Ferry Services (Clyde and Hebrides)

– in the Scottish Parliament at 2:37 pm on 8th December 2004.

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Photo of Murray Tosh Murray Tosh Conservative 2:37 pm, 8th December 2004

I regret that I could not call the three remaining members whose names were on my screen, but I had to protect the next item of business, which is a debate on motion S2M-2117, in the name of Nicol Stephen, on Executive-supported lifeline ferry services in the Clyde and Hebrides, together with two amendments to the motion.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

On a point of order, Presiding Officer. I gave notice of this point of order around noon today, which was the same time at which I received the documents that the Executive published today in relation to this debate: a consultation paper and a specification and tender document that, combined, are about 250 pages long.

I seek your guidance as to whether the Executive should provide a better and adequate period of notice, particularly when a debate relates to a legal proposition. This debate does that, as is manifest from the wording in the motion. The legal proposition is argued in the documents, so we could not apply ourselves to it when framing our amendments, which had to be lodged before the documents were available. Do you agree that the Executive's approach does a disservice to the great number of people who would have liked to be able to put their views to their elected representatives in order to inform this debate? I seek your guidance as to whether this sort of occurrence, which is becoming somewhat frequent, can be regarded as unacceptable and something that we must bring to an end.

Photo of Murray Tosh Murray Tosh Conservative

I have some sympathy with the thrust of Mr Ewing's point because the Presiding Officers encourage the Executive to give in advance as much information that is relevant to the subject of the debate as possible. However, the publication of documents is a matter for the Executive, as is the advance release of any information to Opposition spokesmen and party leaders. It is not something in relation to which I have the capacity to give a definitive ruling. It might be something that the minister can respond to in his speech.

Photo of Tommy Sheridan Tommy Sheridan SSP

On a point of order, Presiding Officer. Can you confirm whether there was a legal barrier to accepting my amendment to the motion? Was that amendment not accepted for the normal reasons or was a legal decision taken to refuse it?

Photo of Murray Tosh Murray Tosh Conservative

All amendments that are not selected are not selected for the normal reasons. The normal reaction of the Presiding Officers is not to divulge the reason for which the amendment was not accepted.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat 3:42 pm, 8th December 2004

I am glad that you made that clear, Presiding Officer.

To respond briefly to Fergus Ewing, I say that I would have liked the documents to be available earlier today, because they are substantial. I accept responsibility for that and apologise to him in that regard.

In relation to the legal point that was raised, on 25 June, in answer to a parliamentary question, the Executive set out the full reasons why we were proceeding with the tendering of the Clyde and Hebrides ferry services. The position has not changed since then and does not change in any of the documents that were published today.

Photo of Tommy Sheridan Tommy Sheridan SSP

Can the minister provide the chamber with the estimated costs of the tendering exercise that is being proposed today? Does he have any estimated costs of any legal challenge to any European Commission instruction that would force us to tender?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

Clearly, there are significant costs associated with proceeding with the tender. There is also significant uncertainty for the communities, the lifeline services and the staff involved. However, the cost and the uncertainty involved in not proceeding with a tender would be even greater—

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

I assure the chamber that the advice that we have been given, which has been repeated today, is that if we do not proceed with the tender, the Commission could rule, under the European cabotage regulation that was passed in the early 1990s, that the funding that we pay to Caledonian MacBrayne is illegal state aid and could rule for the immediate cessation of that funding, which would have truly disastrous consequences for the services concerned.

This is an important debate that relates to important issues for the Clyde and Hebrides lifeline ferry services. I intend to cover three main issues. First, I will speak about our final consultation before we tender the main bundle of Clyde and Hebrides ferry services—the consultation document is the one to which Tommy Sheridan and Fergus Ewing referred. Secondly, I intend to explain the way ahead for the Gourock to Dunoon service, which has been the subject of great interest and considerable representations in recent years. Thirdly, I will explain the new investment that the Executive intends to make in both vessels and pier facilities.

On the consultation on the main bundle of routes, as I explained in June in answer to a parliamentary question, the Executive is clear that the Clyde and Hebrides services must be tendered if it is to continue to subsidise them. The issue has been hanging over everyone who is involved for the past few years and it has been an unsettling time for the communities that are served by Caledonian MacBrayne and for the CalMac workforce. It is important that we now take things forward, get the new regime in place and create certainty for the future.

It is two years since the previous consultation on the service specification and although that exercise showed substantial support for most of our key proposals, I want to give the various stakeholders, including communities, ferry users and others who are involved a final opportunity to give their thoughts on both the draft service specification for the tendering exercise and the long-term development opportunities for the services. I want the services to develop, move forward and expand for the future. That is why we today launched a further consultation on the draft service specification.

I take this opportunity to speak about the CalMac workforce. I assure CalMac employees that we attach great importance to their future and that the Executive will do whatever it can to ensure that the protection that is available to CalMac employees is as robust as possible as we move forward.

The majority of responses to the 2002 consultation were on the Executive's proposal for a passenger-only service on the Gourock to Dunoon route. Following further discussion with the European Commission in late 2002, the Executive concluded that it would be possible to tender the Gourock to Dunoon route with a passenger-only subsidy, which it has at present, in a way that gives operators a choice about whether to provide a passenger-only service or a combined passenger and vehicle service. Those proposals were set out in our consultation paper in March 2003.

There was a strong response to that second consultation and much of it argued that the proposal did not go far enough to guarantee a vehicle service. I have thought long and hard about a way forward that meets the aims of the community while complying with the requirements of the state-aid rules. I have tried hard to respond to the wishes of the local community and I believe that the proposals that I am announcing represent a major step forward. There is a view that the Gourock to Dunoon route could be operated on a commercial basis, without subsidy, if the current restrictions on CalMac's vehicle service were lifted. If so, that would provide the best option, within state-aid rules, to achieve the community's wishes.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

The advice that McGrigors solicitors in Glasgow issued on the Altmark decision states:

"as long as there is no overcompensation, there is no advantage. If there is no advantage then the test of illegal State aid ... is not met."

It states that if public service obligation payments

"do not constitute State aid then they do not have to be notified" to the European Union. It continues:

"This affords local/national decision makers some discretion over whether ... notification is necessary rather than forcing central decision taking".

Does the minister disagree with that legal opinion?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

I believe that what I am announcing today is a positive way forward that will be strongly welcomed by the local community. I will explain the detail.

I believe that we can achieve the community's wishes within the state-aid rules if we open up the opportunity for other operators to come on to the route. If a suitable ferry operator is identified, the restricted service that is provided under subsidy arrangements by Caledonian MacBrayne will be replaced. We expect to advertise the opportunity in early 2005. The proposal will be advertised extensively to ensure the widest possible interest. Thereafter, potential operators will be invited to submit formal proposals for assessment.

