As ferry users and the general public begin to understand exactly how the Clyde and Hebridean Ferry Services are delivered and who is responsible for what, there is growing concern and discontent with the lack of effective strategic management of Scotland’s maritime assets.
The key issues are:
- long term underinvestment in both the ferry fleet and in the ports and harbours they must use;
- inability to manage fleet development with an eye to overall operational and financial efficiency;
- failure to prioritise address to endemic issues of port-related service unreliability;
- poor project management.
Underlying these theatres of failure is a fundamental question of where responsibility for the situation principally lies – a matter we address below.
There have been powerful public statements made on the level of dissatsfaction with the current situation, notably by the Islay Ferry Group and, in a cogent and powerful argument recently published in The Herald, by Arran resident, Neil Arthur.
The most high profile expression of concern at the situation came a few days ago on 1st June 2015, when Argyll and Bute’s SNP MSP. Michael Russell lodged an interesting series of four written parliamentary questions on the issue.
The Russell parliamentary questions
QUESTION S4W-25867
To ask the Scottish Government whether it will ensure that Caledonian Maritime Assets Ltd does not proceed to final tender decision for two new ferries for the Clyde and Hebrides Ferry Services without agreement from the communities served by these routes [Arran and Uig Triangle] that the specifications are (a) suitable for existing piers and harbours and (b) capable of replication over a number of years. (NB Neither of these routes in Argyll and Bute)
For Argyll note: The vessels to which Mr Russell refers are the two new 100m vessels currently out to tender by CMAL:
- one to replace the 21 year old MV isle of Arran, the second boat on the Ardrossan-Brodick [Arran] route, alongside the 22 year old MV Caledonian Isles;
- and the other to replace the 30 year old MV Hebridean Isles. This is thought to be see the new vessell going to the Uig Triangle, freeing the 15 year old MV Hebrides, currently serving that route, to move to take over from MV Hebridean Isles as second boat alongside the 5 year old MV Finlaggan on the Islay service.
QUESTION S4W-25868
‘To ask the Scottish Government whether it will ask Caledonian Maritime Assets Ltd to reconsider the length specification for two new ferries for the Clyde and Hebrides Ferry Services, as this would restrict their usage on a number of routes, including those to Islay and Mull.’
For Argyll note: The vessels referred to above are the two 100m boats currently out to tender as noted above. Mr Russell’s question essentially stresses the imperative to consider in commissioning the maximum flexibility of deployment of each vessel to be added to the fleet. His proposition, if agreed by the Scottish Government, might also leave open hope for Mull and for Islay to secure the service of one of these new vessels for their routes.
QUESTION S4W-25869
To ask the Scottish Government whether it will ask Caledonian Maritime Assets Ltd to ensure that the final specification for two new ferries for the Clyde and Hebrides Ferry Services will allow their operation on all routes without modifications to piers or harbours.
For Argyll note: This is an intelligent question underlining the imperative for fleet flexibility to see as many of its vessels as possible capable of serving as many routes as possible – without, as has been the case in Stornoway and Ullapool, as previously in Islay, extensive and expensive physical modifications to ports and harbours. This is not a perspective that has greatly troubled the commissioning of new vessels for the fleet; nor seen the emergence of any strategic infrastructural plan for harbour and port facilities to enable this aim.
QUESTION S4W-25870
To ask the Scottish Government whether it will require Caledonian Maritime Assets Ltd to develop a standard specification for the procurement of two new ferries for the Clyde and Hebrides Ferry Services that could permit the building of further ferries for use on all existing services and capable of using all pier and harbour infrastructure without major modification.
For Argyll note: This question is again a prompt that indicates perceived failures by CMAL to pay adequate attention in commissioning to maximising the usability of its fleet units. This is a fundamental financial as well as operational management issue; and CMAL’s apparent inability to think this way underlines its lack of prioritising a commercial efficiency which is a perfectly comfortable fit with today’s public sector services; and is no more than an intelligent execution of its responsibilities.
Together these questions underline the fact that substantial amounts of public money have been used casually – wasted – without adequate thought given to how their deployment might deliver maximum flexibility and reliability to west coast ferry services; and maximum return of value on the investment of public money.
We evidence this judgment in three case studies further below.
Underinvestment in the ferry fleet
In eight years of government to date, since May 2007 and and on a non-party politically sensitive issue, the SNP Scottish Government, has commissioned only four boats for the west coast fleet, one of them only ordered last year and not yet built – all of them very challengeable decisions and all of them implicit in the concerns of Mr Russell’s four questions. For the future, a fourth hybrid vessel is to be commissioned at some point and tendering is under way for two medium sized vessels to replace the 32 year old MV Isle of Arran and the 30 year old MV Hebridean Isles.
