Quantcast
Channel: For Argyll » dismissive
Viewing all articles
Browse latest Browse all 3

Tutorial from McGrigor as parliamentary questions see Transport Minister wriggling on Gourock-Dunoon ferry

0
0

Highlands and Islands MSP, Jamie McGrigor, yesterday got answers to written parliamentary questions he had put to Transport Minister, Keith Brown, related to the Gourock-Dunoon passenger ferry service.

Mr Brown was clearly in trouble in answering them without giving majorhostages to fortune and, in some cases, was tellingly forced to swerve the question.

This was very different from the recent experience of watching how easily the Transport Minister, Keith Brown, dismissively cruised over a set of questions submitted by Highlands and Islands MSP, David Stewart, scripted for him from within the Dunoon-Gourock Ferry Action Grop – but unfortunately not scrutinised properly in advance by the MSP. Several of these asked for information long in the public domain, with Mr Brown simply referring Mr Stewart to where he would find the answer.

This was not the case in his responses yesterday to McGrigor.

Making the MV Argyll Flyer lead vessel on the route

The government has recently announced that the operator on the route, the state owned Argyll Ferries Limited, is making MV Argyll Flyer the lead vessel on the route in place of her fleet sister, MV Ali Cat. The reason for this is to put the marginally more reliable vessel in the lead position in the sailing schedule to deliver the most crucial daily services.

Jamie McGrigor’s question: ‘To ask the Scottish Government , further to the answer to question S4W-20838 by Keith Brown on 9 May 2014, whether it will provide a breakdown of the costs associated with making the MV Argyll Flyer the lead vessel.’

Keith Brown’s response: ‘The MV Argyll Flyer was switched to ‘lead’ vessel on the Gourock-Dunoon route to improve reliability, following a formal request to Transport Scotland from local ferry users. [Ed: AKA the Dunoon-Gourock Ferry Action Group]

‘This switch required changes to the established rosters and shift patterns. These, along with associated increased maintenance and repair costs, increased berthing dues and increased overheads and operators return, have generated additional operating costs.

‘The breakdown of these costs is commercially confidential.’

Commentary: This answers reveals that the operators made a better return with Flyer in the lead role. Good news. However, the insistence on keeping the crews with the vessels and engaging in cost sensitive changes to ‘established rosters and shift patterns’ and thereby generating ‘additional operating costs’, is utterly avoidable.

Either crew must be capable of operating either vessel. Conversely, either vessel must be capable of being operated by either crew. If ease of movement of crew between the two vessels in the fleet is not achievable, there is another set of questions to be asked.

The straightforward action where there are costs associated in changing crew rosters, is to swop the crews, putting the crew used to the lead role schedule on the Flyer and vice versa.

Current contract cost in relation to all bids initially tendered

The last set of answers Jamie McGrigor extracted from the Transport Minister revealed that the fall in anticipated passenger numbers had reached a level where the operator was legally entitled to ask for a revision of the subsidy, since operating costs in the bids were calculated on the anticipated carryings.

This subsidy upgrading was of a substantial order – £786,000 for each of the remaining three years of the contract, adding £2,358,000 to the original contract cost.

Jamie McGrigor’s question: ‘To ask the Scottish Government , further to the answer to question S4W-20838 by Keith Brown on 9 May 2014, whether, by adding historic grant payments made to Argyll Ferries and the projected costs to June 2017, the Argyll Ferries’ service is now more expensive than the other bids received during the tender process.’

Keith Brown’s response: ‘The costs of the other bids received in 2011 for the Gourock-Dunoon ferry service contract are commercially confidential to those bidders.’

Commentary: While the specific costs tendered by specific competing bidders are commercially confidential, this does not preclude the minister from essentially answering the question. He could have said ‘Yes’ or No’. He could have said ‘In some cases’ or ‘In one case’. Such answers could in no way have infringed commercial confidentiality but would have clarified the issue.

For such an indication to be properly understood, we would need to know – and do not, whether all bidders were given by the Scottish Government a set of anticipated carryings on which to base their subsidy requirements and their bid; or whether each competing bidder based their bid on potential carryings calculated by themselves and possibly related to market expansion in response to proposals in their bid.

In the first instance, if the Scottish Government provided a common set of anticipated carrying figures for all bidders to use in their bid price calculations, then the responsibility for over-optimistic carryings is there own.

If, however, each bidder produced their own anticipated carrying figures in association with any market development proposals they were making, then, again with no need to invoke commercial confidentiality, the Minister could say whether the Argyll Ferries Limited bid was more or less optimistic than its competitors.