The appointment of a new ferry operator would take place in autumn 2005. I emphasise that if no suitable operator is found, we will bring forward proposals to tender for a subsidised service at that point. However, I believe that offering the route on the basis that I have set out provides the best opportunity for the local communities involved to have a combined passenger and vehicle service. That is my proposal for the route.

Photo of Jamie McGrigor Jamie McGrigor Conservative

Will the minister say whether CalMac will be able to tender for the unrestricted route?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

I would not wish to exclude any operator from the opportunity. Clearly, CalMac receives a subsidy for the service that it currently provides and I think that it has privately indicated that it does not regard the route as one on which a profit can be made for the company. However, I repeat that I would not wish to exclude anybody from the route. If CalMac wished to come forward with a commercial proposal, that proposal would be fairly and objectively assessed along with all the other bidders' proposals.

Finally, new investment is crucial to maintaining and improving our lifeline ferry services. It ensures that improvements are made to vessels and it supports the infrastructure of vital harbours, such as new linkspan facilities. Since the establishment of the Parliament, CalMac has brought four new vessels into service and a fifth vessel is due next summer.

I am pleased to announce today that CalMac will order a further two new vessels, which will cost a total of £15.3 million. One vessel is for the Wemyss Bay to Rothesay route and one is for the Largs to Cumbrae route. The new vessels are expected to come into service by 2007. The new vessel for the Largs to Cumbrae route will cost around £5.8 million and will enable CalMac to transfer the current vessel on that route to serve the Oban to Lismore route, which will provide improved passenger and vehicle services to Lismore.

I can also announce today that we plan to provide piers and harbours grants for new projects totalling around £15.8 million over the period to March 2008. Those new projects include works at Largs, Cumbrae slip, Wemyss Bay, Lismore, Brodick and Kennacraig. That new investment and the proposals that I am announcing today are vital for many of Scotland's most remote and peripheral islands and communities, and I commend the motion to the Parliament.

I move,

That the Parliament commends the Scottish Executive's continued commitment to supporting and investing in lifeline ferry services in the Clyde and Hebrides; endorses its proposals for tendering the main bundle of ferry services as required under European Union rules, and welcomes the proposals for a final round of consultation to obtain the views of local communities and freight service users before proceeding with the tender under EU rules.

Photo of Fergus Ewing Fergus Ewing Scottish National Party 3:53 pm, 8th December 2004

In such debates, it would be better if we, as elected representatives, had the benefit of our constituents' views, especially when matters are highly controversial and extremely complicated, such as those that are dealt with in the papers that we are discussing. I hope that the Executive will take that on board. I do not doubt one whit the minister's bona fides on the matter, but I sometimes wonder what our civil service is planning behind the scenes. People who are expert in the matter have not had the opportunity to contribute to the debate. Of course, they will have the opportunity to contribute in the 14-week consultation period, but would it not be better to have the debate after the consultation, with the benefit of people's views? I think that it would, but a radical change would be required by the Executive in how it conducts its business.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

The issue that Fergus Ewing raises is one that I wanted to emphasise. There will be a significant consultation period that will last until 16 March, during which everyone who is involved will have the opportunity to have their say. We are bringing the matter directly to the Parliament so that the Parliament will have the first opportunity to debate it. I think that the principle of information coming freshest and first to MSPs is another principle that Fergus Ewing has often supported in the chamber.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The information is certainly fresh. There simply has not been time for us to study the documents. I thought that the minister had accepted that.

The SNP's position has always been to support lifeline ferry services to our islands. The cost of travelling from our islands to the mainland has always been far too high. That is why, in our amendment, we not only reiterate our principled stance but advocate that islanders should not be excluded from whatever national concessionary travel scheme is introduced. That scheme should be extended to travel by ferries. The minister might have intervened at this point to give us more good news—perhaps not today. I was reassured slightly by the fact that when Bruce Crawford raised the matter with the minister at the Local Government and Transport Committee, the minister seemed to regard that idea favourably, at least.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

I am happy to explain that there will be a statement to the Parliament on that issue before Christmas. We do not have long to wait. It would be inappropriate for me to make an announcement today or to reveal only part of the package. We have listened carefully to the representations relating to ferry services and I will respond to that point when I make the statement to Parliament.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The minister is not wearing a Santa Claus costume, but I welcome his words in that spirit.

As far as the main issue of the tendering is concerned, the Executive is going to have to do better. Political debates in Parliament should not really be about legal arguments—this is not the place for that. However, many people who have a long track record in this matter take a different view from that of the Executive—something that will be explored in time to come. Those people include Professor Neil McCormick, one of the most distinguished jurists in Europe, and Brian Wilson, who has a long-standing interest in the matter. Brian Wilson has said that we are going along

"a completely unnecessary road. I do not believe that Europe was ever interested in forcing"—

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Can I just finish the quote, please? I know that George Lyon will not like listening to it, but I want to make it through to the end. Brian Wilson said:

"I do not believe that Europe was ever interested in forcing this tendering process on what to them is a localised operation. The civil servants who conned ministers into this process, in the early days of devolution, have a lot to answer for."

He went on to say, in a subsequent statement:

"I have been in touch with competition officials at the DTI who are delighted with the Altmark judgment and confirm that, as far as they can see, it means that Caledonian MacBrayne does not need to be subjected to competitive tendering".

Whether Brian Wilson is right or wrong—

Photo of George Lyon George Lyon Liberal Democrat

It is on a point of clarification.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I ask Mr Lyon to restrain himself.

Whether Brian Wilson is right or wrong, the issue is that the public are entitled to have the fullest information on this matter. I will give way to Mr Lyon.

Photo of Trish Godman Trish Godman Labour

You will have to be very quick, Mr Lyon. Mr Ewing has finished.

Photo of George Lyon George Lyon Liberal Democrat

I will be very quick. Like Fergus Ewing, I was sceptical about the need to put the routes out to tender. I visited the Commission and asked two questions in a letter. I asked, first, whether the Altmark judgment had any effect or impact on the cabotage regulation that governs this matter and, secondly, whether the Commission still required the Scottish Executive to put Caledonian MacBrayne ferry services out to tender. The Commission's first reply was to point out that the Altmark judgment—and this was from the director general—

Photo of Trish Godman Trish Godman Labour

You are making a statement. Will you please ask a question?

Photo of George Lyon George Lyon Liberal Democrat

I am making a point of clarification.

Photo of Trish Godman Trish Godman Labour

You are not. There is no such thing as a point of clarification. Will you sit down? Please finish, Mr Ewing.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I look forward to the repetition of that argument.

That simply proves that we are having this debate at the wrong time. We should not be debating legal issues today. We should be debating the social issues and the economic future of the people who live on the islands. Because of the late publication of the documents, the debate is becoming—as we see from Mr Lyon's intervention—an arid exchange of legal opinions that takes us no further forward.

