Submission from Gills Harbour – 8 April 2008

Dear Mr Farrell,

SUBMISSION TO SCOTTISH ISLANDS FERRY INQUIRY: GILLS HARBOUR, , THE MAINLAND TERMINUS OF , SOON TO BE OPERATING NEW CATAMARAN RO: RO FERRY TO .

I write on behalf of the trustees/office-bearers of Gills Harbour, a community-owned facility at the head of on the southern shore of the Pentland (Canisbay parish, three miles west of John O’Groats), from where the commercial (i.e. unsubsidised) year-round ferry service to the Orkney Islands operates.

Your Committee’s MSP members may be interested in the 15-mile long thrice-daily Roll On: Roll Off (RO: RO) passenger and freight ferry service operated by Pentland Ferries Ltd to St. Margaret’s Hope, in , Orkney from here, the (Scottish) mainland terminal.

There should be some lessons applicable elsewhere around the Scottish coast. This is the best (i.e. shortest, quickest and most sheltered) ferry route across the ; roughly half the journey is through , an ‘inland sea’. Because of the lee of the mid-Firth isles of Stroma and only c. 3 miles out of the 15 are exposed to sea-swells emanating from the Atlantic Ocean, driven by the prevailing Westerly winds.

Our body has a partnership agreement with the above private firm, whose managing director is Andrew Banks Esq., of St Margaret’s Hope; its head office is on the Pier there.

The company has imaginatively recycled a redundant (but internally strengthened) 100 metre long dry-dock as a breakwater/pier here. It was lowered to the pre-prepared levelled seabed, ballasted with locally sourced rocks, protected from external sea-swells using mass-concrete and rock armouring. Staff employed by the ferry firm installed such as walkways with hand-railings, navigational and other lighting, bollards plus fendering, all for operational and safety reasons.

Persons working for Pentland Ferries had earlier fabricated and installed nearby the hydraulically- operated link-span (‘bridge’ between land and ship), provided a concreted vehicle marshalling area with parking, plus other necessary operational facilities.

NEW £8 M RO: RO PENTLAND FIRTH CATAMARAN SHIP: DETAILS

The service does not receive taxpayer’s funds, nor were any public-sector capital grants received. It operates in a purely commercial manner, providing direct employment for c. 50 full-time equivalent jobs on board the company’s ship(s) and shore crews/office-workers at the two termini. The ex-Gills RO: RO ferry caters for both tourists and local residents; with booking (often by ‘internet’) usually essential; until and including 2007 four summer return services were provided ex-Gills to cope with demand.

A new ‘catamaran’ RO: RO ‘medium-speed’ vessel is presently being built for Pentland Ferries in a Far East shipyard (with a Scottish manager there) at a reported cost of in excess of £8 million, with delivery to the route expected in June 2008; this twin-hull ship (launch date c. 23.04.08) will have extra carrying capacity (9 articulated trailers, plus 32 cars: or 85 cars) and the published timetable for summer 2008 (three daily return trips) has been slightly amended to allow more convenient times on evening sailings year-round.

The new ship will be a ‘first’ for Scottish island services, being hailed by some independent transport consultants as ‘revolutionary’.

She is Australian-designed (the world leaders in this field) and is being fitted out to stringent UK and European standards; she is compliant with MCA requirements. The twin-hulled vessel (see company web-site for yard updates etc.) will have a service speed of c. 18 knots, cutting travel time to St Margaret’s Hope to under one hour.

Your Committee members will appreciate that this represents a major investment by a local family firm. The Banks family were historically the main boat-builders on both shores of the Firth; Andrew’s family has been involved in business for perhaps 200 years.

Pentland Ferries freight operations provide a key service to Orkney’s important export aquaculture (i.e. salmon farming etc.) and shell-fishing industries; it regularly carries in-bound trucks with goods for Orkney's supermarkets. The ex-Gills service is the route of choice for volatile fuel cargoes such as LPG and aviation spirit; freight carried ex-Gills is used by island construction companies/house-builders and suppliers to the building trades, while we understand that c. 80% of Orkney agriculture’s live lamb/sheep ‘exports’ travel via Gills, as does outbound chilled meat.

