Warning of 'catastrophic' CalMac privatisation after SNP ministers told to justify ferry contract decision

CalMac’s main union has raised fears the Scottish Government ferry operator could be split up after competition watchdogs recommended a route-by-route assessment of "whether any level of service could be commercially provided".

The non-binding Competition and Markets Authority (CMA) advice was sought by ministers as part of their plans to award a new ten-year contract to the firm to continue running its west coast network without a competition.

CalMac’s newest ferry Glen Sannox is due to enter service in January | John Devlin/The Scotsman

It is expected to involve total public subsidies of £3.7 billion.

The contract was due to have started in October, but Transport Secretary Fiona Hyslop announced a one-year delay in May while “a number of complex issues” were considered before a final decision was taken over whether to go ahead with a direct award to CalMac.

The company is the biggest ferry operator within the UK and has argued that its network enables vessels to be swapped between routes during disruption such as breakdowns.

Before the UK left the European Union, ministers were permitted to continue subsidising CalMac under competition laws by ownership of its vessels being transferred to a separate Scottish Government firm, Caledonian Maritime Assets (Cmal).

However, the CMA report said because of the size of the subsidy, Transport Scotland should “better demonstrate” why it had decided against “different models of delivery across some/all routes”.

It asked “why an open competitive tender would not allow the policy objective to be met with a lower level of subsidy” and said that could include “market testing with potential operators” who might bid for the contract.

The report also said Transport Scotland “should demonstrate that an open tender process for smaller bundles or individual routes would not have been potentially more attractive to private operators”.

The CMA asked whether CalMac’s ferry leasing and maintenance costs, and the cost of buying new vessels by Cmal, were the “minimum necessary”. However, the Rail, Maritime and Transport union expressed alarm at the potential impact of a private operator taking over ferry routes.

It said the CMA had been created by the Conservatives “to frustrate public ownership and the direct award of public service contracts”.

General secretary Mick Lynch said: “What the report really calls for is the unbundling of the Clyde and Hebrides ferry contract and selling profitable routes to private operators, which is completely counter to the interests of CalMac communities and workers, not to mention the SNP Government’s long established policy of a single contract, which should be directly awarded to CalMac Ferries for the long term.

“No number of ferry procurement problems can mask the fact that privatisation of the contract would be catastrophic for the long-term stability of lifeline ferry services and jobs in the west of Scotland.”

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But the Scottish Conservatives said value for money was crucial.

Transport spokesperson Sue Webber said: “Scotland’s ferry network has been run into the ground under the SNP. Islanders would assume that due diligence was carried out by Transport Scotland, and this report suggests otherwise.

“Taxpayers deserve good value for money and islanders need a reliable ferry service. If this award is just handed to CalMac, without proper due diligence, it will lead to perpetual disappointment for islanders, who will potentially be subjected to yet more cancellations and delays.”

A Transport Scotland spokesperson said: “We welcome the the CMA’s conclusion that our subsidy assessment clearly describes and evidences our policy objective of ensuring the continued provision of lifeline ferry services to island and peninsula communities and our equity objectives of tackling the inequalities faced by these communities.

“We will consider carefully the improvements to the assessment suggested by the CMA. Minsters have been clear the network will continue to be operated as a whole network, and this remains the intent.”