I move amendment S2M-2117.1, to leave out from "commends" to end and insert:

"believes that lifeline ferry services must be provided and an element of public subsidy will be required for that aim; further believes that the proposed national concessionary travel scheme should be extended to ferry travel; calls on the Scottish Executive to provide documented evidence showing that EU law requires that the tendering process which the Executive proposes must be undertaken; is concerned about the potential impact that this process may have upon the employment conditions of staff working on ferries, and notes that many passengers have voiced serious concerns about both the efficiency and effectiveness of the current ferry services provided by Caledonian MacBrayne which require a thorough and independent investigation."

Photo of David Mundell David Mundell Conservative 3:59 pm, 8th December 2004

I intend to start where Fergus Ewing finished. In the Executive press release issued on 26 June 2004 in connection with the Altmark case, it was left to a quote from George Lyon—I was not aware that he had any status in the Executive—to say:

"it is now clear that there continues to be a requirement on the Executive to tender the services."

However, as we have heard again today, the full legal discussion on that issue has not been made clear, although we might hear about it during Mr Lyon's speech. I do not think that we should simply accept what is stated in correspondence from the European Commission. We have to take our own robust view and make an interpretation.

Photo of George Lyon George Lyon Liberal Democrat

Why did the Tory minister responsible for driving through the regulations in Europe, Mr MacGregor, not recognise the impact that they would have on Caledonian MacBrayne?

Photo of David Mundell David Mundell Conservative

There are many things in relation to the EU whose full implications people did not recognise, particularly the way in which Europe would get involved in day-to-day decisions in our country. When people signed up to join the EU, they did not sign up for the EU to be telling us what to do with our ferry services between the mainland and the islands of Scotland. It is Mr Lyon's party that would have the EU and Brussels determining the times of our trains, the times when our ferries leave and who can go on them. We must recognise the role of the EU in this matter and, even at this late hour, the Executive should take a much more robust view in relation to the Commission's role. What is happening sets a very unsatisfactory precedent.

I was pleased that the minister acknowledged what an unsettling time this has been for CalMac employees and customers. I am not happy with the way ahead that has been determined, but at least there is now a degree of clarity as to how we are going to go ahead.

It would be churlish not to welcome the minister's announcement of investment in ferries and pier facilities. The one thing that everyone in the chamber will agree on is that the term "lifeline services" means precisely that. The ferry services are vital for the functioning and sustainability of our island and remote communities, so I am happy to welcome that investment.

I am also happy to give a cautious welcome to the Executive's proposal for the Gourock to Dunoon ferry service—the welcome must be cautious at this stage in case something emerges that has not been said today or of which we are not yet aware because of the lateness of the hour when the documents were produced.

Photo of Trish Godman Trish Godman Labour

Mr Mundell is in the final minute of his speech.

Photo of David Mundell David Mundell Conservative

We support genuine competition on services where it is sustainable, so if a wholly unsubsidised, commercial operation on the Gourock to Dunoon route can be achieved, we would welcome that. However, we do not welcome the Scottish Executive's kowtowing approach to the European Commission.

I move amendment S2M-2117.2, to leave out from "commends" to end and insert:

"notes the continued uncertainty inflicted upon Caledonian MacBrayne, its employees and customers as a result of the Scottish Executive's handling of the tendering process; regrets that Clyde and Hebridean ferry services are going out to tender purely to satisfy the wishes of the European Commission, and calls on the Scottish Executive to put the interests of our island communities before those of the European Commission."

Photo of Alasdair Morrison Alasdair Morrison Labour 4:04 pm, 8th December 2004

In an ideal world, we would not be having this debate and we would not be discussing the issues arising from the fact that the Scottish Executive has to put CalMac services out to tender. However, as we all know, we do not live in an ideal world. I have made my views known about the tendering process. Nicol Stephen has outlined the legal reasons for the process and the consequences of not proceeding with it. Again, I put on record my view that we must ensure that the integrity of Caledonian MacBrayne is retained before, during and after the tendering process.

For obvious reasons, I will focus on the needs of my constituents and on the level of service that we have enjoyed for years, which we hope to continue to enjoy for many years to come. I was pleased to hear Nicol Stephen place such emphasis on the role of CalMac's crew and staff. I was also delighted to hear about the continued and increased investment in vessels and infrastructure. Since the election of the Labour Government on 1 May 1997, investment in CalMac services has increased beyond recognition. Prior to that great day, CalMac had to make do on a little over £9 million per annum. Next financial year, our coalition Government will spend £27.9 million on ferry services and infrastructure. That positive trend of substantial increases in investment has continued with Nicol Stephen's announcement today.

Photo of Tommy Sheridan Tommy Sheridan SSP

Has the member any estimate of the future costs of the tendering process? How much more will the taxpayer need to pay to subsidise the tendered service?

Photo of Alasdair Morrison Alasdair Morrison Labour

I have reiterated my position on that issue in previous years, but I recognise the legal position that Nicol Stephen outlined. Frankly, the member's question should properly be addressed to the minister, who might give an indication of those costs when he sums up.

Like the people on the islands in the constituencies of George Lyon and Allan Wilson, all my constituents know Caledonian MacBrayne well. We appreciate that reliable and safe ferry services are provided under the current state-owned regime. My constituents and I are certainly relieved to hear that the Executive has taken steps to secure the ferry services for the long term and to ensure that there will be no disruptions during the retendering process. That is important.

However, some issues are Western Isles specific. The minister will recall that he had a constructive meeting with South Uist councillor Ronnie Mackinnon, who has faithfully and consistently campaigned for a new ferry service between Lochboisdale and Mallaig. I would greatly appreciate an update on that important development issue.

Another important local issue is concessionary fares. I appreciate that the minister will make an announcement to the Parliament on that either next week or the week after, but he will be aware that, although island pensioners greatly appreciate and use their pensioner passes on island bus services—

Photo of Alasdair Morrison Alasdair Morrison Labour

I cannot possibly, as I have only 50 seconds of my four minutes left.

The minister will appreciate that pensioners cannot use those concessionary passes on mainland buses without travelling across the Minch. Both I and my colleague the MP for the Western Isles raised that issue many months ago, long before the Scottish National Party took a passing interest in it, so I hope that the matter can be addressed satisfactorily when the minister makes his announcement next week or the week after.

Finally, I wish the minister well during the current tendering process. Let us hope that it will draw to a quick and satisfactory conclusion, with the ferries still under a similar type of control as obtains under the current regime. I want CalMac's crew, staff and passengers to enjoy the same conditions as they currently enjoy. I will support the motion in the name of Nicol Stephen.

Photo of Trish Godman Trish Godman Labour

We move to open debate, where speeches will be of four minutes. As the debate is oversubscribed, I have already had to tell some members that they will not be called. If members go over their four minutes, at least one other back bencher will not be called.

Photo of Bruce Crawford Bruce Crawford Scottish National Party 4:08 pm, 8th December 2004

A lot of romance is attached to the history of CalMac. The company can trace its roots back to 1851. It is no exaggeration to say that the fabric of island life has been dependent on the services of the company since its inception. However, that romantic history should not blind us to the fact that, if CalMac is to survive today, it must do much to improve its efficiency and effectiveness.

