So we now know that - as the Herald says - an offer
to effectively give Western a vehicle-carrying monopoly on this
strategically important route was made immediately after the 2007
election, despite the fact that the promise to build new vehicle-carrying
vessels for the town centre route was a key election pledge which
helped the party gain power in Argyll and Bute - and indeed the
rest of the country.
This still leaves some puzzles, one of which is
that the then Transport Minister was not renowned for imaginative
or even independent thinking, and this proposal was almost certainly
fed to him.
The civil servants were almost certainly part of
this and as previous Ministers will testify in private, they have
their own Western-oriented agendas here. But that is hardly enough
to explain why this happened and so quickly after the election.
Clues may be found in the subsequent
short list for the Gourock-Dunoon tender published April 2010
The business models of the shortlist are very different, but there
are two that stand out. Western's business model is based around
cherry picking unsubsidized high value segments (here vehicle
carrying) on short crossings with its own linkspans.
By contrast, Brian Souter's company Highland and
Universal Securities Ltd in its ferry activities (reflected in
its New Zealand holdings) has been based around subsidized foot
passenger commuter traffic often integrated with its own bus services:
its own NZ company Fullers
says;
Brian Souter has also been trying to start a fast
passenger commuter ferry service on the Forth Estuary linking
with buses. He has been trying to get subsidy for this and has
failed and if he had asked me first I would have told him he would
have no chance because it is against EC law - the 1992 Maritime
Cabotage Regulation only allows for island ferry services to be
subsidized.
This created problems for certain CalMac routes
such as Tarbert-Portavadie and Gourock-Dunoon and in 2003 the
European Commission issued a Communication which stated that long
estuaries or fjords which lead to a detour of about 100 km by
road may be treated as islands for the purposes of the Regulation
as they may cause a similar problem by isolating conurbations
from each other. The ratio between the distance around the estuary
and the distance across should be around 10 or greater.
This opened the way for Tarbert-Portavadie and the
Gourock-Dunoon Clyde Crossing to be subsidized since these physical
requirements fit them (as they were designed to do) - but not
the Forth Crossing. Brian Souter would have found this out once
he tried to squeeze the physical characteristics of his Forth
Estuary fast passenger ferry service into the requirements of
the EC's 2003 Communication.
But as he would also have found out, while he could
not get subsidy for his fast passenger Forth Crossing connecting
with his buses on either side, he could expect to get subsidy
for any fast passenger Clyde Crossing connecting with buses on
either side.
So where does that leave us? With two shortlisted
firms both with very different business models and both with very
different reasons for interest in Gourock-Dunoon.
Western Ferries business model is to focus on carrying
vehicles on its own linkspans and short crossing. They would have
no commercial interest in running any service that involves paying
berthing dues for the publicly-owned linkspans and there is no
commercial interest in their actually putting in a bid once they
can be sure that there will be no competing vehicle service bidding
- in short, any time from now on. In commercial terms they would
be quite happy to see any other company taking on the high cost
low revenue foot passenger service here that they do not want.
By way of contrast Brian Souter's company Highland
and Universal Securities would find the foot passenger market
between the town centres very attractive as a bridgehead and link
to help develop bus services on either side of the Clyde, especially
if the foot passengers came with a subsidy as well.
Whether this would be with a fast passenger service
is less certain especially since there is not the same landing
or docking opportunities at Gourock or Dunoon that were available
for the hovercraft experiment on the Forth.
Let us be quite clear that there is no evidence
or indeed any suggestion that either company did anything wrong
here. On the contrary, the two scenarios painted here - Western
with a vehicle monopoly running on its own linkspans and Highland
and Universal Securities with a near complete foot passenger monopoly
running on the town centres route - make perfect sense from a
commercial perspective. These companies are simply acting in the
interests of their respective shareholders which is what they
are supposed to do. There is no evidence or suggestion that they
made any agreements or understandings, on the contrary the evidence
in the Herald article of 23rd February is that when the government
tried to offer a deal that would give Western Ferries a vehicle-carrying
monopoly that this was rejected - and for sound commercial reasons
given that Western would immediately know when the deal was offered
in 2007 that the government would not make such an offer if they
really intended to build new vessels for the town centre route
and so Western could eventually expect to have all of the vehicle-carrying
market if they just waited.
But all this may still help explain why the offer
to withdraw CalMac vehicle service was made by the government
in 2007 immediately after taking office. If there were thought
processes involved here they were certainly creative thought processes
above the cerebral level and pay grade of the hapless Transport
Minister, even though he may be the one lined up to carry the
can for this now. In this week's Dunoon Observer the constituency
MSP talked of a "win-win" that included Western in terms
of the offers the government had made and Western rejected. However,
without even consulting the firms concerned the government in
the broader sense may have been thinking laterally about a broader
"win-win" beyond Western that they thought would solve
a number of problems and serve (they thought) a number of their
own objectives. Indeed, it is not difficult to imagine deluded
voices in the government arguing that this is actually in the
public interest and that this would be what the public needed,
even if all the evidence was that this would not be what the public
wanted.
And if this model and combined solution works in
Cowal it could also work in other places such as Bute - and so
on The end of my "Rogues" note
was only concerned with Western Ferries plans for Bute and other
parts of the whole ferry network. In the case of Bute this could
leave it with the only other ferry service other than Western
ferries being a subsidised foot passenger service. I said in that
note that
That (subsidised of course) passenger-only service
for the same reason (and with the same business model) set out
here would be very attractive to Highland and Universal Securities.
Western could do Ardyne Point to Port Bannatyne while Highland
and Universal Securities would have strong interests to get what
would be left of the subsidised foot passenger service Wemyss
Bay to Rothesay. There is no reason why the Western Ferries /
Highland and Universal Securities hybrid arrangement with Western
taking vehicles and short crossings and Highland and Universal
Securities taking subsidised foot passengers and long crossings
linking with its buses could not eventually finish up being applied
throughout much (or indeed just about all) of the CalMac network
with the effective end of public services (in the form of CalMac)
here, and major implications for control over public policy and
regional economic and social development.
This specific ferry/bus sea and land arrangement
could finish up dominating much of the Highlands and Islands and
other parts of the West Coast such as those parts of Inverclyde
and Ayshire linking with the Clyde Coast ferry network.
As I said there is no point in criticising firms
for doing what they are supposed to do which is to serve their
private interests. They did not do anything wrong here as far
as can be seen. But if firms exist to serve the private interest,
governments exist to serve the public interest which may not always
coincide with that private interest. Certainly the outcomes which
the government has effectively ensured through its incompetence
and duplicity are not in the public interest. A parcel of rogues?
Given the rate at which the government's strategy is unravelling
here with new facts emerging almost daily, I don't think we have
heard the end of this yet.
Neil Kay 23rd February 2011