However, there are disturbing reports that its nationalised competitor is considering using public funds in conjunction with new double-deck livestock containers provided by taxpayers' expense, to undercut normal commercial rates by consigning lambs from to Aberdeen for very low, even no, cost; with cattle on the lower deck bearing the (subsidised) price. Committee members might wish to look into this well-flagged suggestion.

ROUTE FROM GILLS COMPLIES WITH ANIMAL WELFARE SEA-TRANSPORT RECOMMENDATIONS BY E.U.

The ferry via Gills is the shortest available one for farm livestock, thus complying with the European Union animal welfare recommendation that such a sea route be chosen to minimise stress to dumb animals.

Competition has helped Orkney Islanders to combat price-inflation; freight rates across the Firth have roughly halved since Pentland Ferries commenced its commercial RO/RO services in 2001, initially with Pentalina B and then also with Claymore, both one-time CalMac ships of c. 1,800 gross registered tonnes; as stated a new-build, medium-speed twin-hull 70 metre catamaran RO/RO vessel is due to enter service ex-Gills in June 2008.

We share our partner’s view that the services from Gills to St Margaret’s Hope should be classified as a ‘lifeline’ service to Orkney, IF such a designation is to remain with the other timetabled year-round RO: RO Pentland Firth service. Members may wish to press to have the term ‘lifeline’ defined, as it used for Scottish ferry services,

This is operated at an annual ‘revenue’ costs to UK taxpayers of c. £10 million by state-owned Caledonian McBrayne, (trading as NorthLink Ferries), on the longer, more turbulent, passage from Scrabster in Caithness to in Orkney.

We also share Pentland Ferries view that any subsidies of taxpayers’ monies should be for the benefit of Orcadians and the islands’ economy and that as ‘level a playing field’ as possible should prevail on the two Pentland Firth RO: RO routes (see below) to Orkney.

EUROPEAN UNION ‘RULES OUT’ FREIGHT SUBSIDIES ON FIRTH TO STATE SHIPPING LINE: AGAINST STATE-AID REGULATIONS

Because Pentland Ferries serves the same market as state-owned NorthLink Ferries' Scrabster route, (both Orkney) freight subsidies are, we understand, forbidden on the Pentland Firth runs by European Union rules designed to prevent one company out-competing a ‘rival’ in such a ‘shared’ market by using taxpayers’ funds. The ex-Scrabster route is 28 miles long, almost all of which is exposed to the open Atlantic Ocean swells.

Should such a ban be extended to some Orkney/Aberdeen livestock consignments, given what had been suggested above re lambs etc., with the added likelihood that these may contravene EU animal welfare recommendations?

In addition there is the fact that most sheep are presently shipped via Gills on a commercial basis. If sheep transport is to be subsidised, should not consignees be able to benefit if they choose to use the St Margaret's Hope to Gills crossing, in broadly the same manner as persons over 60-years-old can utilise their Travelpass on the ‘short sea route’.

There are no natural sheltered inlets on the Caithness shores of the Pentland Firth; the best are and Gills Bays, both traditional Admiralty-recommended anchorages.

NO NATURAL HARBOURS ON SOUTH (CAITHNESS) SIDE OF FIRTH

The Pentland Firth, is an ‘open’, exposed, channel in a windy area (westerlies predominate) with strong flows of tidal streams. It contains potential obstacles such as tide-races, but these can be entirely avoided by judicious navigation on the 'short-sea-route', as the ex-Gills crossing is colloquially known.

Safe berthing at both Scrabster and Gills can be difficult in severe winter conditions, when a heavy westerly swell is running; actual sea passages across the Pentland Firth are almost always achievable.

At Scrabster, the new (completed 2003) £23 million deepwater Queen Elizabeth breakwater/quay was paid for largely by taxpayers funds.

This new deep-water pier (8 metres depth at LAT; lowest astronomical tides) provides many previously unobtainable advantages for Caithness's economy, such as enabling tourist cruise- liners to berth alongside for the first time, plus quay access for regular service-runs by larger supply and installation vessels to the UK’s ‘Atlantic Frontier’ ultra-deep-water oilfields, west of .