We need look no further than the financial analysis in the Deloitte & Touche report to see that there is a requirement for further investigation into the operation of the company. The report drew attention to staffing levels, ship repair costs, pier dues and administrative overheads. However, the company's treatment of overheads on its balance sheet—which directly affected the profit or loss of individual routes—has caused alarm bells to ring and eyebrows to be raised. That is one reason why I strongly support Fergus Ewing's amendment, which calls for further investigation into the running of the company.

I will talk about the Executive's proposals for tendering the Clyde and Hebrides services, in particular the principle that the winning operator will be the one that requires the least subsidy. I am aware that the Executive has emphasised issues such as safety standards, quality, reliability and performance. It can give as much weight as it likes to those elements in the tendering process, but the fact is that the lowest-subsidy requirement for winning the contract will mean that cheaper labour will be employed. Wage and social costs will be cut and the move from full-time contracts and overtime payments to fixed-term contracts and part-time labour will have a direct impact not only on the workforce, but on the sometimes fragile economies of the islands that CalMac serves. That is an inevitable consequence of the tendering process.

The effect on the workforce and communities will be compounded by the fact that EU rules require the term of the contract to be limited to six years. Such a short period will mean that there is little incentive for the operator to develop and invest in the market, even though a quick look at the document that the Executive produced today suggests that it intends to make an investment alongside the vessel-owning company. Short-term contracts lead inevitably to short-term asset stripping rather than to a long-term strategy for generating revenue.

I am astonished at the Executive's self-congratulatory, complacent and weak motion. Instead of robustly putting forward Scotland's case to the European Commission and arguing that ferry services should be exempted from maritime state-aid rules, the Executive seems to have surrendered abjectly. George Lyon can spout on about other legal advice that he has received, but, in such cases, it is one legal view against another and the Executive should have properly tested the Commission's position.

As Nicol Stephen has made clear, the Executive ran up the white flag in June when it issued a press release to say that, of all people, the chef de cabinet to the European commissioner for transport and energy had ordered it to put the services out to tender. That was the head of the commissioner's private office—in other words, his private secretary. Things have reached a sorry state when a minister of the Scottish Government is telt what to do not by a European commissioner or director-general, but by a private secretary. That is another good reason why I will support Fergus Ewing's amendment and I ask all members who refuse to be telt what to do by a private secretary in Brussels to join me in the vote at decision time.

Photo of George Lyon George Lyon Liberal Democrat 4:13 pm, 8th December 2004

Given the length of the debate, I will concentrate on the issues of substance that the minister outlined in his opening speech.

I welcome the minister's announcement of substantial new investment in the network—£30 million is a substantial amount of money in anyone's language. The new ferries represent a major boost to the Isle of Bute—at which point I should declare an interest—and to Millport. I also look forward to the construction of the new linkspan at Rothesay pier, which will be integral to utilising the new capacity on the Rothesay to Weymss Bay route.

The good news for Millport will also immediately benefit the islanders of Lismore, who desperately need an improved ferry service. I should point out that the proposals still leave the door open for a north-end ferry on that route, which is an important consideration for the islanders. Of course, the investment at Kennacraig is a welcome boost for Islay. On the legality or otherwise of tendering the CalMac routes, I will circulate to members a letter that confirms that Altmark had no impact on the maritime cabotage regulations and that we had to tender the routes.

Customer service and customer care must lie at the heart of the contracts and have been sadly missing from CalMac's decision to introduce shore ticketing on the Clyde. I am sure that the minister is well aware of the many representations that have been made to me and other members on that matter.

Contracts should provide scope for innovation and route development. We cannot just set the service in aspic. There must be incentives in the contract that will allow new ideas on flexibility and route development to be implemented over the lifetime of the contract. That must be included in the contract process.

In going ahead with the tendering process, the Executive must ensure that CalMac employees, many of whom live on the islands that they serve in my constituency, get full protection for their earnings and pensions. The minister gave an assurance on that during his opening speech, but I hope that he will reassure the employees that their terms and conditions will be fully protected.

On the Dunoon to Gourock proposals, since day one, the key issue that has faced the communities in the Cowal peninsula with regard to the future of the CalMac route is the need for competition. They regard that as vital for keeping down fares and securing the long-term economic viability of the Cowal peninsula. I fully back that view. I am sure that other colleagues in the chamber will agree that competition must be the central driver in the process. The two-stage strategy that the minister outlined is designed to ensure that that objective is delivered for the Cowal communities. The minister has listened to the representations made by the local groups in Dunoon, who have argued strongly that the Executive should seek out a commercial ferry operator in the first instance to operate the route on a commercial basis. If that does not work, there should be a fallback position whereby we can still bring forward a tender that is based on a subsidy for the passengers and, most important, that has no restrictions on the type of service that is delivered.

I welcome the announcement on the new investments, which will be a major boost to the CalMac network. Customer service and customer care and the protection CalMac employees' terms and conditions must lie at the heart of the process. I support the motion in the minister's name.

Photo of Des McNulty Des McNulty Labour 4:17 pm, 8th December 2004

I do not always agree with Fergus Ewing, but I agree with him that the process could have been handled better, particularly in relation to the release of information. One of the suggestions from the inquiry that Maureen Macmillan and I conducted for the Transport and the Environment Committee two years ago was that there must be a robust consultation process on the details of the service specification. The communities affected need to have the full opportunity to discuss all the structural and service issues, as well as the mechanism. I am not sure that that has been carried through as well as we and the communities would have wished.

Some things in the Executive document that was published today reflect points that were made to us as we went round the islands and spoke to affected stakeholders and are welcome developments, particularly the issues relating to disabled travellers, the role of Gaelic and the performance regime—the right to step in after four days rather than after seven days. However, the legal issue that was raised has not been satisfactorily resolved. We took the view in our report that the Commission's rigid requirements for the enforcement of European rules should be challenged, as we thought that it was illogical that a process that is supposedly designed to improve competition mechanisms and make things cheaper for the public purse should be conducted in such a way that it could unnecessarily increase the cost to the public purse.

There are a number of ways of looking at procurement and the tendering process is not necessarily the best way, although it is the one that the Executive has come up with repeatedly—the proposed mechanism has not shifted substantially from two years ago. The minister could perhaps have presented us with more alternatives and different choices and the debate could have profitably gone further than it has in the past two years.

What concerns me, at the end of this exercise, is that we will end up in a situation in which the public purse will pay more for worse services. I see nothing in what is proposed that suggests that we will get something that is better because of the tendering process. Alasdair Morrison made the point that, in a rational world, we would not be in this situation. Surely part of our job as politicians is to try to find a way of making the world more rational, whether by legal challenges or by looking at things differently.

