Why the Government knew suitable car ferries
for Gourock-Dunoon had to be built specially - and how this failure
may lead to the break-up of the whole network
The Government knew suitable vessels for Gourock-Dunoon could and
should have been commissioned by them and built specially for the
route, that these vessels should have been two vehicle-carrying
ferries that could not have been expected to be available on the
second hand market, and that this commissioning of two new vehicle-carrying
ferries would have been fully compliant with European law.
Who says? The government itself and the EC together say, in the
form of official documents produced for the Scottish administration
or the European Commission, and in the possession of the present
Scottish Government.
But as I discuss below, what is about to happen on Gourock-Dunoon
has implications, not just for this route, but for the whole Scottish
network. The government, whether knowingly or through incompetence,
has set in train a series of events that is not just likely to lead
to a private monopoly of vehicle-carrying over this strategically
important route and (at best) a highly subsidised and inefficient
passenger only service between the two town centres, as we shall
see it has also risked undermining its whole rationale and argument
to the European Commission that the CalMac routes should be kept
together as an integrated network and tendered as such.
So first, why is Gourock-Dunoon important and what are the issues
here? The case had been made that there was a sound economic
case for building these two vehicle-passenger ferries, the case
has been made that there was a solid legal case that these
vessels could and should have been built, and we can now say that
the government and its predecessors knew that there was an unassailable
case on technical grounds that these vessels would have to
be built specially for the route since the characteristics of the
Gourock-Dunoon route meant that they could not be expected to be
provided by the second-hand market.
I have dealt with the economic and legal aspects at length (but
give appropriate links and reminders to this below). I am just piecing
together last bits of evidence (on the technical grounds issue)
about what happened in Gourock-Dunoon. Of course much took place
behind closed doors and we may never find out the full truth. But
there is enough out there in terms of published information, Freedom
of Information (FoI) requests and statements by key players to give
us as fairly full picture, much of which I have reported on this
website.
The story below is a bit involved but worth following in detail
because, as I note, it is not just the future of Gourock-Dunnon
that is at stake, it is the future of the entire CalMac network.
A few days before the Gourock-Dunoon tender is settled, there is
one last element that can be added to help make sense (though I
am not sure that is quite the right word) of the shambles that is
Gourock-Dunoon. We know that official advice from the government
has been that "suitable" vehicle-passenger vessels are
available on the second-hand market for Gourock-Dunoon (a claim
already disproved thanks to FoI). See here,
and here and here
However, evidence in the public domain shows that detailed arguments
and evidence had been previously produced that suitable vessels
could not be expected to be provided on the open market, and instead
the vehicle-carrying vessels could and should be built specially
by the government for Gourock-Dunoon.
Who gave this advice? It was actually official advice within government
and to ministers, but kept secret at the time the decision was made
public in 2003 that Gourock-Dunoon would be tendered separately
from the main CalMac tender with bidders expected to bring their
own vessels for the route.
Before I get into this, I feel I have to use a new term. I do so
with reluctance, in my career as academic I have found there are
often too many words already, with different words for the same
thing (like the Commission using "compensation" where
we say "subsidy").
But the case of the advice given by officials (past and present)
responsible for ferries (including Gourock-Dunoon) in the Scottish
Executive / Scottish Government's transport department at Victoria
Quay in Edinburgh, words fail me. Or at least there is no one word
that captures their performance as documented in my recent blogs.
In my Petitions blog I described how
they have given advice that could be described as not competent
down the years, with very serious consequences. I did not even have
to deal with Gourock-Dunoon to any great extent there to demonstrate
my point.
In my blog about the realities of ferries
I pointed out why the Government's own official report justified
the economics of building two new vehicle-passenger ferries for
Gourock-Dunoon, yet was unjustifiably ignored and brushed aside
by Victoria Quay in their advice to ministers.
In my Parcel of Rogues blog I pointed
out the systemic and sustained efforts by Government to represent
things that were simply not true, and they would have known were
not true, in relation to Gourock-Dunoon. They would have got away
with these "things that were not true" had it not been
for Freedom of Information.
And finally there is my blog about the legal "thing
that was not true", the claim that they could not build
the new vessels needed for Gourock-Dunoon because European law forbade
it.
