CALMAC – HOW DID

WE GET TO THIS

POINT?Stephen Boyd, STUC

Highlands and Islands Conference, 12 September 2015

A very brief history…

1851: David MacBrayne Ltd, initially known as

David Hutcheson & Co, founded

1923: Caledonian Steam Packet Company

formed following merger of Caledonian

Railway & Glasgow and South Western

Railway

1968: management of CSP transfers to

Scottish transport Group; gains control of

MacBrayne’s the following year

1973: Caledonian MacBrayne established

Tendering

1990’s: Tories had considered privatising Calmac but decided it was unworkable

2000: Scottish Executive argues services must be tendered to comply with (1992) EU Maritime Cabotage Regulations

Delay while implications of Altmark ruling considered; Scottish Executive decides tendering must proceed; Executive defeated in 2004 vote in Parliament but win at second attempt

2006: Calmac split into 2 companies: Caledonian Maritime Assets Ltd (CMAL) owns vessels and infrastructure; CalmacFerries ltd operates services; offshores employment contracts

2006/07: first tender exercise, after potential bidders drop out, Calmac left as sole bidder and wins 2007-13 contract

2012: current contract extended by 3 years to 2016

Current tender exercise

Initial Invitation to Tender for 2016-2024 contract published on 31 July

Invitation to Submit Final Tender will issue on 14 December

Winning bid announced in late May 2016

Contract operational from October 2016

ITT contains significant protections on jobs, terms and conditions and pensions

But, for the first time, Calmac faces genuine competition; Serco unlikely to withdraw from process

ISSUES FOR THE

STUC

Priorities for STUC

Contesting the requirement to tender

Highlighting the costs and inefficiencies of tendering

Highlighting the benefits of retaining Calmac‘bundle’ of services

Promoting publicly owned and accountable services

Jobs and conditions of employment

Economic development of the Highlands and Islands

Promoting excellent health and safety standards

Don’t argue that current services cannot be

“It’s difficult to overstate both

the scale of the failures in policy

making with respect to Scottish

ferries post-devolution, nor how

unnecessary such failures have

been” Professor Neil Kay

Is tendering necessary?

Scottish Government argue tendering

necessary to comply with 1992 Maritime

Cabotage Regulations and State Aid law

STUC, academics and many politicians

disagree. SNP opposed tendering in

opposition

Scot Govt continues to use spurious

comparisons with other services e.g. Corsica

Tendering very expensive, highly disruptive,

ultimately pointless exercise

Complying with EU law without

tendering

Stop treating as simply a ‘transport issue’. This is about the delivery of an essential (lifeline) public service

1992 Regulations do not mention tendering and there is no reason in principle why alternatives should not be pursued

Strong economic case against tendering

Domestic ferry services in most countries are treated as essential public services and administered appropriately; plenty of potential EU partners who share view that tendering does not work for them

Services will have to comply with Altmark criteria

First Minister committed to revisiting requirement to tender once current process is completed

Scottish Government approach …”not

predicated on a real understanding of

commercial logic and interests let alone

what EU permits and prohibits in this

context. In the absence of coherent

oversight the market will provide its own

solutions and one of the first lessons

students learn in Economics 101 is that you

cannot just rely on crossed fingers to ensure

that private interest aligns with the public

interest” Prof Neil Kay