Ferry firm CalMac gives up to £400k in bonuses to staff

The bonuses have come despite CalMac receiving some £10.5m in poor performance fines in the six-and-a-half years since CalMac took the franchise - nearly eight times more than in its first nine years in charge of the beleaguered west coast fleet.

The salary boost, based on the cost of CalMac previous year's payroll would be estimated to cost nearly £400,000.

The typical worker on an average salary of £35,000 a year would get £525.

The payment will only be made to staff with one full year of service on March 31, 2023.

There has been concern that many of CalMac's 700 staff, who are agency, temporary or set contract workers will lose out, including permanent staff with less than a year's service.

The publicly subsidised ferry operator made a £2.35m loss in 2021/22.

CalMac's parent company David MacBrayne Group (DMG) has received nearly £900m in taxpayer subsidies over six years from the Scottish Government to run the ferry services since securing the ferry contract in 2016. The level of handout has soared from £131.939m in 2016/17 to over £163m in 2021/22 including £11.7m in Covid funding.

Details of the bonuses to be added to the July 2023 payroll came in an email to staff from Mr Drummond headlined: "Recognising your ongoing dedication" and admitted the ferry company had a "challenging financial outlook".

In his accompanying message, Mr Drummond he explains that they have "not met our operator profit threshold" but nevertheless have "made the decision to make this payment to recognise the input of our people who, despite the challenges we have faced, have continued to deliver with bravery and resilience".

He added: "I know the last year has been difficult for all colleagues and we continue to face growing challenges affected our commitment to provide the best service possible to customers.

"Despite a challenging financial outlook, we are investing record sums in maintenance as it is the right thing to do for our customers and communities."

The Scottish Government's public sector pay policy which has maintained a suspension of performance related bonuses since 2016, does not apply to CalMac or parent company DMG.

But it has applied to minister-owned ferry procurers and owners Caledonian Maritime Assets Limited, which is on a long list of public sector bodies that are covered by the pay rules from the Scottish National Investment Bank to Scottish Water.

The issue over bonuses to publicly owned groups and organisations emerged after it was revealed that a bonus bill to executives of the nationalised shipyard Ferguson Marine reached £134,218 over two years while two long-delayed lifeline ferries - Glen Sannox and Hull 802 - are still to be delivered with costs expected to quadruple from the original £97m contract.

In April, First Minister Humza Yousaf told the Scottish Parliament that it was "his expectation" that bonuses to Ferguson Marine executives should not be paid for the 2023/24 financial year.

It comes amidst protests over cuts to ferry services, with an estimated 500 residents, 200 cars, 40 vans and 20 lorries converging on Lochboisdale - the port which links South Uist to the mainland - on June 4 to protest after the loss of services for most of that month.

The ferry company apologised for the decision, said it would affect the least number of customers, but has been ordered by ministers to review its decision-making algorithms.

South Uist has been consistently hit by cancellations to services through the CalMac route prioritisation matrix which attempts to restrict disruption to the fewest islanders. Last year residents complained that food rations in local shops were the result of freight delivery failures brought about by a ferry breakdown, something denied by the ferry operator

Islanders have been also been registering their fury over cuts to services involving MV Hebrides in Outer Hebrides which they say cost communities over £10m last year.

The Scottish Government-controlled ferry operator had initially been praised for what was felt was a u-turn on a "disastrous" decision to slash the capacity of MV Hebrides, the 23-year-old ferry that serves on two routes across the Little Minch to Harris and Uist.

But CalMac indicated the cuts change may be shortlived indicating the move was only temporary to provide extra space for passengers due to recent issues with breakdowns and delayed annual maintenance checks which saw South Uist lose its ferry service for most of June.

Concerns surfaced as CalMac cut the capacity of MV Hebrides, which normally carries 612 passengers and 90 cars, by 20% by not using its mezzanine deck last summer.

The row emerged in 2001 when CalMac came under fire for resisting reinstating full lifeline ferry services to timetable on the Western Isles in the summer at a cost of £816,000 through removing the use of MV Hebrides' mechanical mezzanine deck.

MV Hebrides was due to be replaced by one of two long delayed ferries still being completed at the nationalised Ferguson Marine shipyard in Inverclyde.

The public sector bonus culture comes despite an outcry over the over £2000-a-day remuneration, made up of fees and expenses given to Ferguson Marine's previous Scottish Government-appointed turnaround director Tim Hair who left his post in February, last year.

The Scottish Government defended the payments to Mr Hair as being "in the middle of the industry norm".

The yard, which was rescued from administration by the Scottish Government in 2019, has struggled to complete two lifeline ferries, which are over five years later and with costs expected to quadruple on top of the £97m original contract price.

Three key executives of CalMac - Mr Drummond, Duncan Mackison, and Martin Dorchester have between them pulled in £208,000 in performance bonuses and £121,000 in benefits in kind, or perks, between 2016 when the Clyde and Hebrides ferry contract was awarded to CalMac and 2022.

Mr Drummond, who became chief executive in October, last year after being managing director for four years and service delivery director before that, took over £170,000 in bonuses and perks over the period. Some £109,000 was in the form of performance bonuses and £65,000 was through benefits in kind, believed to be mainly the costs of a car.

Earlier this week it emerged that a Scottish Government-commissioned community consultation response analysis backed moves to scrap ferry operator CalMac and owner CMAL to be merged into one body as part of a revolutionary culture change in the way lifeline services are provided by ferries.

The damning analysis over the future of Scotland's beleaguered ferry network says that a strong case has been made for including the ferries division of the Transport Scotland agency into the new body.

An analysis of common community themes said the current arrangements for running ferries encourages "abdication of responsibility... self-interest and territorial behaviour combined with a duplication of resources and a slow decision making process".

A Scottish Government spokesperson said: “David MacBrayne Ltd, which owns CalMac Ferries Limited, is excluded from the Scottish Government’s pay policy. This is to enable CalMac to operate in a similar commercial environment and on a level basis with other operators.”

An earlier version of this story stated that executives would also receive bonus as part of the payment to staff. CalMac have since clarified that this is not the case and have provided the following statement. "The article published on the Herald website on 13 July entitled “Ferry chaos firm CalMac gives up to £400k in bonuses to staff” is misleading and contains statements which are false.

"The truth is that after a particularly difficult year when our frontline staff have worked very hard in the face of extreme pressures, a decision was taken to make a one-off payment to them of 1.5% of salary as a thank you for their efforts on behalf of our customers and the communities we serve.

"The Herald article states that Executives (company directors) will be receiving a bonus, when the facts are that no director is receiving the payment. Directors, including our chief executive Robbie Drummond, will receive zero as this payment is for our staff and managers and not for Executive-Directors."