To ask the Secretary of State for Scotland what representations he has received regarding the Government subvention on the ferry services to Orkney and Shetland in 1991–92.

I discussed the issue of the subvention to ferry services with representatives of Orkney and Shetland islands councils on 25 January and my right hon. Friend and I continue to receive written representations from organisations and individuals.

The Minister will know that he and the Secretary of State have acknowledged that freight charge increases of more than 20 per cent. are bound to have a damaging impact on the local economy and that there may well be a need in the longer term to review the operation of the current subvention. Will he accept that we have an immediate problem and that P and 0 has not come up with anything in response to requests to review its projections for the year? If the economies of the islands are not to be damaged in coming months, help is needed, and that help can come only from the department. What is the Minister prepared to do about that?

We have increased the subsidy by 17·5 per cent. and we have offered to review the situation in the summer to make certain that if P and O's estimates are wrong—we believe that they may well be —we can make some form of arrangement to ensure that the full subsidy is paid—in line with the hon. Gentleman's request.

As for a different type of subsidy, I made it clear to the islands council representatives that if they want to put forward proposals we shall examine them carefully. This system has served the islands well in the past.