In contrast, the breakwater/berthing pier at Gills consists of the recycled dry-dock controlled-sunk on a pre-levelled base with a guaranteed water depth of just under 4 metres at lowest tides. This was provided by Pentland Ferries own funds, under the terms of our and other agreements with the firm; together with the necessary dredging it cost c. £2 million.

The ex-Gills vessels consistently achieve the degree of sailing regularity that the freight market demands. Any difference in cancellations/postponements on scheduled (mainly winter) sailings is simply explained; it is entirely a factor of taxpayers' funds invested in capital facilities at Scrabster, but not at Gills. One can say that £23 million provides more shelter that £2 million.

IS A CHEAP WAY TO ‘EXPERIENCE ZERO GRAVITY’ BY SAILING ON ON HAMNAVOE IN HEAVY WEATHER’?

In periods of heavy weather from the prevailing westerly direction the 112 metre long, 8,780 gross tonne Hamnavoe sails on a longer route via Scapa Flow, to catch lee shelter off Hoy, entering/departing the Firth via Cantick Sound, off Hoy’s south-east extremity, which is only c. 8 miles from Gills.

At such times, the Scrabster/Stromness vessel has to sail roughly parallel to the Caithness coast for almost half her voyage; it was experience on this part of the crossing that led one newspaper columnist to suggest, only half-jokingly, that such a trip on the Hamnavoe was the cheapest way on Earth to experience ‘weightlessness’ (zero gravity). This is because it can be impossible to avoid the 'Men of Mey' ebb tide-race made fiercer when opposed by westerly-quarter gales.

Hamnavoe is much larger than previous . She is a 'gas-guzzler', burning eight times as much fuel per trip as does the Pentland Ferries vessel.

The latter's new catamaran will be a medium-speed vessel, cruising at c. 18 knots, allowing a balance between fuel consumption and crossing times; this nevertheless will be reduced to under 1 hour.

The catamaran’s arrival is expected to further boost the ex-Gills crossing, which is already favoured by many who seek to minimise their shipboard time, especially those fearing sea- sickness; since 2001, thousands of persons who would not otherwise have sailed to Orkney have used the Pentland Ferries ships.

GILLS HARBOUR PARTNER CLAIMS PUBLICLY ‘PENTLAND FERRIES COULD CARRY FOLK FOR FREE’, IF LOCAL COMPANY OBTAINED THE SAME SUBSIDY ON FIRTH SERVICE AS STATE SHIPPING-LINE PRESENTLY DOES.

Interviewed by the John O'Groat Journal (published 29.02.08) about the new ship, Mr. Banks referred to Hamnavoe's £10 million subsidy (out of NorthLink's annual total of £31 million) and stated: 'If I got that level of Government subsidy, I would run the service for free. I could give everyone a free passage and that would greatly increase the number of people from all over the UK coming here'.

However in September last year, shortly after the shipyard order was confirmed, Northlink Ferries managing director Bill Davidson was quoted in Orkney Today as admitting in a public forum that, if the ex-Gills route became busier, then the Scottish Government would 'likely' be asked to compensate his state-owned firm with more taxpayers’ cash 'for traffic loss to the Pentland Ferries catamaran'. Members may wish to formulate their thoughts on this matter.

At present, the public purse gives the nationalised c. £70:00 for every passenger who board Hamnavoe. She is thus the most unprofitable 80 metre long ferry in and almost certainly in Europe.

Committee members may care to reflect on the implications of the above, bearing in mind (a) the possible introduction in future of 'road equivalent tariff' (which will clearly favour the shorter route, as in Norway) and (b) the fact that, unlike Pentland Ferries, NorthLink does not pay National Insurance contributions for its seafaring staff, employed as they are through an 'offshore tax haven' subsidiary based in the Channel Islands.

Does this set a good example to award-winning Scottish entrepreneurs such as Andrew Banks? Perhaps this may be a matter for the Committee to consider.