In this ‘fast escape’ response, the Transport Minister is on a face saving exercise; and while one can sympathise with the wish to avoid embarrassment, the questioner has the legal right to the most helpful possible answer.

Issues around state ownership of Argyll Ferries Limited

Argyll Ferries Limited is a state owned company, one within the parent company, Davd MacBrayne Limited, which is state owned, with Scottish Ministers as its single shareholder. This corporate identity underpins the following question and answer.

Jamie McGrigor’s question: ‘To ask the Scottish Government, further to the answers to questions S4W-20838 and S4W-21231 by Keith Brown on 9 May and 2 June 2014 respectively, for what reason the additional costs of providing Argyll Ferries’ service have not been paid from the reserves of the parent company, David MacBrayne Limited. ‘

Keith Brown’s response: ‘The changes made to the services provided by Argyll Ferries Ltd (AFL) have all been made under the provisions of AFL’s contract with the Scottish Ministers and are therefore eligible for increased grant funding under the terms of that contract.’

Commentary: This is a straightforward answer on the correct procedure followed.

Limits and freedoms of action of a state owned company

This is an interesting one. The state owned ferry companies are in a very difficult position, Their existence as partially distinct from government, allows the government to ensure the delivery of lifeline services across the network – because it can ensure that there will always be an operator willing to take on unprofitable routes to low population destinations. The state will pay for them.

However, once you establish a company with an independent identity and a pseudo commercial orientation, is there a line to be drawn on what it can do and what it cannot do – in relation to its reason for existence?

This issue came to attention with the recent entrepreneurial bid from CalMac to run a ferry service for the Swedish Government for the Isle of Gotland. CalMac then said that it had also tendered to run a Thames ferry service for London.

While the company was not successful in either bid, it opened up this issue of potential boundaries of its legitimate activity. Moreover, because the company could not have undertaken such enterprises without the knowledge and permission of its single shareholder, the Scottish Government,  it also raised a very different question.

Has the Scottish Government permitted such excursions to allow the management of David MacBraye Limited to establish whether CalMac could have an independent commercial existence, in which case it might become the subject of a management buy out? This would then leave the Scottish Governmenr free from political opposition to any move to contract the major west coast Clyde and Hebridean ferry services to a privateer – such as Serco, to whom they controversially awarded the Northern Isles ferry services, last time out.

Jamie McGrigor’s question: ‘To ask the Scottish Government, further to the answer to question S4W-21231 by Keith Brown on 2 June 2014, whether the quantum of dividend that could have been repaid to the Scottish Government has been diminished by the costs associated with the Gotland tender.’

Keith Brown’s response: ‘As with any commercial company, the board of David MacBrayne Ltd [DML] is responsible for decisions on how profits are spent: on investments in the company, on new business ventures and on returns to the shareholder. It is not therefore possible to conclude that the costs of the Gotland tender have reduced the dividends paid to the Scottish Ministers.’

Commentary:Firstly, to say ‘It is not therefore possible to conclude that the costs of the Gotland tender have reduced the dividends paid to the Scottish Ministers’ is a nonsense.

Then – and more significantly perhaps, David MacBrayne is not ‘any commercial company’.

It is wholly owned by the Scottish Government but with an arms length management in which the government has representation. In a government with pronounced totalitarian tendencies, it would be naive to imagine that CalMac or its corporate parent, David MacBraye Limited, have any latitude to move without state consent, however informally consent or refusal may be delivered.

We are aware of the direct operation of such controls in two cases: one with the Calmac subsidiary that ran the service from Ballycastle to Rathlin island for the Northern Ireland Government; and one with the MacBrayne subsidiary, NorthLink Ferries Limited that ran the Northern Isles ferry services.

In each of these cases the companies concerned lost the contracts in the renewal process, each in legally questionable circumstances.

In each case the companies concerned strongly wished to challenge the decisions in legal action.

In each case their single shareholder forbade such action.

In the case of the Northern Isles ferry services contract the company would have been challenging its own owner, the Scottish Government, through Transport Scotland, which would have been an interesting spectator sport. Challenging the Northern Ireland government wold have been a different matter for the company but perhaps also embarrassing for the Scottish Government.

In each case, any company that could be described as ‘any commercial company’ would have gone to Judicial Review. David MacBrayne could not do so, literally crippled by the instructions from the state, its owner.

Note: For the avoidance of doubt, our sources for the knowledge of the two cases above of the Scottish Government’s proscription of legal action came, in the Rathlin ferry instance, from within the Northern Ireland government; and in the Northlink Ferries instance, from one of the destination authorities served.


Viewing all articles
Browse latest Browse all 3

Latest Images

Trending Articles





Latest Images