The services are for remote island communities; they are not standard transport issues in that sense. Whether we should be looking at the full range of European directives and mechanisms rather than at the narrow transport rules relating to seafaring—such as the cabotage regulations—as our sole mechanism for driving our pathway forward has not, in my view, been fully or adequately explored by the minister.

Because of the hiatus over the past two or three years, significant management issues in Caledonian MacBrayne have not been adequately addressed. One of the problems with the minister coming back to us and changing the position in relation to Gourock and Dunoon is that it would have been much better if he had done so two years ago rather than now. That would have enabled Caledonian MacBrayne to be in a better position to compete with Western Ferries and other potential rivals on that route.

There are genuine and solid grounds for criticism of the way in which the business has been conducted. That is not necessarily to say that we cannot make a success of things, but the minister will have to make a better fist than he has made up to now of convincing people that these proposals are the best route forward.

Photo of Mary Scanlon Mary Scanlon Conservative 4:21 pm, 8th December 2004

I endorse the points that Des McNulty and Fergus Ewing have made. I find that some of the questions that I had for the minister are answered in the document, but because I was not at my desk at lunch time I did not have time to peruse it. It is unfortunate that the minister did not provide the information in time to allow members to contribute more to an informed debate.

However, I am proud to represent the Conservatives—masters of the free market and of competition, where appropriate and when appropriate. The previous Conservative Government examined the cost of subsidising Caledonian MacBrayne and found that the unit costs were, in fact, lower than those for the then P&O service to the northern isles. I would like to use some of my speech to compare some of the tendering process now with the tendering process that we have already gone through for the northern isles with NorthLink.

We welcome genuine competition, which will yield benefits for passengers and enhance social inclusion and opportunities on west coast islands, as well as encouraging tourists to visit. On the comparison with the northern isles, I would like to use the example of Andrew Banks of Pentland Ferries Ltd. That man built two piers, at St Margaret's hope in Orkney and at Gill's bay near John o' Groats. He runs a service across the Pentland firth, which takes an hour, and his passenger and freight numbers have grown enormously year on year, yet he does not receive a penny from the public purse. In fact, he states that, if he received the kind of subsidy that is given to NorthLink, he could run the service free. Last year, Pentland Ferries carried around 80 per cent of sheep out of Orkney and a substantial number of cattle, as well as shellfish lorries and liquid petroleum gas tankers.

Moreover, Pentland Ferries' fares are cheaper. NorthLink receives a 75 per cent subsidy on livestock and, since its inception two years ago, its public subsidy has gone up from £11.5 million to almost £24 million. That can hardly be said to meet the criteria of value for money. Would the minister continue to meet the demands for a higher subsidy for the west coast operators, whichever company wins, on the same lines as he has with NorthLink? Will he consider giving the subsidy to the operator chosen by the people and by businesses to convey passengers, livestock and freight, rather than simply giving it to someone who carries a smaller percentage?

We want the changes to the ferry services to be made for the right reasons, with an assurance that the price paid for tendering should not fall on CalMac employees. That issue was raised by the trade unions at a meeting that many of us attended last week. The unions have also raised issues relating to the Transfer of Undertakings (Protection of Employment) Regulations and pensions. I note that the consultation document—which I have not had time to read—states, on page 13:

"The tender process will also include questions about bidders' employment policies to allow these to be assessed ... As with the transfer of staff we shall ensure that our proposals on this issue are as robust as possible."

I wonder whether CalMac employees will sleep easily in their beds tonight knowing that, because to me it is as clear as mud. Will any new company offer the final-salary pension schemes for CalMac employees and make the additional payments that have been required from time to time because of fluctuations in the equity market? Will the financial burden to the Scottish taxpayer increase, as it has done with NorthLink, or have lessons been learned from NorthLink? Finally, I ask the minister to address the concessionary fares scheme.

Photo of Duncan McNeil Duncan McNeil Labour 4:25 pm, 8th December 2004

As a representative in the Parliament with three ferry terminals in my constituency—there are CalMac terminals at Wemyss Bay and Gourock and a Western Ferries terminal at McInroy's point—and with the CalMac headquarters at Gourock, I have followed the highs and lows of the debate since late 1999.

During the process, we have sought common cause with island communities and with our neighbours across the river in Argyll—albeit for different reasons. We had a common concern about the restrictions that were in place, which damaged the viability of the Gourock to Dunoon run. We see some solution to that in the proposals. However, concerns on our side of the water were about the impact that the withdrawal or reduction of the Gourock to Dunoon service would have on the transport interchange proposals and subsequent development of the plans at Gourock. We were also concerned about the future of the CalMac headquarters in Gourock, which provides highly valued jobs. Another concern was the loss of the vehicle service at Gourock and the displacement of traffic on to the narrow roads through Gourock to the Western Ferries terminal. We welcome the Executive's commitment to the Gourock to Dunoon service, which we anticipate will address some of the concerns in my constituency.

I also welcome the announcement that CalMac will order a further two new vessels. I am sure that the Deputy Presiding Officer, Trish Ferguson, who has a shipyard in her constituency, will be delighted if we do all that we can to ensure that those contracts are awarded to Scottish shipyards and preferably, from her point of view, to Ferguson's shipyard in Port Glasgow.

I am pleased to hear that the minister appreciates that employees in my constituency and others are naturally concerned about the impact that the proposals will have on their future employment and on their terms and conditions. When he sums up, will he reassure us that employees will not pay a price in reduced terms and conditions and that, in discussion with tenderers, he will ensure that TUPE applies? In his discussions with CalMac, will he seek to clarify and take into account the impact of offshoring on employees if he decides to go ahead with the proposals? In his discussions with tenderers, will he ensure that pension entitlements that are not covered by TUPE will be addressed to the benefit of any transferring employees?

Photo of Trish Godman Trish Godman Labour

I have never been called a shipyard before.

Photo of Rob Gibson Rob Gibson Scottish National Party 4:28 pm, 8th December 2004

I support Fergus Ewing's amendment. We are dealing with lifeline ferry services in an area that had objective 1 funding, has had transitional funding and, if the calculations were done correctly, should continue to have structural funding to support life in those remote communities and islands. That is not to talk down the services' potential for making more money in future and for making a better life for people in those areas, but it is the background against which we are discussing this pathetic document today.

We can talk about building ships and we can talk about the process of trying to modernise CalMac. We are even making a slight deviation towards privatising part of it. That is all good Blairite stuff, but we do not need that here; we need the process to be one in which public money is used to subsidise lifeline services and we need some commitment from the Government that it will not welsh on that.

I speak on behalf of customers and people who find that they are not consulted or cannot make complaints in a structured fashion. I notice from the consultation that research is planned. I also notice from the 2002 consultation that there are dozens of complaints about fare structures and services. The large number of complaints points to the fact that CalMac has not been responsive to many of its customers in the way that it should have been. If the national health service can go through the rhetoric of consulting, it is high time that that is built into the process under consideration in more detail.