So what we have is a litany of advice that is evidentially not
competent and/or things that are demonstrably untrue emanating out
of Victoria Quay and into the mouths of successive ministers down
the years. As I said there is no one word for this but let's try
a phrase. Lets call it "Demonstrably Untrue and/or Not Competent
Stuff" or DUNCS for short
It is a clunky phrase and DUNCS as an acronym is a bit makeshift,
but it is fit for purpose - unlike the Government's dysfunctional
transport department at Victoria Quay. So here is one last piece
of the DUNCS jigsaw in the case of Gourock-Dunoon. It stems from
the answer I received from the European Commission confirming (as
I had argued) that there was no EC law preventing the Government
from building new vessels for Gourock-Dunoon had they wished.
But there was one sentence in the reply from the Commission which
said; "In addition, bidders should also have the possibility
to bring their own vessels instead".
Now it was one thing for the Government to state this (it was what
they were doing with the tender after all), but quite another for
the Commission. Why? Because the Commission was giving advice on
what they saw as relevant to the application of the law, and that
sentence suggested that while EC law and guidelines here did not
prevent the government building two new vessels for Gourock-Dunoon,
the Commission was also saying that Government could not require
bidders to use these vessels and operators could use their own vessels
if they wished. This seemed consistent with what the Executive
had announced in January 2003: "we have concluded that
it is possible to tender Gourock-Dunoon
in a way that gives
operators the choice of whether to provide a passenger-only or a
combined passenger and vehicle service. To do this, we will tender
Gourock-Dunoon separately from the rest of the network".
What "choice" really meant here was; "bring your
own, we won't build what is needed".
But as I noted in my blog "The current tender documents (and
the Commission) say that any operator is free to bring its own boats,
but as we have seen and confirmed for years, there is not even one
suitable, modern, 12-knot, 40-car bow-and-stern loading ferry on
the second-hand market, let alone the two that would be needed to
operate the route and run a frequent service. You have to build
them specially - as is done for every other CalMac route".
So in that sense the requirement that operators could use their
own vessels if they wished was irrelevant, there are and were no
suitable vessels available. If the vessels needed had been built
after 2007 as the incoming government had promised and then offered
for tender, they would have been adopted. There was and will be
no alternative, efficient low subsidy alternatives available, instead
the route faces getting at best high subsidy, inefficient and totally
inappropriate foot passenger only alternatives.
However while all that is true, it is no real stretch of the imagination
to see what officials in Victoria Quay would have told the incoming
transport minister in 2007: "you want to build two vehicle-passenger
ferries for Gourock-Dunoon ministers? That's a courageous decision.
You know that it has been policy since 2003 when it was decided
to tender Gourock-Dunnon separately that operators could bring their
own vessels if they wished? So, minister, imagine what would happen
if you built these vessels and the winning bidder wanted to use
their own vessels instead? You could have two new vessels lying
unused. And in any case, if we built these ships specially for CalMac,
the Commission guidelines (also issued in 2003) said that binding
any new operator to take over these vessels would in most cases
be discriminatory. As we said, a courageous decision minister".
An imagined conversation perhaps but one that is consistent with
what has emerged since the years and based on what MSPs have said.
All this would, however, have been economical with the reality and
the law here.
The Commission guidelines that had been published in December 2003
did state that that binding any new operator to take over any vessels
would in most cases be discriminatory, but it went on to say that
in relation to a
"vessel with a design so special that it cannot be found
or sold on the market or used for another purpose, it will be
less restrictive of the freedom to provide services for there
to be a requirement that that vessel be taken over than for the
service to be awarded to a single shipowner with a contract that
would be long enough to allow the full amortisation of a purpose-built
vessel. In such cases, the vessel could be leased - under very
clear conditions set out in detail in the tender documents - by
successive operators from a vessel-owning company set up for that
purpose. An obligation for the new service provider to take the
ship over directly from its predecessor would also be conceivable
Where Member States' authorities themselves own vessels
or have them otherwise at their disposal, these may be placed
at the disposal of all potential service operators under the same
non-discriminatory terms" see 2003
Commission Guidelines
This was an extremely important clarification by the Commission
in late-2003 because it enabled first the Scottish Executive, then
the Scottish Government, to make the case that the vessels for the
CalMac network had to be built specially for the routes in question
and in turn the bidders had to be bound to use these vessels for
the routes in question since they were the most appropriate vessels
in each case, suitable alternatives would simply not be available
in the open market.
This case was duly presented by the Executive to the European Commission
to make the argument for the other routes in the main CalMac tender
in 2005. The Executive did not make the same arguments for Gourock-Dunoon
as it did for the rest of the CalMac network, that vessels would
have to be built specially for these routes and that the winning
bidder required to use them. But exactly the same arguments had
been made persuasively about Gourock-Dunoon as were made about the
rest of the CalMac network, by the same officials who were briefing
ministers and in turn the European Commission.
