CalMac gets record £316,000-a-month in poor ferry performance fines

Details of the penalties, which were once kept under wraps while payments were handed over to the Scottish Government, reveal that the Scottish Government-owned company has notched up £16m in performance penalties as it nears the end of the seven year contract.

It comes as it was further revealed that as of November, of 350 commitments made by the ferry company to enhance services, there were 31 that had not been achieved a matter of months before the ferry operator's current seven-year contract expires.

Some £100m has been spent on repairs for the entire ageing CalMac fleet in the space of just over three years, with £24.852m spent in the space of just five months to February, this year.

It comes as the Scottish Government considers providing an uncontested award of the contract to provide lifeline island ferry services to CalMac 'in perpuity', making it a wing of government.

READ MORE: The 'scandal' of £300k bonuses and perks given to CalMac ferry execs

Before CalMac Ferries Ltd, a subsidiary of David MacBrayne Ltd, took the £1bn eight-year contract under competition from the services company Secro, the penalties over nine years to September, 2016 amounted to just £1.36m.

The penalties are almost equal to the total post-tax profits the CalMac's parent company David MacBrayne Limited notched up in 2022/23.

Nearly £5m in penalties have been imposed over the 15 months between October, 2022 and December, last year at an average rate of £315,578-a-month. Nearly £1m in fines have been imposed in the latest three month period from October to December.

It had already been forced to pay out a record annual penalty of £3.088m in the year from October 2021 - an average rate of £257,338-a month.

Similar penalties have been made by Transport Scotland to ScotRail over its performance when it was operated by Dutch state transport firm Abellio - but the money was reinvested in improvements to the Scottish rail network such as upgraded waiting areas on the Edinburgh to Glasgow route.

As part of its contract management arrangements, Transport Scotland conducts a series of performance measures to assess ferry operators and penalties are imposed when they are not met.

It reports two of these - reliability and punctuality - to its senior management team.

Performance deductions are not made against reliability and punctuality measures when a sailing is cancelled or delayed due to a "relief event".

Relief events include adverse weather, tidal conditions, traffic problems and other issues of safety.

There is concern that the plan to give CalMac the permanent right to run services has not been a feature of a written Transport Scotland consultation over the future of the service and some have argued that there must be a separate public discussion over the proposal.

A final decision after a due diligence process – which will establish the feasibility of that approach from a financial, operational and legal perspective – is expected in the summer, with an aim to have the new arrangement in place by October 1 next year.

But the Ferries Community Board, formed as part of CalMac's franchise bid for the Clyde and Hebrides Ferry Service to be the voice of the communities, is opposed to the move.

It has said that in response to the ferry service inquiry by the Scottish Parliament's transport committee, communities represented "unanimously" do not support a direct award of the next contract.

The ferries community board has said that to gain community support for a long term directly awarded contract, they would need to see "significant change in the structure organisation and culture of the management and operation of the ferry services".

It says it would want to see a "radical overhaul" of the contract itself with "revised measures of success and far greater accountabilities" to the communities served by the ferry services in Scotland.

An estimated 500 residents, 200 cars, 40 vans and 20 lorries converged on Lochboisdale - the port which links South Uist to the mainland - in June, last year to protest about how the island has been persistently hit by cancellations due to ferry breakdowns. It led to a rethink demanded by the Scottish Government on how islanders were affected by cuts to services.

One user group official said: "The level of penalties is quite staggering.    The level of performance we are seeing from CalMac albeit that they have had to deal with a lack of investment in our ferries is totally unacceptable and it is no wonder that people at a public meeting on Uist had a vote of no confidence in CalMac this time last year.

"The fact that the Scottish Government had to order CalMac to rethink how it rescheduled services is an indictment in itself on how it operates."

Joe Reade, chair of the Mull and Iona Ferry Committee said: "I don’t understand why the government is determined to pursue direct award, when there are not only no commercial arguments in favour of it, but no mandate for it either. The only people who will be happy are CalMac management and the RMT [union] . Meanwhile, government have not even asked islanders if this is a route they want to go down.

"We’ve had a ‘consultation’, but it asked only what flavour of direct award we wanted, not whether we wanted one at all."

He questioned why islanders have been denied the opportunity to discuss a route-by-route tendering of lifeline island services.

South Uist's vote of no confidence.

