrayne Group and NorthLink-Serco, to be in control of setting policies and procedures to ensure efficient and cost effective investment in and operation of those ferry services that it funds. That the productivity and performance of this state funded sector is so manifestly abysmal, demonstrates that these objectives are not being achieved. The findings of Holyrood’s RECC on ‘catastrophic failure’ regarding vessels 801/02 merely serves to confirm a longstanding legacy of dire decision making on vessel specification, procurement and related aspects.

While civil servants are well-meaning, as generalists and without expertise in maritime economics and other specialist skills, Transport Scotland officials appear to have become over reliant for guidance, on appointed individuals in CMAL and the DMG, each with their own vested interests and prescribed operating arrangements to protect, and in some cases with debatable previous experience or success in ferry operations.  

Such a reliance on CMAL in particular for advice, seems highly questionable. A recent press statement attributable to a spokesperson stated that CMAL “was the only organisation in the public sector in Scotland that possesses the professional and technical skill, expertise and experience to manage large vessel and harbour infrastructure” – surely a statement of breath-taking arrogance, bearing in mind the numerous costly blunders that have occurred under that organisation’s watch. In fact several Scottish local authorities, harbour authorities and others manage large marine infrastructure projects with success. Highland Council alone owns 100 piers and Harbours, from busy ports such as Kyle, Lochinver and Kinlochbervie, seven vehicle ferry terminals and a wide variety of other marine works. Shetland Islands Council has a long history of commissioning and operating a fleet of efficient ferries that provide a quality of service far in excess of any in the CHFS network. And of course private operators have proven able to commission large vessels in short timescales and operate them with exemplary efficiency, without the need for public funding. If cost-effective solutions are to be secured CMAL is not the model to embrace.

The David MacBrayne group is in the unenviable position of inheriting from previous managements a dysfunctional system – obsolescent vessels, unhelpful schedules and restrictive labour practices, exacerbated by current difficulties in mustering sufficient personnel to fill the bloated crew compliments of the large open-water vessels. There is next to no opportunity to innovate due to the above, the inflexibility of the CHFS contract and the requirement to operate CMAL vessels.

Which brings us to the matter of unreasonable trade union influence and in particular to the RMT. The right of trade unions to seek to protect members terms and conditions is of course a given. That right does not extend to demanding employment at public expense of more personnel than necessary to undertake a given function, especially in the light of seriouslabour shortages in other sectors such as haulage, hospitality, health and education. Nor should that right extend to overturning Government policy such as de-bundling certain ferry services, simply because trade unions perceive ministers as a “softer touch” than commercial managers. Previous instances of ministers and managers in the state funded sector caving in to unreasonable trade union demands has cost the Scottish public purse and island communities dear. Much more robust and skilled bargaining is required to balance the public good with realistic labour terms and conditions.

In her letter, Mrs Pacitti states that Transport Scotland “are now adopting a more targeted approach to stakeholder engagement, which continues to ensure that policy decisions are informed by the knowledge and experience of international ferry industry best practice”.From our experience as participants in the Expert Ferry Group/Ferry Industry Advisory Group, Transport Scotland officials focus, as regards ferries, has been disproportionately on the David MacBrayne Group/CalMac and CMAL, arguably collectively by far the least productive entities in terms of high cost for indifferent service quality and ever rising subsidies. This focus seems in practice to exclude the experience of the nine other year-round operators of scheduled vehicle ferry services in Scottish waters, a number of which exhibit the best practice on which it is claimed Transport Scotland seek to draw. A greater familiarity with best practice at home would be a good start. 

In summary: CalMac’s annual operating subsidy of some £150m is now two-thirds of total income, farebox income just one third. In 1991 the subsidy was £5.8m or 18% of turnover and the service then carried more passengers (6.4m). Notwithstanding the enormous sums of public money now devoted to DMG/CMAL, community dissatisfaction with ferry services has never been greater. In short, the Scottish state funded ferry sector is highly dysfunctional and requires radical overhaul. 

Solutions

Some pointers to a more effective, radical and focussed approach to the domestic and international ferry sector are set out in our paper A Maritime Policy for Scotland. The key changes required are institutional and practical.