I will talk about a particular group of customers that some members have already mentioned—the disabled. How many of the boats that have been built are compliant with the Disability Discrimination Act 1995? How many of the new boats that are to be built will be compliant? At the moment, one ship out of the CalMac's fleet of 30 is compliant. We are talking about people in remote islands who need to travel on a lifeline service. The minister has said nothing that would allow us to feel that their needs as regards equal opportunities are being met.

I turn to the way in which the crews are treated and the way in which the European matter has been handled. Ferry services across the English channel are provided by local ships with well-paid local crews. Most of the Brittany Ferries boats are built in France. That large country has been able to use the European rules and bend them to the needs of its citizens. It is a scandal that, in a small country, we are having to have this debate about lifeline services. The legal rulings make it clear that the Government has not lobbied on behalf of, or pulled its weight in standing up for, some of the most disadvantaged communities on the edge of Europe.

I think about what has happened with the northern ferries—for example, those that are run by NorthLink. All those areas require that we provide public subsidy for their services. Surely the minister can justify making a whole-hearted commitment on that, instead of chipping away at the edges every time he speaks to us on the subject.

Photo of Tommy Sheridan Tommy Sheridan SSP 4:32 pm, 8th December 2004

It is ridiculous that the Presiding Officer has to preside over such an important and vital debate—a debate about the privatisation of an essential lifeline service in Scotland—when she has such limited time at her disposal.

Let us have some reality instead of the "Alice in Wonderland" talk that we have had until now. We are talking about the interests of the CalMac workers. Who pays when it comes to privatisation, whether of gas and telecoms companies or of CalMac? If European competition rules are to be applied, we need to ask why those rules exist. They exist so that the taxpayer's contribution to a service is lowered and the delivery of that service is improved. Wage costs account for 50 per cent of CalMac's operating costs. We are talking about providing an improved service and having the highest levels of health and safety, but how can we open up the market to competition and deliver an improved service without affecting the workers who are employed to deliver that service? From the outset, we should be clear that it will be they who will pay for privatisation.

This is an "Alice in Wonderland" debate because we are not only being asked by a Labour-Liberal Executive to support privatisation of a lifeline service, we have the opportunism of the Tories, whose amendment seeks to defend a public service against privatisation. That is the reality of the situation in which Labour members find themselves. Instead of standing up for a lifeline public service and the workers that are employed in it, and instead of backing the trade unions that have called on the Executive to mount a legal challenge, Labour members are prepared to go down on their knees before the EU commissioners and allow the destruction of CalMac and the loss of jobs and services that will result.

What an "Alice in Wonderland" answer the minister gave to my question on the cost of opening up the services to tender. First, he said that the costs would be substantial and acknowledged the insecurity for CalMac workers. Then, to my question about the cost of the legal challenge, he said that that too would be substantial and that it would create a lot of insecurity. The minister also said that I would have to believe him when he said that the first costs would be greater than the second. I am not prepared to believe the minister—he must tell Parliament what the costs are. We have to face up to the fact that when the Tories told us in 1994-95 that it would be cheaper to privatise rail services, we found out after only one year that the public subsidy to the privatised railways had to double from £1 billion to £2 billion. Every member knows that such is the reality of privatisation.

It is unacceptable that the minister did not come to Parliament today to tell us that he is willing to pursue the matter to the nth degree and to challenge the European Commission. At the end of the day, if the minister was willing to take on the Commission, less cost would result in respect of the workers and essential lifeline services in Scotland. He should show the Executive's continued support for these lifeline services; he should not go down the cowardly route of bowing before the Commission and allowing privatisation of the services and the subsequent loss of jobs and terms and conditions.

I ask Parliament to back the SNP amendment and—this is like "Alice in Wonderland"—also to back the Tory amendment. Both amendments would defend the services that the Executive wants to destroy.

Photo of Trish Godman Trish Godman Labour

I call Maureen Macmillan, to whom I can give two minutes.

Photo of Maureen Macmillan Maureen Macmillan Labour 4:37 pm, 8th December 2004

It will be difficult to keep my speech to two minutes, but I will do my best.

Not only did the Executive go to Europe to lobby for the services, but so did Argyll and Bute Council, the Highland Council and delegations from the SNP and Liberal Democrats. Des McNulty and I were also in Europe, as were the trade unions. The Commission gave us the same answer, which was that the services had to go to tender.

Photo of Maureen Macmillan Maureen Macmillan Labour

I know. We are all in this "Alice in Wonderland" situation.

Photo of Maureen Macmillan Maureen Macmillan Labour

No. I have only two minutes.

I am disappointed that that was the result of all our lobbying. I am also disappointed that the decision in the Altmark case did not give us the chance to back away from the tendering process and I am further disappointed that the consequences of a legal challenge to the Commission's decision would result in, for example, subsidy being withdrawn. I recognise the great dangers in challenging the Commission on the issue. It is a disappointment, however, that it is not possible to do so.

I want to endorse what Duncan McNeil said about the workforce, who are part of our communities in the remote areas of Scotland. We have to ensure that the interests of the workforce both in respect of their terms and conditions of employment and their pension entitlement are protected, not only for a year or two but in the long term.

However, we must also not lose sight of the fact that we must improve the support that is given to our island communities. For example, it seems that John Farquhar Munro is to hold a party on Skye to celebrate the spending of £30 million on buying out the Skye bridge toll contract. Although I am sure that that will delight the people of Skye, I am concerned about the situation on our other islands. How much extra will be spent on Coll, Tiree, Colonsay, Islay, Jura, Mull, the small isles and the Western Isles? Many would say that they are in great need of our support. I look forward to the minister's response on that.

Photo of Bristow Muldoon Bristow Muldoon Labour 4:38 pm, 8th December 2004

Before I address the contentious issue of the requirement to tender, I open by acknowledging the support that the Executive has committed to our lifeline ferry services. I am thinking in particular of the investment that it has made in two new vehicles: the £9.5 million investment in a new vessel for the Wemyss Bay to Rothesay route and the £5.8 million for a new vessel on the Largs to Cumbrae route. That investment comes on top of the five new vessels that the Executive has ordered since 2000, its investment in piers and harbours, which amounts to £16 million, and its general support for CalMac services through grants that have risen from £19 million two years ago to £28 million in the current year.

I turn to the requirement to tender. The minister referred to his answer of 25 June to George Lyon's parliamentary question, in which he said that the Commission had not changed its mind on the requirement to tender. He also said that the Commission views the maritime cabotage regulation as having a different treaty base to the state-aid rules. The minister will acknowledge that many people—including the trade union movement and communities—have considerable concerns about the potential impact of the proposal to tender on staff, service quality and fragile communities' economies.

