CalMac secretly fined £3.5m over ferry disruption by Scots Gov agency Transport Scotland

A group of island businesses have now called for the penalties to be put in a pot to compensate those who are losing money from disruption to the ferry services.

Details of the penalties have been consistently kept under wraps by the Scottish Government-controlled ferry operator saying they were commercially sensitive.

Similar penalties have been made by Transport Scotland to ScotRail over its performance - but the money is reinvested in improvements to the Scottish rail network, such as upgraded waiting areas on the Edinburgh to Glasgow route.

The Herald on Sunday has seen emails in which the CalMac executive has admitted to the amount of penalties incurred.

It is understood that the penalties covered a period from April 2021 to May 2022.

Details emerged after CalMac managing director Robbie Drummond met with Western Isles residents to discuss the challenges the ferry service faces.

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

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

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.

The Lochboisdale Ferry Business Impact Group said the penalties should be used to benefit businesses across Scotland that have lost as a result of cancellations.

The group was formed in the wake of a two-week disruption to the South Uist service, caused by the sudden and unexpected removal of MV Lord of the Isles for repair work to her firefighting system.

For a short time Uist was left without a service after North Uist's MV Hebrides struck a pier.

It returned to normal service following repairs to its damaged hull.

The outage was preceded by a three-month period which saw the almost complete removal of the service, during which, the locals say, these repairs could have been implemented.

A study for the group said the major disruption to the community of South Uist resulted in financial and economic losses estimated around £648,000 near the height of the busy season.

The Herald on Sunday understands that some £300,000 of the £3.5m fines were the result of issues with the South Uist route.

John Daniel Peteranna of the group, whose South Uist-based renewable energy company supplies wind turbines to make help make homes self-sufficient said: "If there is no train, due to a strike, there is always another option, get the bus, get a lift, use your car. But if there is no ferry you just cannot get there.

"This is no understood on the mainland. Yes there are other ferries from other islands but they do not connect with each other."

He said there should be greater islander involvement within the ranks of the different spheres of the Scottish Government controlled ferry services, from the ferry operators, CalMac, to Transport Scotland and Caledonian Maritime Assets Ltd (CMAL), the taxpayer-funded company which owns and procures ferries.

"The ferry opeartor is fined for missing sailings. But this money goes back the the Scottish Government. We want the Scottish Government to put those fines in a fund that the island business affected and who have sustained losses due to canceled ferries, on whatever route, would be able to apply for compensation as they are the actual people affected and are losing money with every cancellation."

Western Isles SNP MSP Alasdair Allan has told the transport ministers Jenny Gilruth that between November 2021 and June 2022, the Lochboisdale-Mallaig service failed to complete the vast majority of regularly timetabled sailings.

"It is little wonder that the community has lost faith in the reliability of this service and doubts its resilience. These reservations are underlined when considered in concert with similar service disruption into other Uist ports," he wrote.

"The group also raised issues to do with compensation for lost business as a directresult of ferry disruption. They highlighted challenges for some island companies to continue to operate in light of recent levels of disruption as there is no commercial insurance available to protect them against such losses. CFL [CalMac Ferries Limited] does not provide compensation for consequential losses or expenses for unused accommodation, car hire and other services. This regularly causes a loss for island businesses providing visitor services.

"The user group would ask you to consider whether a compensation scheme might be designed which would repurpose the government penalties it receives for service loss, due to technical failures, redeployment or other avoidable cancellation... They argue that monies earmarked for transport to island communities and returned to the government should be diverted to island businesses in the form of a compensation scheme for financial losses incurred. They also believe that penalties for delayed or cancelled sailings should also be increased within the next ferry network contract."

Seventeen of CalMac's 35 working ferries deployed across Scotland are now over 25 years old.

The oldest in the CalMac fleet is is the Isle of Cumbrae which is 46-years old.

And the cost of repairs to ferries run by CalMac has more than tripled in a decade as age has taken its toll.

The state-controlled ferry operator spent more than £28.5m on repairs to their vessels last year, compared with just £9.5m in 2011.

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

The network issues have come as would-be ferry replacements MV Glen Sannox and Hull 802 are still languishing in now state-owned Ferguson Marine's shipyard, with costs of their construction more than doubling from the original £97m contract to nearly £250m. Their official in-service launch is running at least five years late.

The first ship was meant to enter service on the Arran route in the summer of 2018 but is not expected to be ready until next year at the earliest - five years late. Hull 802, destined for an Outer Hebrides route, has gone the same way. The latest estimated cost for both ships is at least £250m off an original fixed contract price of £97m.

Ferguson Marine's financial collapse in August, 2019 resulted in state takeover.

The ferries contract was plagued by design changes, delays and disputes over cost, with the yard’s management and Caledonian Maritime Assets Ltd (CMAL), the Scottish Government-controlled taxpayer-funded company which owns and procures ferries for state-owned CalMac, blaming each other.

In one year alone, in 2019, ScotRail run by state controlled Dutch transport firm Abellio was ordered to pay more than £3.3m in fines for service failures - but the money as in previous years went back into improving the service.

The Scottish government announced Abellio ScotRail's contract to run train services in Scotland was to end early and it was nationalised in April.

The Dutch firm had been running the franchise since 2015 but had faced criticism over cancellations and performance levels.

The performance data, produced by the Service Quality Incentive Regime (Squire), is gathered by Transport Scotland's inspectors.

They audit all 355 ScotRail stations and a minimum of between 190 and 210 trains at least once every four-weekly cycle.

The concerns surface as users complained of detours of up to 180 miles as lifeline ferry services were thrown into turmoil for over three days last week after a safety issue with an ageing CalMac ferry.

Ferry services on two routes were brought to a standstill on Wednesday after MV Hebrides was removed from service due to safety issues.

Sailings continued to be disrupted on Friday four days after the issues with Hebrides emerged.

On Thursday, services between Uig on the Isle of Skye & Lochmaddy on North Uist and Uig and Tarbert on the Isle of Harris were hit even after the third oldest vessel in the fleet, 37-year-old MV Hebridean Isles was temporarily moved from Islay on Wednesday to help support the lifeline services.

This has had a knock on effect with cancellations experienced on other services including links to Islay which went down to a one-ship service due to a lack of replacement vessels.

It had been hoped the issue with Hebrides CO2 firefighting system so that it would be back in operation on Friday.

A Scottish Government spokesmans 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.

“Under the CHFS2 contract, performance deductions can be applied by Transport Scotland in certain circumstances when sailings are late or cancelled, in the form of a reduction in grant paid for operating ferry services.

“Scottish Ministers are committed to ensuring that island residents and communities’ views are represented appropriately and have asked the new chairman, as a priority, to consider how this might be achieved. [CalMac] board memberswere appointed based on their experience and abilities. An understanding of the role of transport, including ferries, in maintaining the economic and social integrity of the Highlands and Islands is a requirement for all board members.”