JOINT VENTURE CLAIM ‘PROVEN AS UNTRUE’ AS TAXPAYERS’ MONEY BAIL-OUT WAS ‘DEMANDED’ AND PAID

When Northlink Ferries tendered in 1999 for its contract beginning in 2001, it was publicly claimed to be 'a joint-venture' between the state firm and the Royal Bank of Scotland plc. This implies both parties taking rewards and risks.

Within 18 months NorthLink had run into multi-million pound financial difficulties mainly, we believe, because it had not ‘factored in’ the likely effects of the ex-Gills service, as had been done (we believe) by incumbents P&O Scottish Ferries.

Construction at Gills was well under way by the second half of 1999 (before the final date for tenders) and P&O staff were carefully monitoring this. We had no evidence of CalMac doing similarly.

Here we felt that that the root-cause of the cost overruns could only be interpreted as a 'lack of due diligence' being undertaken by CalMac for its yet-to-start-trading subsidiary NorthLink Ferries: CalMac had no previous Northern Islands experience

Far from being a joint venture (as normally understood, with one party being a stock-exchange quoted ‘public limited company), RBOS seemingly took none of the risks; losses all landed on the state-owned company (i.e. the UK taxpayers had to pay up). But then it emerged that an RBOS associate company owns the ships and leases those to NorthLink; this continues.

Very few European island ferries serve destinations with populations as low as Orkney (c.20,000).

Most (e.g. Greek islands, Balearics, Channel islands) have many more inhabitants/visitor numbers, so are served by ferries of typically 8,000 tonnes upwards. A result is a lack of a second-hand market for ferries of the ''optimum' size for a local crossing, as the Pentland Firth is; the same goes for most ferries serving Scotland’s islands.

It was suggested by senior Highland Council transport officials that the RBOS had effectively demanded that the Pentland Firth vessel be a scaled-down ocean liner so that she retained a substantial re-sale value (but see below).

IS HAMNAVOE MOST UNECONOMIC 8,000 TONNE RO:RO FERRY IN EUROPE?

Back in 2000, Cal Mac was said to be bringing its Scottish islands ferry operations expertise to the table to the 'sham' joint-venture; however Professor Alfred Baird, of Edinburgh Napier University's Transport Research Institute claimed in an EU-sponsored report, published early 2006, that the NorthLink RO: RO ferries 'appear to be (amongst) the most inefficient, environmentally unfriendly ships built in recent years' ... 'with a very high fuel consumption relative to payload'.

Whether or not our partner Pentland Ferries is the 'EasyJet of the Firth', or whether it offers a 'cheap and cheerful' service ex-Gills, as is claimed in independent web-sites, an one-to-eight fuel consumption ratio between its vessels and NorthLink's ex-Scrabster ship may seem excessive to some Members.

In April 2004, just 18 months into its contract, the apparent 'lack of due diligence' (as above) resulted in NorthLink Ferries essentially going 'bust', only kept afloat by an emergency injection of even more taxpayers' funds.

This was accepted because NorthLink was said to provide so-called 'lifeline services'; Members may care to ask officials ask why such a designation has seemingly been withheld from Pentland Ferries for its much-appreciated year-round scheduled services ex-Gills, provided by an entrepreneur, not managed by bureaucrats. We make, of course, no criticism of the marine officers and men who sail the NorthLink vessels.

Following some 'flak', the RBOS publicly withdrew from its so-called 'joint venture', retaining the ships for lease to the 'winner'; unsurprisingly this turned out to be NorthLink Ferries. Perhaps a precedent was set in the state-owned company being allowed to tender for a UK failed transport deal; would this have been allowed for a rail or coach operator? And would one be able to ‘duck’ paying normal employers’ NI contributions, but not the other?

In July 2006, the new 6-year contract with state-owned NorthLink meant an enhanced subsidy of a minimum of £31 million annually until 2012; this is for services to Orkney and Shetland that required no state-aid until after 1980, although frequency of Shetland sailings have increased since while now, of course, there is competition on the Pentland Firth.