In 2001, officials in the Scottish Executive had produced a paper
"the Uniqueness of the CalMac Fleet". The paper was prepared
as part of the development of the Executive's proposals for the
tendering of the Clyde and Hebrides ferry services and fed into
the Executive's consideration of the case for tendering the Clyde
and Hebrides network as a single unit.
As the published
version of the paper says "The paper was not prepared with
publication in mind", and indeed its existence was not made
public when the decision to tender Gourock-Dunoon separately was
made in 2003, along with the requirement that operators bring their
own vessels. The existence of the paper was only made public in
2005 when it was put on the web by the Executive, but not published
in print form. Even now most people who are interested in these
issues are unaware of the existence of the paper, I only found out
about it by accident when I was looking for something else on the
web.
When the paper was written in 2001, Gourock-Dunoon was still planned
to remain part of the main CalMac tender and treated as such. The
paper is only five pages long and worth reading in its entirety,
but the essence is captured in two paragraphs in the 2005 web version:
21. New vessels
will be designed with the aim of best
serving the route on which they will be employed. It is normally
expected that when a vessel is ordered for a route she will see
out her working life on that route. The overall effect is that
there is no ready supply of new tonnage or tonnage under construction,
which is uncommitted, from which replacements for the larger Caledonian
MacBrayne vessels could be found. The unusual draft and beam restrictions
necessary for ships to operate on these routes further restrict
the potential availability of second hand vessels from the external
market. This restriction also applies to the medium sized vessels
in the fleet.
22. The smallest vessels in the Caledonian MacBrayne fleet
are not
unique. They are specialised, in that they have
particular features of underwater design that match them to the
routes they serve. Because there is a relatively restricted market
for these vessels it is considered unlikely that craft would be
available, either under construction or available new. It should
be pointed out that these vessels are not particularly complicated
from a technical point of view, and newbuild vessels could be
ordered to replace any of them.
The paper concludes that these points hold for all CalMac routes
and vessels (including the Gourock-Dunoon route and its vessels)
with the possible exception of Ullapool-Stornoway and the MV Isle
of Lewis. The paper also mentions additional features such as the
side-loading facility for Gourock-Dunoon and Wemyss Bay Rothesay
vessels. This special feature would no longer be relevant for Gourock-Dunoon
since the new vessels would not be side-loading but would instead
have to be designed for the new linkspan and so would have bow and
stern ro-ro facilities much like much of the rest of the CalMac
fleet. But the rest of the "Uniqueness of the CalMac fleet"
document still holds; as it points out, there could be expected
to be no ro-ro ferries with draft, beam and capacity specification
suitable for Gourock-Dunoon available on the second hand market.
The crucial point was that they would have to be built specially.
Given that the vessels needed were not built specially, we are
about to see that point that could not be expected to be delivered
by the second hand market vindicated in full. Ironically, despite
the fact that the government telling DUNCS about there being "suitable"
vehicle-passenger vessels available for the Gouorck-Dunoon, tender
they must be hoping and praying that two modern 40-car shallow draft
12-knot bow-and-stern loading vessels do not suddenly magic out
of the ether and are submitted by one of the tenders for Gourock-Dunoon.
Because if "suitable" vehicle-passenger ferries are available
for Gourock-Dunoon as the government claimed, then it would raise
serious doubts about the claims in their 2001 paper about the "Uniqueness
of the Calmac fleet", not just about Gourock-Dunoon but about
the rest of the CalMac fleet. If "suitable" vessels could
be found by operators bringing their own vessels here, why could
this not be done for the rest of the CalMac network? In the Alice
in Wonderland world of Victoria Quay they would have those dependent
on Gourock-Dunoon believe that such vessels could be found on the
open market, but would want the European Commission to believe the
opposite and that that suitable vessels for such routes could not
be found on the open market.
It is not just those dependent on these ferries who will be watching
this with interest, my guess is that the European Commission is
also.
Of course, we are about to find out that the "Uniqueness of
the CalMac fleet" paper was right all along and that suitable
vessels are not available on the open market
So where does that leave us? To summarise, in 2001, Executive officials
produced a document that was never intended for publication and
indeed which remained unpublished until 2005. The 2001 document
made the case that, in common with almost all other CalMac routes,
Gourock-Dunoon was a route for which it was not reasonable to expect
that suitable vessels could be available on the second hand market,
for routes like Gourock-Dunoon, these would have to be built specially
and to order.