I acknowledge that the minister will act in good faith on the basis of legal advice from lawyers and discussions with the Commission but, as we approach the consultation process many people, including people in the trade union movement, still want to make a case to him for alternatives to the Executive's proposals. I urge him to explore in further discussions with the United Kingdom Government and the European Commission whether an alternative to the tendering process can be identified and whether a revision can be made to the maritime cabotage regulation, which I do not expect was intended to have the implications for lifeline ferry services that it appears to have.

The Conservatives' position in the debate has been hypocritical, given their previous supposed commitments to free trade and their stewardship when the maritime cabotage regulation was introduced. I am pro-European and think that we should engage more with the European Commission to revise the regulation so that it does not have the impact that it seems it will have. Des McNulty said that part of our job in Parliament is to find rational solutions to problems. The current proposals do not fully meet that test.

Concerns exist about several detailed issues in the consultation proposals. Concern has been expressed that the draft service specification uses only the phrase "as if TUPE applies" and does not say that TUPE regulations will apply. Members have asked about pension protection for CalMac staff. The draft tender document suggests that tenders be judged on the basis of the lowest cost, rather than on the quality of the bid. I urge the Executive to review that. The potential local economic impact is significant not only in island communities, but in mainland communities such as Inverclyde, as Duncan McNeil said.

Parliament's job is to ensure that the safe and reliable service that Alasdair Morrison talked about can continue to serve Scotland's islands. I encourage the minister over the consultation period not merely to consider responses to the draft service specification, but to explore rational alternatives to ensure the continuation of services without having to tender.

Photo of Jamie McGrigor Jamie McGrigor Conservative 4:43 pm, 8th December 2004

I have been reminded of a saying that was attributed to John Stuart Blackie, who lived in Oban at the turn of the 19 th century:

"The earth belongs unto the Lord

And all that it contains;

Except the piers of the Western Isles;

For they are Davey MacBrayne's."

That may be an amusing anecdote, but it sends shivers up the spines of would-be competitors that will have to pay the pier dues and levies that CalMac—or should I say the vessel-owning company?—will charge.

We must ask what the point is of a tender process for the main bundle of routes. All that it has produced is confusion and worry among people who depend on ferry services and among CalMac staff. The most important achievement would be to have a ferry service that offers best value to customers and to people who live on remote islands and who rely on their lifeline services. Therefore, a deal must be struck between what is necessary and what is efficient and cost-effective. That key issue, rather than bending over backwards to satisfy European rules, should be foremost in the Scottish Executive's mind.

Photo of Jamie McGrigor Jamie McGrigor Conservative


We welcome competition between ferry operators when demand exists, as on the route between Gourock and Dunoon, but compliance with the European tender process for the main bundle of routes will not benefit ferry customers, the people who live on the islands or the people who live in the coastal communities. Once the tender is set in stone, it may well become a factor that drives up costs and leads to less reliable ferry services. One of the most important considerations is flexibility of services, which means the ability to change routes, their timing and their destinations according to islanders' varying needs.

There is always room for improvement. To give CalMac its due, it reacts to demands from the public, albeit sometimes slowly. CalMac cannot please everybody everywhere all the time, but it attempts to do so, which above all requires flexibility without constraints. The tender, once written, will cut flexibility and increase constraints.

Every day since 1973, Western Ferries has run an excellent service on the Clyde between Gourock and Dunoon. The ferries run until late at night and work out of hours in cases of medical emergency. Western Ferries carries nearly 80 per cent of vehicular traffic across the Clyde and would obviously like to provide the residents of Dunoon with improved quality of service. Whereas in the past new vessels for CalMac were subsidised to the tune of 75 per cent, that has become impossible under European rules. It is impossible to discover how much of CalMac's subsidy is spent on the route, because that information is commercially sensitive and therefore confidential, but it is obvious that the route can make money, as has been shown by Western Ferries, which operates with no subsidy.

Photo of George Lyon George Lyon Liberal Democrat

Will the member take an intervention on that point?

Photo of Jamie McGrigor Jamie McGrigor Conservative


The residents of Dunoon are fortunate in having two options for vehicle ferries and no monopoly and it is understandable that they do not want their services to be downgraded. Dunoon is a gateway to the new Loch Lomond and the Trossachs national park and every effort should be made to make Dunoon one of the main gateways to the Highlands.

The most important point is that the people who live on the Clyde and the west coast should have reliable and constantly improving ferry services that are run by a company that has intimate local knowledge and experience of the waters, which must be classed as among the most dangerous in the world.

The Executive can learn lessons from the sorry saga of NorthLink, whose contract to provide lifeline services to Orkney and Shetland should have lasted until 2007, but which has had to be retendered more than three years early because the funding did not fit the job. Passengers and businesses have suffered because of the Executive's incompetence in safeguarding a suitable service for the northern isles. The latest debacle over the minister's yes-no approach to approving NorthLink's new timetable has added to the confusion. If we are to be forced into a tendering process for the main bundle of routes, can we have one that allows innovation? The ferries are vital to our islands from Bute to Lewis. Let us put Scottish people before European Union rules.

Photo of Jim Mather Jim Mather Scottish National Party 4:47 pm, 8th December 2004

We have been joined by several Labour members and others in voicing concerns about today's announcement, including concerns about the delay and uncertainty that, as the minister acknowledged, helps few, does little for investment and undermines the local economy, as well as concerns about the lack of convincing evidence for dismissing the Altmark judgment.

Our preference remains in favour of there being no tender. We would prefer further building on and developing of the present model, based on a thorough independent investigation. That process should give Caledonian MacBrayne new challenges, including those of becoming more cost effective, generating more net revenue, matching private operators' profitability levels on key routes and perhaps even learning some of the lessons of easyJet and Ryanair. Those measures would have the objective of benefiting passengers, communities and taxpayers. The process would also involve further revising and reviewing of routes and services, putting downwards pressure on fares and, where feasible, increasing the frequency of services.

Meanwhile, we have adverse changes and delay, such as the latest move on shore ticketing on the Clyde, which seems to have a dubious justification and comes with many additional costs. There are direct costs in relation to manpower, redundancy, premises and systems, as well as indirect costs such as those that arise from reduction of the incentive to travel that results from more damage to the already weak integration with rail. With the help of the Executive, CalMac needs to review and recast its cost base, beef up its customer service and offer a credible integrated service.

At present, the majority of users see CalMac as being more like the post-privatisation British Airways than the lean and hungry Ryanair. However, we believe that CalMac can be more like the latter, for the sake of its passengers, employees, the local economies and the Scottish taxpayer. In our non-tender option, we want a new and efficient, cost and frequency-obsessed CalMac, with much higher volume targets than the current meagre 2 per cent as a surrogate for an economic growth target. That would force CalMac to empathise further with its communities and staff by giving it the same objectives as they have. We have heard that such a move is supported by none other than Brian Wilson, which we thoroughly welcome.

