What does the Government think would be a "suitable vessel" for Gourock-Dunoon? Just about any old tonnage that floats

One tiny, useful residue of all that “corrosive media cynicism” is that no-one these days is fooled easily. Most of us, if awake, understand exactly what the member for the Maldives, or wherever, is about. Ian Bell "I might be a cynic but we get the politicians we deserve" The Herald Wednesday 24th March 2010

Two weeks ago, the Member of the Scottish Parliament for Banff and Buchan, aka Stewart Stevenson Transport Minister, told the Cowal community through an official that: '"suitable second-hand vessels" are available if the winning bidder needs them, and that this "includes tonnage that can carry vehicles"'’. However last week: '"A Scottish government spokesman explained that providing specific detail about the evaluation criteria could prejudice the procurement process before saying: “The Scottish government is tendering for a Gourock- Dunoon service in line with EU procurement rules "'. The government then declined to answer any of the questions I gave to the paper for the government to answer around the question of what they meant by "suitable vessel" : See "Cowal wants a vehicle ferry service".

This is like a second-hand car salesman assuring us he had found "suitable vehicles" for us, but that Brussels bureacrats prevented him from saying exactly what was meant by "suitable vehicle" and we had no choice but to accept the contract that he had drawn up on our behalf, sight unseen. .

A second-hand car salesman trying that tactic would not stay in business long. Unfortunately, Ministers of Transport are not subject to the same market test. However, you can be sure that the European Commission in Brussels would not be pleased to hear what was being claimed and said about them in either case.

So last week I put in six questions under Freedom of Information (FOI) legislation to CMAL, the state-owned company that actually owns almost all the vessels used by CalMac and much of the shore based infrastructure. CMAL had been instructed to find Stewart Stevenson' s "suitable second-hand tonnage" after it had been announced that potential tenderers here would have to bid on a 'bring your own boats' basis.

CMAL took only a week to answer (they answered this Monday) and when I asked them two supplementary questions they answered them the same day. .CMAL is to be congratulated for the prompt and transparent way it handled this, in stark contrast to the way that the Transport Department have tried to bluff this one out. At least some light has been shone on this charade.

Their answers to the six questions plus two supplementaries are shown at the end of this piece and reflects the remit given to them by the Minister and his officials as to what they mean by "suitable".

I had asked CMAL what technical and financial criteria had been used to define "suitable tonnage", and also questioned whether criteria relating to customer use and comfort had been used. I was told: "The criteria used...are vessels that it is believed could access the shore infrastructure at Gourock and Dunoon, i.e. length, breadth and draft."

CMAL advised that no financial (i.e. purchase or operating cost) or customer use/comfort criteria had been used. A supplementary question confirmed that vessel speed and capacity had not been considered to define suitable tonnage. CMAL said: "We only looked at vessels we believed to be capable of accessing the shore infrastructure. These ranged from speeds between 11.7 and 27 knots, and passenger capacity of 175 to 625."

CMAL's response gives the lie to the claim that providing such detail could be prejudicial to the procurement process.

What it does show is that providing such detail about the evaluation criteria could be prejudicial to the interests and credibility of those responsble for setting up this fiasco.

There is nothing in the criteria about whether commercial operators would consider these vessels as 'suitable', nothing about whether they would be affordable to buy or run, nothing about what speed they should do and nothing about what vehicle-carrying capacity they should have.

No wonder the government did not want to spell out what it meant by 'suitable.'

It essentially boils down to any old tonnage capable of docking at Gourock and Dunoon would be tagged as a "suitable vessel" for this route.

This is like "suitable vehicle" for the second car salesman meaning any old banger that could actually park at Gourock and Dunoon piers.

What the second-hand car salesman meant by "suitable" would be unlikely to make commercial sense, or sense for me as a potential user. The same holds for Minister Stevenson's idea of "suitable vessels" for Gourock-Dunoon - he might think that any old obsolete pile of junk rejected by Greece and Spain should be regarded as "suitable" for the Gourock-Dunon route, but that view is unlikely to be shared by potential bidders for the route or potential users of these ferries.