The required institutional change is perhaps the more challenging as it necessitates a radical culture shift from a generalist to an expert administration to set policy and facilitate the provision of ferry services and other maritime requirements. The overriding aim of policy should be advancing trade and developing Scotland’s capacity to prosper. In undertaking its functions, it is essential that such an administration be independent of and not, as at present, dependent on CMAL/DMG who should be dealt with at arm’s length and in equal manner toother entities such as local authorities, private ferry operators, harbour authorities, etc. In fact the existence of CMAL as a separate vessel owning body is irregular, inefficient, unique to Scotland and should be disbanded.

In terms of practicalities, we have tabled several papers that illustrate how significant improvements can be made to the provision of ferry services at considerably less cost to the taxpayer – i.e. better for less. As pointers for the Islands Connectivity Plan, we recommend drawing on these papers and on Scandinavian practices and those of efficient domestic operators such as Western Ferries, Pentland Ferries and Shetland Islands Council. It may be added that certain island community ferry groups, in particular Mull and Arran, have both come forward with innovative proposals based on our repeated recommendations made within FIAG, all of which thus far have been rejected. These proposals may be summarised as: ‘Please Minister, buy us a catamaran ferry like Pentland Ferries boats?’ Despite this the answer from Holyrood Ministers is still ‘no’, and hence we are left with the continued failed strategy to procure ever more expensive traditional designs each requiring more expensive port infrastructure.

The high level of dissatisfaction felt by several communities with the ferry provision by CMAL/DMG has therefore prompted them to seek alternative and more cost-effective, responsive and self-contained arrangements, the logical outcome of which would be de-bundling these connections under separate tenders. The myth that the large CalMac fleet enables vessels to be replaced easily in the event of breakdown or other disruption is belied in practice in that CalMac performs worse in this regard in terms of service disruption and capacity constraints than other Scottish operators. Of course de-bundling is anathema to the RMT ‘monopoly’, but the Scottish Government must decide whether the huge and ever growing sums devoted to one dysfunctional ferry operator is for the benefit and largesse of CalMac’s personnel or the communities it purports to serve.

We urge that these serious matters be resolved quickly, not just for the well-being of our island communities, but to rebuild the damaged reputation of the Scottish Government. We would also caution against continuing with the current proven dysfunctional ferries policy approach, failed management and culture which can only lead to further and potentially more serious problems, as now reported in the press virtually daily. Scotland’s predicament now seems very reminiscent of Italian state-owned Tirrenia ferry company whose enormous and out of control subsidies were eventually ended by Rome, leaving an obsolete and mostly unrepairable ferry fleet laid-up in the Port of Civitavecchia, and with island communities left in the lurch. All so reminiscent of the unfortunate yet inevitable direction of travel for state ferries in Scotland, which is entirely due to an unwillingness to change.

With the growing anger among communities about their inadequate ferry provision, we have been approached on a number of occasions to give advice. In our response, besides drawing on our own expertise in maritime best practice and intimate knowledge of island socio-economic realties, we have been fortunate to have access to a range of high-quality expertise in naval architecture, fleet operation, seafaring, ship-broking, legal structures, community development, etc. This combined expertise, we will be more than happy to contribute to assist the Scottish Government in resolving the vexed issue of Scotland’s state funded ferries.

Conclusion

The Expert Ferry Group was established originally by Keith Brown MSP in order to avoidthe need for Ministers to have to come to the Holyrood chamber and repeatedly make apologies for the costly mistakes of officials responsible for ferries policy and practice. In this it failed, primarily because the many officials involved consistently refused to take the advice of the only two independent experts, us.

We have been approached by various media organisations and, as regards the Ferry Industry Advisory Board, we have so far avoided commenting. Cost-effective solutions to the current problems are available, we would welcome the opportunity to discuss these with you at an early opportunity.

Yours for Scotland

Roy Pedersen​​​​

Alfred Baird

MY COMMENTS

The more I learn about this the more angry I get. The islanders are up in arms as these vital lifeline ferry services are crucial to their economies. Tourism revenue is severely depleted because of the restricted timetables and the regular breakdowns and other complications.

Huge sums of taxpayers money is being squandered and decisions are being made by a quango CMAL that does not have a single island representative on its board. To be blunt they have not got a clue about how to run efficient ferry services and it is CMAL that should be being dissolved, not the ferry expert group.

Ministers are being played as fools, by fools, and we are all paying the price. This is the time for resignations and if not, sackings. This is a level of incredible incompetence and mismanagement on a grand scale. Like so many other things, this will not go away. I intend to make sure of that.

I am, as always

YOURS FOR SCOTLAND

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