Emergency ferry to maintain Scots lifeline services costs taxpayer 'eye-watering' £11,760 a day

Details emerged after the Scottish Government agency Transport Scotland refused to discuss the cost of the public contract claiming it was "commercially sensitive".

The £8-a-minute deal was struck with the Isle of Man Steam Packet Company Limited said to be the oldest continuously operating passenger shipping company in the world, which celebrated its 190th anniversary in 2020.

The revelation has come in the wake of growing anger over a "waste" of public money over Scotland's ferry-building fiasco.

READ MORE: 'Scandal': Ex-Ferguson Marine chief says nationalisation 'rescue' of ferry fiasco firm is nothing of the sort

The collapse in August, 2019 of Ferguson Marine Engineering (FMEL) led by tycoon Jim McColl, which runs the last remaining shipyard on the lower Clyde, came amid soaring costs and delays to the construction of two lifeline island ferries and resulted in its nationalisation by the Scottish Government.

The delivery of new lifeline island ferries MV Glen Sannox and Hull 802, which were due online in the first half of 2018, are over four years late, with costs doubling to over £200m.

Joe Reade, chairman of the Mull and Iona Ferry Committee which has been fighting for a replacement ferry said the Scottish Government should be seeking more cost-effective answer - including buying a new ferry in construction in Indonesia for just £12m.

He said: "They are throwing money at whatever solution they can find and are avoiding the most obvious solution."

The catamaran, which was due to be completed in the middle of this year, had an option that it can be sold on the open market if a buyer can be found.

Video: MV Arrow

It comes as it has been confirmed that attempts are being made to find other vessels for charter.

CalMac have told concerned ferry users in a note that a ship broker is assisting in the search.

But the ferry operator has said that it is proving "particularly challenging" as the majority of passenger vessels that could be suitable are currently tied up with work over the busy summer period.

One transport consultant who has studied the plight of the nation's ferries said: "Those kind of numbers are eye-watering but unfortunately ship brokers and owners are aware of the situation in Scotland. It is a sellers' market in that respect and the prices will be set accordingly."

It comes after it emerged that Ferguson Marine's turnaround director Tim Hair is being paid a daily rate of £2,565.

Total remuneration for his 238 working days in 2020 in a contract which is due to expire at the end of the year including fees, expenses and VAT totalled over £790,000.

That is almost six times First Minister Nicola Sturgeon’s £151,000 salary.

MV Arrow was brought in to help relieve pressure on freight services between CalMac's Stornoway to Ullapool crossing but broke down on July 24 after operating for just a week. Marine waste got tangled with a propellor and all sailings scrapped till the end of the month.

When it was commissioned, transport minister Graeme Dey said it will bring "additional capacity" to a key route during the busy summer period.

“We recognise communities’ frustration at the recent disruption and the impact it is having. We are doing everything that we can, supporting CalMac to maximise available capacity across the network," he said.

CalMac had hoped Arrow's charter would free up space on its MV Loch Seaforth ferry, particular during the busiest weeks of the summer tourist season.

The ro-ro ferry joined the ferry fleet on a short-term charter from July 19, until September 7.

It took over MV Loch Seaforth’s evening freight sailing six days a week, allowing the Seaforth to deliver two additional passenger sailings per week.

But it was out of action for 10 days after it broke down a week after it went into service.

Arrow, returned to action on Tuesday and it is understood CalMac is seeking to renegotiate the charges for the charter as a result.

The deal for Arrow was struck with Isle of Man Steam Packet Company Limited which provides freight, passenger and vehicle services between the Isle of Man Sea Terminal, in Douglas, Isle of Man, and five ports in the United Kingdom and Ireland.

In June 2009, it emerged the company, then owned by the Australian finance firm Macquarie Bank was under investigation by a Isle of Man parliament select committee over concerns of their published profit margins, which according to Hansard were 36%, almost three times the industry standard for ferry companies throughout the world.

Critics of the Steam Packet company said at the time that these profits should be used to plug the deficit from the loss of freight trade and others said that it was not the government's place to intervene.

In May 2018, it was confirmed that the Isle of Man government had agreed a deal worth £124 million to purchase 100% of MIOM Ltd, the parent company of the Isle of Man Steam Packet Company.The deal was approved by Tynwald, the Isle of Man parliament, on 16 May 2018.

Arrow is owned by a company registered in Denmark is managed by Seatruck Ferries under contract and has been on a long-term charter to the Isle of Man Steam Packet which made a £14.7m profit in 2019, £4m more than in 2018, the first year under Manx government ownership.

Scottish Government plans to charter a second ferry, Arrow's sister ship, the MV Clipper Ranger in 2018 were dashed when her managers, Seatruck, would not entertain a short term hire.

Ministers have been asked to "come clean" over the status of the nationalised firm at the centre of Scotland's ferry building fiasco following concerns that it was at risk of going into administration again.

Ferguson Marine (Port Glasgow) Holdings (FMPG), which is controlled by ministers and supported by taxpayer cash, made a £100 million loss in its first four months of Scottish Government control.

Two previous companies running the Ferguson Marine shipyard have gone into insolvency in the past seven years.

The Scottish Government has said it believes it was acting in the public interest in taking complete control of Ferguson Marine by December, 2019 as it saved the yard from closure, rescued more than 300 jobs, and ensured that the two vessels under construction will be completed.

Ministers have now taken over the contracts for the ferries and terminated the existing agreements with the owners and procurers of Scotland’s ferry fleet, Caledonian Maritime Assets Limited (CMAL), Mull and Iona Ferry Committee (MIFC), supported by other island groups have already written to Islands Minister Paul Wheelhouse, asking him to buy the ferry in Indonesia.

They say they are only asking him to honour a promise repeated many times – that if a suitable ferry could be found on the used market, CMAL would be instructed to buy it.

The ferry is similar in design to the Alfred that is operated by private ferry company Pentland Ferries.

It is widely appreciated for its reliability in poor weather and burns one third of the fuel of an equivalent CalMac ferry.

The Mull and Iona Ferry Committee commissioned a detailed technical report from the University of Strathclyde's respected Department of Naval Architecture, funded by donations from locals and other supporters from around the world after the Scottish Government refused to support a similar analysis.

The committee says the report found that the catamaran will exceed Maritime and Coastguard Agency safety requirements with minimal modifications.

The committee also found that the vessel’s cost - £12 million compared to the estimated £100m for each of the incomplete boats on the Clyde – will be recouped in just seven years through greater fuel efficiency and lower operating costs.

The Scottish Government has pumped over £17m into the Ferguson business during the four months to March 2020 – including £10m into the construction of the two ferries.

Scotland's public finance watchdog Audit Scotland is currently probing claims of a misuse of public funds in relation to the controversial takeover which is being looked at alongside the awarding of £45m of taxpayers-funded loans from the Scottish Government to FMEL before it collapsed.

The Scottish Government is still owed over £40m from the collapse of FMEL having used £7.5m of what they were owed through the loans to buy the business.