The supplementary questions I asked shows that the identified vessels include one capable of up to 27 knots. Putting this in context, the largest vehicle-carrying vessel in CalMac's fleet is the MV Isle of Lewis, which does just 19 knots. The criteria given by the government were broad enough to include passenger-only, so this could be the fast passenger ferry I thought might make an appearance at some point. And if it is a vehicle ferry, it would be far too big and expensive to run on the route.

The Deloitte Touche analysis of the route identified the need for a frequent service based around two 12-knot 40-car vessels. Smaller and slower vessels could not maintain a half-hourly service. If the vessels were bigger and faster, their fuel and manning costs would render them uneconomic for commercial bidders. And who would want to purchase major assets anyway even if they were available or a contract that would only last six years under EU rules and could be left on their hands as junk if they lost the next contract.

It is considerations such as these that leads to the government commissioning the build of new vessels with a life of 20-25 years for every other CalMac route, then leasing them out for successive six years contracts for use on the routes in question. Modern fuel efficient vessels with speed and carrying capacity appropriate for each of these routes are not found floating around on the second hand market, they have to be built specially. And what holds for every other Calmac route should hold also for Gourock-Dunoon.

The Deloitte Touche report also showed that if you want ti run a ferry service for foot passengers between Gourock and Dunoon town centres then it would just about eliminate public subsidy of this were carried out with two 12-knot 40-car roro vessels because (as Western Ferries have demonstrated in abundance) the money is in vehicle-carrying, not foot passengers. Foot passengers are low revenue and high cost to transport, add vehicle-carrying to a service and you can add much more in revenue than you do in costs. But the vessels would have be appropriate (junking the adjective "suitable" in this context now that it has been debased here) and would have to be available to begin with.

As I have argued separately, building and leasing two such vessels for the Gourock-Dunoon route would and could have been justified under EC law if the government had made the case to the Commission.. However, since the government has refused to say, what, if any proposals they made to the Commission, we have to presume they made no such case. Over the life of just one six year contract, the Deloitte Touche figures show that such an outcome would have saved millions in public subsidy, improved competition in the crucial vehicle-carrying market and in turn proved a major boost to economic development on both sides of the Clyde. The economics of such services set out in the Deloitte Touche report echo studies on other ferry services, such as Washington State Ferries who are replacing their passenger-only ferries with combined vehicle and passenger ferries because the latter are more economic (see here).

Instead, the likely outcome out of all this is that there will only be one bid, it will be from CalMac with a passenger-only vessel to replace MV Jupiter, the vessel has already done docking trials to see if it is "suitable" at Dunoon by ministry criteria. CalMac will then make a statement reminding the public (as they have reminded them before) that their undertaking is only to provide a passenger service, and they see the new vessel as providing the best possible service in that context. (or words to that effect). This will of course mean that Western Ferries finally becomes the sole operator of vehicle-carrying ferry services across this strategically crucial route, with no regulator or competing ferry service to control prices or services. Western will say (as they have in the past) that they would noe be a monopoly because if you do not like what they decide to offer you, you can always take the 80 mile detour Gourock-Dunoon via Rest-and-be-Thankful.

And as for the government, it was becoming clear that the strategy of the Minister and his officials would be to declare disappointment when the only bid for the tender turned out to be for passenger-only, given they had earlier stated that “suitable vehicle-carrying vessels” were available for the route. They would then express regret but say they had to adhere to the market test and EC rules here, and accept that the route had now to be passenger-only.

They will still try to say that, but at least such a strategy has now been shown up for the sham it is.

The irony is that Margaret Thatcher's government in the Eighties tried to give over the whole vehicle ferry market here to Western Ferries but failed due to the strength of public opinion. The legacy of that government was to impose the frequency restriction on vehicle-carrying by the town centre service to one an hour to give Western Ferries a free run to build up the dominant position it now has.