In contrast, the previous devolved Scottish administrations – all of which were Labour-led coalitions with the Liberal Democrats, in a similar eight year period of government, commissioned six new ferries: MV Argyll, MV Bute, MV Coruisk, MV Loch Portain, MV Loch Shira and MV Finlaggan. These six commissions followed swiftly on the heels of two new boats commissioned by the Labour UK Government before devolution, and delivered in the first years of a devolved Scotland: MV Lochnevis and MV Hebrides.
That record of commissioning speaks for markedly different political attitudes to serious investment in the replacement and development of the Scottish west coast ferry fleet.
Underinvestment sees today an ageing fleet, frequently stricken by mechanical and technical failure, with service outages leaving communities with no lifeline service or with one inadequate to the needs of the moment. In the summer season and at times of major events, service outages have a direct cost to communities through lost business.
Strategically questionable investments in the ferry fleet and in ports and harbours
CMAL – like ferry service providers CFL [CalMac Ferries Limited], AFL [Argyll Ferries Limited, a subsidiary of CFL] and DML [David MacBrayne Limited, corporate parent of the previous two] – is wholly owned by the Scottish Government. but is incorporated to distance it from government, a matter to which we return below.
In their responsibility for capital investments made with public money, there is every reason why state-owned companies providing basic services should operate with commercial perspectives on return of value on investment and cost-benefit analysis.
The concerns implicit in Mr Russell’s questions above are that this has not been and is not the case. Boats have been designed and commissioned for specific routes and dispensed from the fleet, on occasion, as with MV Coruisk, as gifts to quieten restive natives.
CMAL’s record of spending on commissioning for fleet replacement is slender but indulgent, to say the least, commissioning tonnage with cutting edge technology which, in some important instances, is unreliable and far less efficient than it is trumpeted to be.
Commercial wisdom in public service provision is to stick with the tried and true because it is cheaper to buy and more reliable in operation.
There appears to be no assured budget for vessel replacement, seeing investment decisions taken on ad hoc occasions, on essentially whimsical political criteria; and not free of suspicion of being preferred options on account of relative publicity-generating potential rather than on the gruonds of cost and operational efficiency.
Port improvements have been piecemeal, sometimes of less utility to a route than they are a public relations flagship for CMAL – as with the current £18M adventure at the able harbour of Brodick in Arran.
Serious underlying problems which serially render a route unreliable in poor weather have been left unaddressed over years – as with Ardrossan, the mainland port for the Arran service into Brodick. Moreover in this case, the issue of the necessary reserve port for such service failures has also been left unaddressed. These specific failures are Transport Scotland’s direct responsibility and not CMAL’s.
Case Study 1: the hybrids
The new diesel/electric hybrid versions of the Loch Class vessels cost £12M a pop where a conventional version costs £4M. Two hybrids were commissioned and are ‘in service’- although this is an exaggerated description of the contribbution of the second one, MV Lochinvar. A third hybrid is currently half way through her fabrication.
Alf Baird, professor of maritime business at Edinburgh Napier University, maintains that the claimed environmental benefits the hybrid propulsion delivers [for that breathtaking additional 200% cost] are no more than marginal.
This is because these ferries will only be used in their electric mode for around 15% of the time, when they are manoeuvering to come alongside in port. For the remaining 85% of their time – the actual passage time – they will be pumping the usual carbon emissions into the atmosphere.
They are also unreliable. MV Hallaig [Skye-Raasay], the first into service, seems to function reasonably well; but the second and latest one, Lochinvar [Tarbert-Portvadie], seems to spend a great deal of time lying alongside in Tarbert while her predecessor continues to run the service.
The hybrids also needed unanticipated new crewing requirements., a matter where good project management would not have been taken by surprise.
The hybridvessels, according to Finance Secretary John Swinney in his address to the Scottish Parliament on 19th August 2014 on the Ferguson’s situation, were designed with the intention that their builder would then be in demand as the supplier of these radical craft. But there were no further orders. No one else wanted them. Their build cost was far too high for a commercial return on investment.
Fergusons then went belly up in August 2o14 – no better time for such misfortune, with indyref 1 on the last furlong to the line. The Scottish Government stepped in to support its major donor, Jim McColl of Clyde Blowers in bis timely takeover of the ailing yard – and ordered another hybrid with a commitment for a fourth.