The tender option has many pitfalls. We could end up with the Railtrack of the seas, with private operators emphasising profit over service and over the growth of the local economy. Such operators could put pressure on staff and kill routes in order to focus vessels and manpower on the more profitable routes, creating the equivalent of 18th century toll roads on many lifeline services, thereby becoming a constraint on west coast development. As other members do, I worry that the tendering process would effectively cast in concrete an imperfect blend of vessels and services, which would limit potential on the west coast in the long term.

In order to move forward, we must be fair to west coast communities; we must use ferry services as economic stimuli, not inhibitors. We need to encourage all stakeholders to befriend change and innovation—in particular, we need to persuade the Executive to be more robust in tackling issues around tendering.

Our amendment spells out the fact that we do not accept the status quo and that we do not accept any diminution of services. We want Caledonian MacBrayne to cease underperforming, which we believe is palpably the case. We also want to stop the perpetuation of risk and inhibition in the local economies that are concerned. I refer to the condoning of failures to link up or leverage public assets, as was the case with the Campbeltown and Ballycastle terminals, and as might also possibly be the case—although I certainly hope not—with the new linkspan at Dunoon.

We want a real impetus to competitiveness. In our opinion, the competitiveness of the west coast of Scotland is much more important than competition on its ferry routes. That is why we will never concede that there is a need to tender without evidence to support the notion that there is absolutely no other option and without proof that the occasionally sensible EU is determined not to put the people of the west coast and their economic well-being in jeopardy.

Common sense, imposed by the people, prevailed on the matter of hospitals. I have no doubt that common sense will be imposed by the people on the matter of ferries, too. I support the amendment in Fergus Ewing's name.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat 4:52 pm, 8th December 2004

There are many less difficult transport issues that the Executive could have chosen to debate today. Very few are less important. There have been many strong speeches in the debate, which reflect the strong emotions that are raised in the communities that are served by these vital lifeline services. I emphasise the fact that the Executive is very committed to all the routes and wants them to continue and to develop.

As Alasdair Morrison said, there has been more than a trebling of investment in CalMac and its services. That increased investment is due to go further over the period of the spending review—in the new Scottish budget through to 2008. We have heard about some of the consequences of that today, with new investment, new vessels and new pier and harbour grants. We want to improve and extend the Clyde and Hebrides ferry services. That will mean new vessels and new investment and a greater commitment than ever before on the part of the Executive to the communities concerned.

Alasdair Morrison mentioned the Mallaig to Lochboisdale route, and I have met Councillor Ronnie Mackinnon, who has campaigned long and hard on that route. We are prepared to consider ambitious development proposals for that route, some of which are mentioned in the new consultation document. I would like to nail one of the misleading views that has been expressed about the Mallaig to Lochboisdale route. It has been suggested that improvement there could come at the expense of other routes. It is clearly not the case that we would reduce the service on any other routes—we are considering the genuine development of services such as the Mallaig to Lochboisdale service.

Photo of Tommy Sheridan Tommy Sheridan SSP

On the extension of services, Alasdair Morrison mentioned the minister's inability to discuss the costs of tendering. The minister is talking about extra investment. What is the cost of tendering that service?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

As I said earlier—although I did not say it in the language that Tommy Sheridan has tried to attribute to me—there will be a cost to tendering. The cost of tendering will be administrative, involving the cost of officials' time. There is also the cost of continuing uncertainty and the cost of the risk of a European Commission challenge to our investment in the services. That is a high cost, which I hope Tommy Sheridan appreciates. It is easy for someone to say that they would challenge the law and that they would be prepared to flout Commission regulations. The challenge is a difficult one, however. We, like any Government, must respond to it in order to protect services—to protect lifeline routes and the communities that they serve.

Photo of Jamie McGrigor Jamie McGrigor Conservative

I gather that the minister has commissioned an appraisal under the Scottish transport appraisal guidance for the Lochboisdale to Mallaig route, which infers that it would replace the Lochboisdale to Oban route. Is that the case?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

The STAG appraisal has been jointly commissioned, so we are going to work with Western Isles Council. We will consider all the proposals for improvements to the route and I would not rule anything out at this stage. The service responds to the wishes of the Western Isles and of the community at Lochboisdale. I want improvements such as the possible future improvements at Lismore and improvements for the small isles to be considered. In response to the point that Jamie McGrigor made in his speech, we will consider developments through the course of the contract. We do not have to wait until the end of it; there is flexibility to allow us to introduce improvements as we go along.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The key issue in the debate is that the minister has contended that we need to go to tender because we require to accept the lowest price. I have stumbled across paragraph 2.4.9 of the "Clyde and Hebrides Lifeline Ferry Services Service Specification" document, the footnote to which indicates that in certain circumstances ministers need not accept the lowest tender; in fact they could accept a higher tender. If that is the case, what is the point of the tender process and the costs involved in the whole exercise?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

Fergus Ewing is quite wrong. We are specifically not going to tender to ensure that the lowest tenderer wins. Let me be clear that we are going to tender because we have to resolve this difficult issue. The tendering requirement is clearly a difficult issue. It has been central to the debate today, but we have not, in Fergus Ewing's words, chosen to take the tendering approach. Previous ministers and I have made representations to the Commission on the matter. We are taking this approach because of the Commission regulation and the legal requirement that is being imposed on us.

Photo of Duncan McNeil Duncan McNeil Labour

Given the contributions in the debate today and the representations from the Scottish Trades Union Congress, does the minister not consider that it would be worth while to make one last effort in the next six weeks to further examine the definitive position and whether we need to put the service out to tender?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

The issue has been hanging over the ferry services and communities affected not for two years, as some said during the debate, but for five years—the Commission first raised the matter with the Executive and the Parliament in 1999. It is now absolutely clear that tendering is legally required. What Professor Neil McCormick has said has been quoted to me and I have had discussions with him on the issue. As I understand it, having asked the Commission about it, he has accepted that there is no alternative to tendering the routes.

I believe that we now need to move forward and in doing so I intend to do all that I can to secure the services and the future of the employees who provide them. In doing that I give an absolute assurance to Duncan McNeil that I will continue to raise the tendering issue with the Commission. If at any stage during the consultation period, which runs until 16 March, or at any point thereafter in the tendering process, we get any change in advice or shift in position from the Commission, I will report it urgently and immediately to the Parliament. Having raised the issue with the Commission directly, I see no prospect of that occurring, on the basis of current Commission regulations.

I turn to the Tories, whom Tommy Sheridan is supporting today. This debate has had its surreal moments, with Tommy Sheridan backing the Tories and Fergus Ewing quoting Brian Wilson MP as his legal adviser. The hypocrisy of the Tories has been breathtaking today. Why do we need to tender these routes? Because of Council regulation 3577 of 1992, on maritime cabotage. Who signed that regulation? John MacGregor. What was his position? The Conservative Secretary of State for Transport. When did he sign it? December 1992, when the UK held the presidency of the EU. The Tories led us into this, yet have the hypocrisy to try to duck the responsibility today.

I ask members to support the Executive motion.