EU orders Executive to put 'lifeline' routes out to tender

• European Commission orders Executive to put ferry services out to tender

• CalMac currently receives a public subsidy of 26 million each year

• Executive must now persuade parliament to back tendering plans

Key quote

"The minister and the commission vice-president had a very clear discussion. The vice-president was sympathetic to the situation and was aware of the specific circumstances of the west of Scotland." - EXECUTIVE SPOKESPERSON

Story in full MINISTERS were ordered by the European Commission yesterday to put out to tender the Caledonian MacBrayne ferry services to the Hebrides.

Tavish Scott, Holyrood's new transport minister, had hoped to persuade the commission to make an exception of the "lifeline" services to the islands and allow them to remain as a single block run by CalMac - a state-subsidised company.

But Jacques Barrot, the Commission's vice-president, made it clear that Europe expects the Scottish Executive to put the routes out to tender, or risk breaching European law.

That decision represents a major setback for the Executive and puts Mr Scott and his fellow ministers in a difficult position. They are now caught in a battle between the Scottish Parliament, which does not want the routes put out to tender, and the commission, which is adamant that EU rules will be broken if the routes are not opened up to competition.

If the Executive fails to persuade the parliament to back the tendering plans, it would risk a major and damaging battle with the commission and could be forced to tender the routes individually.

Ministers have been given the concession from the EU that they can tender the Hebridean routes as one block, to prevent companies cherry-picking the profitable routes and abandoning the loss-making ones.

But they may lose this concession if they continue to fight the EU, and the commission may order them to tender the routes individually - which could signal the start of serious problems for the islands.

It is understood that Mr Scott told Mr Barrot that he would not be able to give a decision on the tendering until he had consulted with the parliament and, because of the summer recess, this will not happen until September.

This gives the Executive six weeks to decide what to do and to start persuading rebel Labour MSPs that there is no option but to tender the routes.

A spokeswoman for the Executive said: "The minister and the commission vice-president had a very clear discussion. The vice-president was sympathetic to the situation and was aware of the specific circumstances of the west of Scotland.

"However, the vice-president was absolutely clear that changes to existing ferry arrangements had to be put in place urgently to make the situation compatible with Community law, which requires public service contracts be awarded through open, fair and non-discriminatory procedures, and that he saw no alternative to tendering."

She added: "The minister will reflect on this discussion and report back to the Scottish Parliament in September on how the Executive intends to proceed."

The CalMac contract for the Hebridean ferry service has been a point of contention between the European Commission and the Executive for several years, because of the huge public subsidy of 26 million it receives each year to operate a service with no competition.

CalMac runs ferries to 22 islands and four peninsulas with a fleet of 31 vessels on 26 routes and carries about five million passengers a year.

It became the subject of only the second defeat for the Executive last December, when 14 Labour MSPs rebelled and defeated an Executive motion which would have put the islands routes out to tender as one block.

Parliament decided in that vote to ask Europe to re-consider its decision on the tendering process.

Mr Scott's visit to Brussels yesterday was his formal attempt to persuade the commission to change its mind.

It is now up to parliament to decide in September how to proceed, but Jack McConnell, the First Minister, will be hoping he can persuade some of the rebel Labour MSPs to vote with the Executive this time round.

Angus MacNeil, the SNP MP for the Western Isles, said the EC would have listened to a "real minister" representing Scotland as a nation state.

He said: "The result of this latest Liberal failure will be higher costs on these lifeline island routes. For my constituents, sympathy isn't enough."