This was a politically expedient decision, because the plans existed, had been built to recently, the familiarity was there – and what’s £12M [sorry, £24M] of public money for £8M’s worth of two ferries when you have Scotland nearly in your hands.
The fact that this order was not an operational decision is underlined by the minutes of the 31st March 2015 meeting of the CMAL Board. These show that there is no idea yet – with the vessel half built and the relevant tranche of money released, which route she will serve. The record is: ”AD stated that although CFL have stated a preference for Lochranza–Cloanig [sic] but this has not been confirmed. The Chair requested that TD take up this matter with M Dorchester. [Ed: AD is Andrew Duncan, Director of Vessels. TD is CMAL CEO Tom Docherty. M Dorchester is Martin Dorcheter, CEO of CalMac Ferries Limited [CFL].]
This case study underlines the modus operandi of building vessels for other than specific operational reasons and assigning them to routes later. It is this adhockery whose wisdom Michael Russell essentially questions in the tenour of his written parliamentary questions lodged at the start of this month.
Further illuminating aspects of the order of the third hybrid ferry are discussed below in the examination of where responsibility lies in the management of Scotland’s maritime assets.
Case Study 2: the commissioning of MV Loch Seaforth
Loch Seaforth was commissioned to replace two vessels serving the Stornoway-Ullapool route in the north west – the ferry, Isle of Lewis and the freighter, Muirneag.
On 11th February, Transport Minister Derek MacKay answered written parliamentary questions from Conservative MSP, Jamie McGrigor. His answers more widely in the public domain from 5th March, when the information in Mr Mackay’s answers was part of a major article For Argyll published [MV Loch Seaforth for Stornoway-Ullapool: a tale of public sector ‘management’.
In addition to Loch Seaforth's build cost of £42M, there were:
- infrastructure improvements at Ullapool and Stornoway to accommodate this larger and different vessel, costing the Scottish Government £9.52M towards the £12M Stornoway project; and £17.82M towards the £19.32M Ullapool project.’ This is a total of £27.44M from the public purse, due in direct consequence of commissioning the a vessel of the size and nature of the MV Loch Seaforth.
- unexpected costs suffered by CalMac Ferries Limited because of extended delays to the emergence of the Loch Seaforth from her German yard - estimated by the government at £1.4M for the charter of the freight boat, MV Clipper Ranger. Loch Seaforth is designed to carry passengers and freight and was supposed to take over that service from the MV Muirneag by October 2014. Her failure to do so meant an eight month charter of Clipper Ranger.
- unanticipated cost to CalMac of operating Loch Seaforth over the period between the completion of her sea trials and the time that the overrunning harbours works at Stornoway and Ullapool were finally ready for her to commence partial operations. The Transport Minister put the expected total cost of this unproductive period at £3.9 million.
This last forecast of £3.9m is unlikely to include the opportunity cost of the Loch Seaforth’s enforced limitation to a passenger-only service for four weeks with the Ullapool linkpan unready.
A new cost can now be added to this picture. The last published minutes of CMAL Board Meetings [31st March 2015] carry the following piece of information: ‘GB [Ed: Gillian Bruton, Finance Director] informed that revenues are £1,740k less than budget and reported a major element of this was due to delays in the Loch Seaforth.]
These incurred costs add a total of at least £34.48M to the Loch Seaforth’s £42m build cost. However £7.04M of this could be put down to the various unforeseen costs of the delay to the vessel’s emergence from the Flensburger yard.
It still has to be said that the competent project management one is entitled to expect of a state owned asset holder ought to have been able to avoid a healthy proportion of the overruns to both the build and the Stornoway and Ullapool port works, which were again CMAL’s responsibility..
These figures make it clear just how substantially expensive were the revisions had been necessary at the harbours of Stornoway and Ullapool – including a new linkspan at Ullapool in order to allow the Loch Seaforth to berth and disembark vehicles at both ports.
Her builder, Flensburger, described the Loch Seaforth as part of a demand for ‘sophisticated, tailor-made ro-ro tonnage’ – so here we go again in avoidance of the standardised, tried and tested; and off we go for the ‘sophisticate tailor-made.’ All easily done with other people’s money.
Flensburger also measured the height of the bar Loch Seaforth will have to clear, saying: ‘Serving this route with just one rather than two ships was the most economic solution. Doing so means however, that the new ferry has to be capable of meeting very high demands on a daily basis. Quite apart from quality, the ferry has to be as reliable as possible so that timetable delays and even breakdowns can be avoided.’