Then in early 2003, the Executive announced that Gourock-Dunoon
would be tendered separately from the main network tender and that
tenderers would be required to bring their own boats. This was despite
the fact that the Executive's own internal research and advice in
the unpublished 2001 document was that officials knew there was
little chance of suitable vessels being available on the open market,
they would have to be designed and built from scratch. But because
the 2001 document was not published the public did not know anything
about this research and advice and did not know that Executive officials
knew this process could not be expected to lead to suitable vessels
being produced for Gourock-Dunoon.
Then later in 2003 the Commission produced their revised Guidelines
for the tendering of ferry services in which it made clear that
in certain "unique" circumstances it would be possible
for a government to build vessels specially for individual routes
and specify that these vessels be used by the winning bidder. The
Executive would then have realised that the research summarised
in the 2001 documents gave them the ammunition needed to argue that
the main CalMac network could be kept together as one integrated
network with vessels specially built and deployed for each route
. So they published the 2001 document in 2005 to make that case
for the main CalMac network. Either they or the Commission would
have felt that such publication was necessary in order to demonstrate
to other interested potential bidders why CalMac had to remain a
single integrated network, with vessels built and supplied to order.
But what the Executive officials did not realise (or if they did,
they kept quiet about it, which may explain why the document was
not published or promoted widely) was that the case they had made
for building suitable vessels for the main CalMac network was the
same case they had made for building suitable vessels for the Gourock-Dunoon
route. The only substantive difference in these respects between
2001 and 2005 was that Gourock-Dunoon was now to be tendered separately,
but that contractual difference in no way affected the general argument
that vessels would have to be built specially for the route since
suitable vessels could not be expected to be available on the open
market.
Which brings us to 2010-11 and the Government's claims that "suitable"
vehicle-passenger ferries for Gourock-Dunoon were available on the
open market if tenderers wished to use them (at which point we can
hear the European Commission saying; "Oh really? If that is
the case, perhaps we should review again the Executive's argument
that suitable vehicle-passenger vessels are not available for the
rest of the CalMac network and they have to be designed and built
specially. Perhaps after all we should require the network to be
split up, as we originally intended in 2001, to allow operators
to bring in their own vessels more easily").
But there are no suitable vehicle-passenger vessels for Gourock-Dunoon.
That was just some more DUNCS that was being fed cynically to the
public, those responsible hoped that the public would believe it
and the Commission would not hear it. Instead we are about to see
the end degradation of this route and the result of systemic and
sustained DUNCS over the years by those responsible. It will almost
certainly lead to a monopoly of vehicle carrying by an unrestricted
private operator and a highly subsidized and inefficient foot passenger
service over one of the most strategically important parts of the
transport network in the west coast. At the same time, the fact
the false claims that "suitable" vessels are available
here are encouraging cherry pickers and vested interests to lobby
for the selective or total break up of the rest of the CalMac network.
Whether all this was deliberate or due to negligence is not yet
clear, but DUNCS is a polite word, there are worse ones that would
be more appropriate.
The DUNCS are so bad and so well evidenced, the errors, actions,
and inactions so egregious that there are clear and justified cases
for two separate steps to be taken:
(1) There should be an independent Inquiry into the issue of
Gourock-Dunoon with particular reference to the advice of officials
in this capacity. Given that many of the problems had their gestation
in the early Eighties, the Inquiry's scope should extend back
at least as far as that period.
(2) There should be a judicial review of the present Gourock-Dunoon
tender with an aim of establishing whether there is a case that
the tender was predicated on false and misleading advice and information,
and if so what action should be taken. This review should also
take on board the arguments of the Executive document on the uniqueness
of the CalMac fleet and the Executive's Deloitte Touche report
into the Gourock-Dunoon ferries. These two official documents
together make the case that two modern vehicle-passenger ferries
should have been (and should still be) built specially for Gourock-Dunoon.
But what, if after all this (and against all the evidence), the
new Scottish Government finishes up claiming after the Gourock-Dunoon
tender results are announced that a "suitable" vessel
(or "suitable" vessels) have indeed been produced for
Gourock-Dunoon (even if passenger-only)? Then just watch the cherry
pickers, their lobbyists and their PR reps lobby the Commission
that this "proves" the CalMac network should be broken
and operators be allowed to bring in their own "suitable"
vessels to cherry pick where and when they wish. That is how big
the stakes are here, not just for Gourock-Dunoon but for the whole
Scottish ferry network.
Neil Kay 3rd May 2011
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