The 'share' of taxpayer's payments for the Pentland Firth ex-Scrabster run is c. £10 million annually. Yet Pentland Ferries, on a shorter, more sheltered, can provide year-round services at no cost to the public purse even against such seemingly-unfair competition, yet still be able to invest in an innovative new ship. Western Isles councillors are already asking Mr Banks if he can lay on a demonstration run to Stornoway.

DECISIONS NEEDED SOON ‘IN PRINCIPLE’ ON POST-2012 CONTRACT TENDERS?

We know that the present contract is fixed until 2012. But in two years time, negotiations for the post-2012 Northern Islands deal will get under way.

Your members may reflect on the continuation of a state-controlled shipping line being able to tender against a normal commercial operator. At present, NorthLink/CalMac can seemingly can demand an 'open chequebook'. (E.g. to cover world fuel price increases, or as here, the likely boost to ex-Gills services when the brand-new RO: RO catamaran arrives).

State shipping lines are now a rarity in Europe and elsewhere, with Scotland being the exception, not the rule.

It is readily accepted by most people that some Scottish ferry services, especially to the smaller islands, can never operate on a wholly commercial basis.

But the UK and Scottish Governments (or their 'agents' such as local authorities) have long been able to made 'subventions' to private operators of trains and buses for services viewed as 'essential'. None of these transport firms remain in state ownership. Thus nowhere outside of Scottish ferry services is a state company (subject to Government guarantees) being pitched directly against a normal commercial operator.

Where is the problem is giving subsidies( if needed, or considered desirable) to private-sector companies operating to Northern Islands, as was the case up from c. 1980 to 2001?

In the run-up to the 2006 award, there was an enquiry into Northern Islands ferry financing by the public-spending 'watchdog' Audit Scotland.

ARE GILLS HARBOUR OFFICE-BEARERS/TRUSTEES ‘NON-PERSONS’? AUDIT SCOTLAND CAN ANSWER?

We gave verbal evidence at Gills and also presented a written submission to Mr Graeme Greenhill, who headed the probe. On that same morning in late October 2005, Mr Banks had given his evidence to Audit Scotland at a pre-arranged session in Orkney.

After hearing from the Pentland Ferries M.D., Mr Greenhill and his colleague sailed from Stromness to Scrabster by Hamnavoe, before driving out to meet Gills Harbour trustees/office- bearers on site, to see facilities here and observe Claymore's scheduled 13:45pm departure.

But we seemingly became 'non-persons' when the report was published; neither our delegation nor Mr Banks were mentioned in the list of witnesses giving evidence, nor were our views reflected in the findings.

As it was Pentland Ferries did not tender; as our treasurer Billy Magee pointed out to Mr Greenhill, it would have been unreasonable to have expected a relatively new family shipping firm to have done so, as Orkney and Shetland services were/are 'bundled together'.

This would have meant Pentland Ferries also having do detailed cost-estimates for Shetland to Aberdeen services (with some runs via Kirkwall, Orkney), at a time when it was consolidating its existing Gills: St Margaret's Hope crossing.

Added to this is the apparent situation whereby redundant CalMac vessels are seemingly not sold unconditionally on open tender, despite those being provided by public funds. Members may wish to enquire into the truth of this assertion.

We believe that a very strong case exists in the tenders for the post-2012 period for separating out the 'local' Pentland Firth RO: RO ferry services, from those involving the long open-sea voyage to Shetland. It should not be too complex to introduce an airline-style inter-ticketing arrangement.

In conclusion, there are some quick points to be made: (a) relates to harbour administration and (b) to the future for trans-Pentland RO: RO shipping, including other terminals than Gills.

HARBOUR ADMINISTRATION AT GILLS BAY

(a) Harbour Administration: In the early 1990s, we accepted advice from a senior Edinburgh- based Department of Transport official to transform ourselves into a modern Port Authority; at the time we had a shipping company, a major construction/civil engineering firm and a European merchant bank vying to be our partners in developments at Gills.

Then, as now, we operate under Government authorisation through a Parliamentary Act dating back to 1897; this legislation is little known as it is restricted to those piers/harbour providing island shipping services in the seven Scottish 'crofting counties'.