"Unbundling, we are told, is firmly off the table – irrespective of what we might think about it, and regardless of any potential benefits. Our own efforts to investigate the benefits of a community-owned ferry company were closed down by the transport ministesr who refused to even talk about it. Meanwhile we learn that it’s the government’s intention to award the contract to CalMac in perpetuity. Forever."

Scottish Conservative West Scotland MSP Jamie Greene who has been tracking the progress of the ferry contract said: “Any notion that the tender process was a true open market exercise is for the birds, there was only ever going to be one outcome. So, whether it's a direct award or not, it's merely a technicality.

"CalMac is trying to deliver a west coast ferry service with both hands tied behind their backs. An ageing fleet, a lack of new vessels, growing maintenance bills, and a stifling contract which doesn't meet the needs of islanders.

"There was a missed opportunity here to revamp and revise how we deliver ferry services to our island communities on the west coast, and islanders views and voices will undoubtedly be ignored as usual."

The record annual penalties imposed in the last full year of £3.823,825 to September, 2023 is nearly three times as much as was incurred in the first year of the CalMac's current contract when it received fines of £1.234m CalMac Ferries had faced fierce competition for the contract awarded in 2016 from the controversial services company Serco, which controls the Northlink ferry service to Orkney and Shetland as well as the Caledonian rail sleeper service to London.

CalMac's contract bid made almost 350 commitments to improve the service, including investments in vessel and port improvements, increasing traffic, providing more opportunities for local employment, more community engagement, and maintaining all existing routes and services.

Some 18 of CalMac's 31 working ferries that were in service in 2021 and deployed across Scotland are now over the working life span of 25 years old.

The 40-year-old Isle of Arran which usually serves as the second Arran ferry in the summer, is second only to Isle of Cumbrae in a list of CalMac's oldest ferries. It has been the regular summer ferry on Argyll and Bute's Tarbert to Portavadie route, when it is not rerouted.

The others that are over 25 years old are Hebridean Isles (39) Loch Linnhe (38), Loch Riddon (38) Loch Striven (33), Loch Ranza (37), Isle of Mull (36), Lord of the Isles (35), Loch Dunvegan (33), Loch Fyne (33) Loch Buie (32), Loch Tarbert (32) Caledonian Isles (31), Isle of Lewis (29) and Loch Bhrusda, which was completed in May, 1996.

After 1973, when the Caledonian Steam Packet Co. acquired most of the ferries and routes and began joint Clyde and West Highland operations under the new name of Caledonian MacBrayne, the official expected life of a ferry had been 20 years.

That is until 2002, three years after the 1999 devolution when the then Scottish Government-owned Caledonian MacBrayne which then controlled the fleet and procured vessels, extended the 'working life' from 20 years to 25 years.

CMAL which took control of the ownership of the ferry network and the purchase of new vessels in 2006, has since moved the 'expected useful life' from up to a maximum of 25 years to 35 years.

Duncan Mackison, interim chief executive of CalMac, said: “'While these performance deductions are a normal part of this type of contract and are designed to incentivise improvements, we take our responsibility to provide a resilient service very seriously. This is reflected in our reliability and punctuality figures, which consistently remain at more than 95% and improved in the last financial year.

“However, we fully share customer concerns regarding cancellations and disruptions and are working closely with third parties and stakeholders to address these issues, whilst also investing record sums in our ageing fleet to maintain resilience. This investment in maintenance grew to well over £43m in 2023 compared with just £20m in 2017.

“The six major and 10 small new vessels funded by the Scottish Government and arriving over the next few years are very much welcome; however, we face a difficult period as we wait in anticipation for them to be fully operational on the network. In the meantime, we will continue to work in partnership with local communities to ensure the best possible outcomes for all who rely on our services.”

A Transport Scotland spokesman said: “We recognise that every cancelled sailing can have a significant impact and continue to work with operators and CMAL to improve resilience across our networks. Regrettably, some communities have been greatly impacted and we fully appreciate the need to improve reliability and confidence in services.

"All the money returned through performance penalties is reinvested in improving the resilience of the ferry network. For example, penalty deductions are helping offset the cost of the current charter of the MV Alfred.

“Delivering six new major vessels to serve Scotland’s ferry network by 2026 is a priority for this government. We have invested more than £2 billion in our ferry services since 2007 and we have outlined plans to invest around £700 million in a five year plan to improve ferry infrastructure.”