When you start looking at where Loch Seaforth is tailor-made, amongst other features you quickly find ‘a hybrid diesel electrical and diesel mechanical propulsion concept specially designed for CMAL’ [Ed: our emphasis]. This will have contributed to her £42M build cost. Flensburger says that: ‘…the Loch Seaforth system provides significantly increased efficiency and fuel consumption compared to pure diesel-electric propulsion ‘.
Flensburger also claim that all their ship designs ‘not only consume up to 30% less fuel than conventional vessels but also have particularly low emission levels’. In this case, it would be important to know whether the unique hybrid propulsion specially designed for and adding cost to Loch Seaforth improves substantially on the fuel and emissions savings that would have been made in a conventionally propelled ship from Flensburg. Was this matter considered?
This commissioning, given its overall cost of £76.5M in build, infrastructural development and costs consequent upon the variety of delays, raises a major question.
Was it the correct decision to supply all ferry and freight services on this route via a single vessel a little larger and a little faster than the Isle of Lewis?
The route is claimed still to need a supplementary services over two months in the summer season; and, although she is capable of 24 hour operation, Loch Seaforth is not going to do a third return service at this time. This now requiring the CMAL fleet to retain a second vessel for this purpose. At a meeting with the Arran Ferry Committee on 10th November 2014, John Sefton of CMAL was minuted as telling members that one of the two new vessels currently under tender ‘may also be used to provide a freight service for MV Loch Seaforth’.
The Stornoway Ullapool communities had preferred a service from two smaller vessels but were given the one-boat service in the greater wisdom of Edinburgh-based Transport Scotland desk-bound officials.
MV Finlaggan, commissioned for the Islay route, cost £24.5M. Would two Finlaggan-sized standard design vessels capable of using the former facilities at Stornoway and Ullapool have been a financially and operationally more efficient addition to the fleet in offering more flexibility for use on a variety of routes?
Case study 3: Brodick Harbour and Ardrossan Port
CMAL is currently engaged in an £18M upgrade to Brodick harbour in Arran – a sheltered and able harbour. The plan requires the building of a new pier, rock armour, demolition of the existing harbour, car parking and a terminal building described by disaffected islanders as looking like an airport departure lounge.
All of this will look nice and be a splendid advertisement for CMAL. But what has been and remains actually necessary is a solution to the port of Ardrossan where manoeuvering into the ferry terminal is generally difficult and impossible in stormy weather. This makes for recurring service cancellations and effective cancellations where the ferry out of Brodick is forced to turn back because it cannot berth at Ardrossan.
This service, with the Large to Cumbrae service and the Wemyss Bay to Rothesay service, sees the highest number of carryings in CalMac’s ferry services portfolio. Its reliability is imperative – but no address is even planned for the serious operational limitations of the port of Ardrossan.
Moreover, where the Wemyss Bay-Rothesay service has Gourock as its designated reserve port when circumstances make Wemyss Bay unusable, no reserve port has been made available for the Arran service when the boat cannot get in to Ardrossan.
Gourock is technically the designated reserve port for the Ardrossan end of the Ardrossan-Brodick service but CalMac Ferries Limited prefer not use it because Gourock:
- is the home port for the Argyll Ferries passenger ferry service to Dunoon;
- Clydelink’s passenger ferry service to Kilcreggan;
- and is the reserve port for the CalMac service between Wemyss Bay and Rothesay.
In February this year it was made known – by ferry operator CalMac – not by CMAL or Transport Scotland – that the port of Troon is being considered as a reserve port for the Ardrossan-Brodick ferry. Beyond that possibility, there has, as yet, been no further announcement.
Both of these issues are not CMAL’s but Transport Scotland’s direct responsibilities, although under the CHFS contract, they ‘devolve’ this responsibility to the operator of the moment.
The Port of Ardrossan is owned by Clydeport Limited; and the Port of Troon by ABP [Associated British Ports]. CMAL is the Scottish Governments holder of its port and harbour assets. It is not CMAL’s responsibility to negotiate with Clydeport and ABP for major infrastructural improvements in one port and for emergency access arrangements to another. Nor is that the responsibility of the ferry service operator, CalMac Ferries Limited.
Transport Scotland lets the contracts for the Clyde and Hebridean Ferry Services, with bidders submitting their proposed services and costs operating within the parameters set in the tender. The Arran service is Ardrossan to Brodick. Issues affecting the reliability of that service caused by the designated mainland port are solely Transport Scotland’s responsibility, in failure and in resolution.
This brings us to a central issue.
Where does the responsibility for failure lie?
This is the key question.
CMAL is owned by its sole shareholder, the Scottish Government. Its incorporation sets it legally apart from its government owner, on the ‘arms length’ principle; supposedly assuring the independence of its decisions – although its Board members are appointed by the government; and it has a government observer.
