CalMac wins controversial £43m islands ferries tender

CALEDONIAN MacBrayne, the state-owned ferry company, was yesterday awarded a six-year contract to run lifeline services, ending a controversial tendering process in which it ended up as the only bidder.

CalMac retained the 26 routes it operates around the Clyde and Hebrides with a subsidy of £43 million in the first year, a rise on last year's £31 million.

The new contract, to start from 1 October, will include improvements to services for a number of islands, but the Scottish Government rejected the case for a new route between Mallaig and Lochboisdale in South Uist due to high costs.

There is also no mention of a Sunday service between Ullapool and Stornoway, although a renewed campaign for a seven-day crossing will be discussed by the CalMac board next week. The tendering process, which cost taxpayers more than £15 million, had been strongly criticised. CalMac's routes had to be offered to tender to comply with EU competition regulations, first revealed in 1999.

Initially, 17 companies expressed interest, but only two submitted bids. Western Ferries and V Ships later withdrew, leaving CalMac's alone in the field.

However, the firm had to split into separate vessel-owning and service-providing companies to comply with the rules on the tendering process.

Last year, the then-Scottish Executive said the tendering exercise had cost at least £15.3 million. Of this, £11 million was due to a one-off clawback of tax relief by the Treasury.

Tax relief was previously claimed by CalMac as it both owned and operated its ferries, and related to its past investment in new vessels, but this was no longer applicable.

When in opposition, the SNP opposed the tender exercise, calling it an "expensive exercise in futility from a supine [Scottish] Executive".

Stewart Stevenson, the transport minister, said yesterday: "I am aware of the strong feelings around the need for this tender, but completing the process was the quickest way to protect these vital services."

But Alex Johnstone, the Conservatives' transport spokesman, said: "This sorry episode disgraces the previous Liberal Democrat and Labour ministers, who presided over years of chaos and delay since the tendering of these routes was announced.

"Vast sums of taxpayers' money have been squandered to restore the status quo."

Yesterday's announcement leaves just one route, Gourock-Dunoon, outstanding. Last year, it was the first service to be put up for grabs, but neither CalMac, which received a subsidy of £2.5 million to run the route, nor Western Ferries, which runs a rival service, put in bids.

Gordon Ross, managing director of Western Ferries, said: "Having seen the closing of the tender for the main bundle of services, hopefully this will mean the Gourock-Dunoon situation becoming a priority for the Scottish Government as it is now an anomaly."

The new contract includes additional sailings to Gigha, Arran, Coll, Tiree and Mull in winter and an improved summer service to Islay. It also includes the introduction of a performance regime, giving CalMac an incentive to deliver the services to the standard set in the contract.

However, it does not include a service between Mallaig and Lochboisdale in South Uist which had been called for.

A Scottish Government spokesman said that the route was "unaffordable" as it would require a new ferry costing £25 million and running costs of £4 million a year.

The spokesman added that the increased subsidy was due to inflation, increases in pension contributions for staff, berthing dues and running costs of two new vessels.

SYNONYMOUS WITH SHIPPING

THE MacBrayne name has been synonymous with shipping services to the islands and west coast for more than 150 years.

In 1851 a steamer firm, David Hutcheson & Co, was set up in partnership with David MacBrayne and later renamed after him. CalMac was an amalgamation of MacBraynes and the Caledonian Steam Packet Co in the 1960s.

Today, Caledonian Maritime Assets, which owns 31 ferries and 30 terminals, leases vessels and piers to CalMac Ferries.

CalMac Ferries carries more than five million passengers a year.