CMAL seek £1.5bn to attempt to fix Scotland's ferry fiasco

The Herald on Sunday understands that a £1.3bn investment cost over ten years does not include the final price over the delivery of two new vessels for state-controlled ferry operator CalMac that are over five years late with the price soaring from £97m to at least £240m. One expert has tipped it to top £400m.

The huge costs come in the midst of "brutal" cuts facing public services after ministers unveiled a spending plan just over a week ago that will slash more than £1 billion from key areas including councils and the police.

Details of the ferry costs were outlined by CMAL chief executive Kevin Hobbs in a meeting attended by Chris Wilcock, head of the ferries unit of the Scottish Government's Transport Scotland agency which would sanction any funding.

It comes as it emerged that Mr Hobbs has admitted that investment in ferries and harbour infrastructure in Scotland has" not met the levels needed for many years".

The CMAL executive has "stressed the need" for a "full" £580m investment committed in an infrastructure investment plan running from 2021/22 to 2025/26. But he has said around £720m further was needed in the following five years to deliver 21 new ferries and the port infrastructure required over the ten year period.

It comes after CMAL stated that there had been issues in finding ferries for use in Scotland through the second hand market.

The publicly owned company has said it had looked at 600 vessels and managed to procure just one.

CMAL has said that if funding "could be accelerated" then additional vessels could be procured or bought over the next three to four years.

Since the SNP came to power in 2007, the average of Scotland's lifeline vessels has soared from 17 years to 24 years. Back in 1974 the typical ferry was just 13 years old.

In 2022, some 17 of state-owned ferry operator CalMac's 31 working ferries deployed across Scotland is now over its 25-year-old life expectancy.

The oldest in the CalMac fleet is is the Isle of Cumbrae which is just four years off its 40-year birthday.

One ferry user group official said: "These numbers are quite staggering, truly eyewatering, and the fruits of the failure of investment that there has been in ferries. The chickens have come home to roost with the amount of disruption felt on the west of Scotland islands and it is long past time for radical action. "The concern is that the amount of money required is not something the Scottish Government necessarily wants to hear at the moment as it tries to get public finances in order after the Covid pandemic.

"But the dysfunctionality of the ferry system cannot be overstated, and action is required. "Levels of dissatisfaction have never been greater, but there are many now seriously fear that the constant bad news is putting off visitors and there has been a concerted effort by some to tone down the rhetoric as a result. That does not, however, resolve our issues."

In a November financial document seen by the Herald on Sunday Mr Hobbs registered concerns about ferry network investment while saying that the Ferguson Marine debacle was an "outlier" in 15 years of history.

"It has been our professional opinion that investment in ferries and harbour infrastructure in Scotland has not met the levels needed for many years. It remains a desire of all stakeholders to increase investment that will lead to greater resilience, reliability and sustainability," he said.

CMAL buys the ferries and then leases them to state-owned CalMac, the operators who for 170 years have provided islanders' key link to the mainland, with in many cases the only one.

The costs will help to deliver the building of 21 new vessels for the fleet as concerns continue to emerge about the ageing ferry fleet in the wake of a series of breakdowns.

Seven of these will be loch-class vessels, built through the Small Vessel Replacement Programme (SVRP) which is already underway.

They are also planning to replace six major vessels in the fleet, the the first of those is being built to serve Islay and Jura.

The £105m deal for two lifeline vessels to serve the Kintyre to Islay route went to Turkey.

The deal to give Cemre Marin Endustri the ferries deal is expected to increase vehicle and freight capacity on the Islay routes by 40% with each vessel able to carry 100 cars and 450 passengers.

But CMAL has been accused of a "scandalous" waste of money for failing to use catamarans instead of the current vessels being built in Turkey.

An analysis, produced with the help of ferry experts, ship brokers and marine economists, reveals that they could have got three catamarans which would could carry 1161 passengers instead of 700 with the preferred ships and 294 cars instead of 214, for just £60m and would not need the £17m pier upgrade.

It says that the 25-year-cost, including the build and the running costs of the catamarans would be £274m - against £387m for the conventional monohull options being preferred - a saving of £113m.

It argues that catamarans are cheaper, more reliable, efficient and environmentally friendly than the conventional monohull vessels that are at the centre of Scotland's ferry fiasco.

CMAL has debunked the study, denied it is anti-catamaran and said the analysis did not have the information necessary to make robust assessements.

Ministers, meanwhile, are continuing to sit on root and branch Project Neptune study into the state of ferry services by global consultants Ernst and Young which had also been tasked by ministers to look into the "unbundling of routes into smaller packages" as part of options for "decentralisation". That led to concerns that the most lucrative routes would be sold off to private firms.

The investigation also led to fears over the future of CalMac and CMAL.

There has been further concern that ferry services are "cocooned" inside four levels of Scottish Government control with the Transport Scotland agency as funders, the CMAL as procurers and vessel owners, CalMac as ferry operators and now nationalised shipbuilders Ferguson Marine (Port Glasgow).

Transport Scotland 'consultancy requirements' documents for reveal that Ernst and Young are looking beyond whether that structure is "fit for purpose".

It asks the consultants to make a recommendation of a "potential route/structure for direct award of ferry services contract that Scottish ministers could consider as part of a future strategy".

But despite the project brief, the First Minister insisted there are no plans to privatise lifeline ferry services to Scotland’s island communities and ruled out the breaking up the CalMac ferry network.

According to Audit Scotland, the consultant’s initial reports on the review prepared in November 2021, identified several areas for improvement, including "insufficient clarity on responsibilities, and a lack of oversight, and present several options for structural reform".

Mr Dey announced he had quit as transport minister at the end of January, over personal health reasons and was replaced by Jenny Gilruth. But there has been speculation that his decision was in part linked to the scale of the ferry crisis.

Ministers were warned 11 years ago by the then head of CalMac about the need for urgent investment to arrest the decline of the nation's lifeline island fleet.

Peter Timms, chairman of ferry operator CalMac warned the government in 2010 that ferry investment had been "slipping behind for decades" and produced an analysis which found that finance was urgently required on a longer term, regular basis "to just stand still".

Since his warning only five vessels have been launched to support the network, and only two are considered as major ferries. They are the 5626 tonne MV Finlaggan, built in Poland in 2011 and the 9058 tonne MV Loch Seaforth built in Germany and launched in 2014.

Before his warning vessels were being produced at a rate of one every 14 months. Afterwards ferries were typically being produced every 33.6 months.

A Transport Scotland spokesman said: “Ministers recognise that having confidence in ferry services can impact upon people’s decision on whether to live and work on the islands, and impacts upon the sustainability of the island communities themselves. These human impacts are at the heart of Scottish Ministers’ commitment to continued investment in ferry services across Scotland.

“During any disruptions CalMac will prioritise sailings to ensure delivery of essential supplies and export of island products, supporting island and remote economies.

“We continue to charge CalMac Ferries Ltd. and Caledonian Maritime Assets Ltd. with seeking potential second hand tonnage to improve operational resilience on the Clyde and Hebrides ferry routes.

The previous charters of the MV Arrow and recent purchase of the MV Utne (now MV Loch Frisa) are evidence of this ongoing commitment to improve and support the existing fleet in this way. We have also recently awarded the contract to build two new ferries for the Islay routes.

“The Scottish Government has invested around £2 billion in our ferry services since 2007. We have long acknowledged the need to address delays in ferry infrastructure."