In practice, genuine independence from government in a wholly state owned company responsible for national capital assets and maritime infrastructural development is probably unachievable.
In the context of a highly controlling, politically strategic centralist government, as is the current Scottish Government, the ‘arms length’ notion is simply impossible ;and, in fact, there is plenty of evidence to indicate that it is a fiction. A simple example is that Transport Scotland’s Scottish Ferries Plan 2013-2022 contains the following statement: ‘We will explore what would be involved if we, through CMAL, were to take responsibility for ports currently owned by Local Authorities.’ [Ed: our emphases.]
CMAL would clearly have no choice in this matter were Transport Scotland to wish to go ahead. ‘Arms length’?
In this chaotic relationship, the failures of CMAL are indistinguishable from the failures of Transport Scotland, making the attribution of responsibility necessarily a shared one, with the location of the ultimate responsibility at Transport Scotland unarguable.
Thi,s department has the genuine power – with the advantage of structural room to throw its hands up in a ‘Not me, Guv’, routine. Add there are senior managers at CMAL who are either less able than they should be or are so thoroughly subservient to their covert masters that they mute their better judgment and do as they are told – a common phenomenon.
This is the worst of all scenarios.
Disguised lines of decision taking:
- have no protocols to guide them;
- leave all participants unsure as to the boundaries of their responsibilities;
- therefore make strong strategic planning impossible since it will always be subject to impromptu politically driven interventions;
- neuter accountability.
When Ferguson’s yard on the Clyde went into administration with no orders on the book in August 2014, a month before the independence referendum, the actions of the SNP Scottish government blew wide open the myth of an ‘arms-length’ relationship between the SNP Scottish Government and the maritime asset holding company it wholly owns – CMAL.
Although fleet replacement is CAl’s responsibility, the Scottish Government brokered a deal with Jim McColl, Clyde Blowers owner and a generous SNP donor, to take over the company; and announced in short order that it was commissioning two new hybrid ferries from the company.
As For Argyll reported on 10th October 2014, during the previous week there was an untendered £12 million contract awarded to Ferguson’s Ship yard at Port Glasgow to build a third small hybrid ferry running on diesel and electric power, to follow MV Hallaig, the class leader and MV Lochinvar, both built by Fergusons.
While this contract was widely welcomed for securing the jobs of the workforce at the yard; and for securing the continuation of shipbuilding and its skillsbase, we reported at that time that: ‘It is understood that the Scottish Government would not be surprised if the manner of the award of that contract were to be challenged; but the decision to award it was clearly taken to protect an indigenous skillsbase.’
No genuinely independent company – as CMAL is supposed to be – and run on public money, would properly rush a commission through in such a outré fashion.
There was also the occasion when a team of Transport Scotland officials visited Stornoway for a public ‘consultation’ on the future of the Stornoway-Ullapool ferry service. All the various options were discussed – a one-boat service, a two-boat service – a whatever-boat service; but the Transport Scotland officials so relentlessly steered the session to the attractions of a one-boat service that it was obvious the decision had already been taken [remarked on openly by a member of the audience].
This decision had not been formed by CMAL but by Transport Scotland – its supposedly arms-length sole shareholder. It was not influenced by the wishes of the community which had been strongly in favour of a two-boat service.
The minutes of the CMAL Board meeting of 31st March 2015 record the contribution of new Transport Minister, Derek Mackay to the meeting. In an interesting – and indicative item, they note that: ‘The Minister informed members that CMAL and Scottish Government have a shared agenda regarding innovation. The Minister stated there would be greater involvement around investment design and transport governance in the future. The Minister believed that going forward the fleet should be more flexible and adept.’ [Ed: our emphasis above, to indicate the reality of the Scottish Government's 'arms-length' involvement.]
In addition to this last issue, it is interesting that the new Transport Minister – who was not appointed until after the contract for the third hybrid was let to Ferguson’s, is as keen as Michael Russell to see serious attention paid to improving the flexibility of the fleet units.
Bring it in-house
The sole logic in taking maritime assets apparently out of the control of Transport Scotland / Scottish Government by vesting them in an apparently standalone but state-owned incorporated company, CMAL, is the deniability this gives government and government ministers.
There is every reason to put a stop to this expensive flak jacket for the government officials and ministers who clearly do pull the strings; and to integrate this area of responsibility within Transport Scotland, professionalising the officer class as necessary.
The current masked site of authority simply creates confusion and breeds ineffectuality and inefficiency.