All the evidence is that public opinion still feels the same way now as it does then about the need for a competing town centre vehicle-carrying servcie (eg see last weeks Dunoon Observer) , and just as importantly such a solution would be far and away least subsidy and the most efficient, and could have been justified under EU law.

With all these apparent win-win outcomes for the government, the users, the tax payer, and the dependent communities, the obvious question is; why has it not happened?

Full answers are probably buried in government archives too deep for even FOI to reach, but there is one simple fact. If it did turn out that a frequent vehicle carrying service delivered even half the benefits suggested by the Delloitte-Touche report, it would mean that government officials and their predecessors have spent years first implementing, maintaining, and advising on restrictions on public service frequency and vessel replacement that will have cost the public purse tens of millions in unnecessary public subsidy, led to distorted and inflated user prices, and help stunt economic development on both sides of the Clyde.

it is not difficult to see why these same officials could resist the idea that such a frequent vehicle-carrying service could be viable, especially given how effective implication of such a policy would show up how flawed and damaging the previous policies had been. It would mean them recognising black when they had spent years advocating and implementing white. It means the likelihood here of what economists call a principal-agent problem - it would be understandable if not forgivable if officials were to go into collective denial over the viability of such a frequent vehicle-carrying service here .

That in no way excuses the current minister from responsibility in all this, especially when the facts and evidence on the options he should have pursued have been clearly and repeatedly put in front of him.

The one part of Ian Bell's article yesterday that I disagree with is the title of his piece: "I might be a cynic but we get the politicians we deserve". No, even if you believe in original sin, none of us deserved to be landed with this. This is a government set to achieve the outcome here that Margaret Thatcher attempted in the Eighties but never managed. This is not just something that the communities could never have expected when this government was elected three years ago, it will also be a label that Minister Stevenson's party colleagues in Argyll and Bute and elsewhere will have to take responsibility for and live with, just as future generations here will have to live with the consequences of what the government has done..

First set of FOI answers from CMAL, 22nd March 2010

Dear Professor Kay

We refer to your request under the Freedom of Information (Scotland) Act 2002 in your e-mail of 12th March 2010 and would respond as follows:

You had six questions under FOI :

1. What, if any, technical criteria are being used by CMAL to define “suitable second-hand tonnage” in this context.

The criteria used by CMAL to define “suitable second-hand tonnage” are vessels that it is believed could access the shore infrastructure at Gourock and Dunoon i.e. length, breadth and draft.

2. What, if any, financial criteria (such as purchase cost? operating cost?) are being used by CMAL to define “suitable second-hand tonnage” in this context.

No financial criteria have been used to define “suitable second-hand tonnage” to date.

3. What, if any, criteria relating to customer use and comfort are being used by CMAL to define “suitable second-hand tonnage” in this context.

No customer use and comfort criteria have been used to define “suitable second-hand tonnage” to date.

4. How many “suitable” second-hand vehicle-carrying ferries were identified by CMAL for the above purpose and were available?


5. Does MV Ali Cat qualify as “suitable second-hand tonnage” in this context?

The MV Ali Cat was not one of the vessels identified in Q4

6. Does MV Jupiter qualify as “suitable second-hand tonnage” in this context?

The MV Jupiter was not one of the vessels identified in Q4

I trust this answers your questions in your e-mail of 12th March and your subsequent e-mail of 15th March 2010.

Second set of FOI answers from CMAL, 22nd March 2010

With regard to your two supplementary questions on the same topic we would respond as follows:

1. Can CMAL confirrn that no criteria relating to vessel speed or capacity were used by CMAL to define “suitable second-hand tonnage” in this context.(if such criteria were used, could these be please be specified)?

As stated, we only looked at vessels we believed to be capable of accessing the shore infrastructure, the vessels speeds ranged from 11.7 Knots to 27.0 Knots and 175 passengers to 625 passengers.

2. In view of the fact that MV Coruisk may become available in 2011, was this one of the six vehicle-carrying vessels identified as suitable in this context?

The MV Coruisk was not one of the vessels considered.

We trust this answers your questions.

25th March 2010