Recently it emerged that several West Coast terminals used regularly by CalMac (Lochboisedale in South Uist is one) also operate on a similar basis. There were reports that the Scottish Government was considering providing a modern legislative port framework for such piers/harbours at no cost to the communities concerned.

We would respectfully ask through your Committee that, if we at Gills decide we want to follow the same course, then the Scottish Government would do similarly for us.

We drafted the 'Gills Bay Port Authority Order' document to the satisfaction of the Department concerned; but a problem then was that none of the above potential commercial parties wanted to 'go public' at that stage, so we were unable to prove the viability of the route, (which has amply been demonstrated since).

Without being bale to prove this 'economic case' (numerous other clauses were judged to be all- right) the then Minister decided to refuse the proposed Order, so our existing Crofting Act ‘legislative framework' continued, similarly to that at Lochboisedale etc.

Our constitution charges us with promoting such improvements and developments, as are needed 'to encourage trade, commerce industry and employment' at or near Gills Harbour: to that end we had commissioned expensive reports by an internationally renowned transport consultancy in 1991/2

TOP INTERNATIONAL CONSULTANCY STATED IN STUDY PUBLISHED IN JANUARY 1993 THAT GILLS WOULD OFFER ORKNEY MARKET A BETTER ‘PRODUCT’ THAN ANY OTHER ROUTE.

This Gills Harbour Study (GHS) was undertaken for us by MDS Transmodal, of Chester, whose principal Peter Iles has Caithness family connections; and so knew the area well.

The consultancy had just completed work for the Port Authority of New York and New Jersey, which played a role in having all major container-ship traffic being located on the Jersey side.

The GHS report concluded that if our swell measurements were correct, if a Gills breakwater were to be built and that if a ship of 70 metres were used (the BES company built the 50 metre Varagen, which was transferred to Orkney’s internal North Isles services, but study authors stated she was too small for year-round operations) then the route would offer the (Orkney) market an absolute advantage over all others (as well as Scrabster and Aberdeen, at that time it included Invergordon, from where a second-hand ex-Falkland ‘out isles’ ship was running a service to Kirkwall; the firm later went ‘bust’).

The GHS report was consulted by the Banks family before Pentland Ferries began operating from Gills; It assumed that the Burwick terminal (8 miles from Gills Bay) would be completed, but was also factoring in a ‘new build’ RO:RO ship cost. This will not arise until new RO:RO catamaran arrives in June.

It even postulated ‘unregulated’ competition on the Pentland Firth, stating that at the end of the day, the crossing from Gills would win out; in 1993, no-one could conceive of taxpayers ‘picking up the tab’ for £10 million-worth of annual losses on West Pentland Firth service. Nor was there any question of a state-owned company being involved as then Caledonian McBrayne was a West Coast operator.

During the early 1990s, secretary John Ross had manually recorded swell and wind-speed data using a tide-gauge at Gills during daylight hours for one complete year; that was until we obtained access to electronic recording equipment (with help from Orkney islands Council) which led to proof of Mr Ross’s results, as such recording devices are obviously totally impartial.

We arranged to have these results professionally analysed. Amongst those engaged by us was the Bideston Tidal Laboratory in Liverpool; they in fact discovered from our figures that ‘tidal surges’ could occur in Pentland Firth in certain conditions; previously that phenomenon had been thought to be restricted to areas where coastal geography led to ‘funnelling’ of sea in certain winds. (e.g. as in southern North Sea or Inner Moray Firth).

All of the above was designed to make the case for facilities at Gills consisting of an extended a pier with RO: RO facilities and a breakwater; a 'steamer terminal for the Orkney trade' had been envisaged for Gills over a century ago hence the island sea-link designations of 1904/5 and 1913/14 as above.

DR GAVIN CLARK, M.P. IS STILL ACKNOWLEDGED AS GILLS HARBOUR’S ‘FATHER FIGURE’.

The relevant legislation was in fact passed by a Conservative administration in 1897; but its champion, Dr Gavin Clark, MP for Caithness, is perhaps best remembered as the founder vice- president of the Scottish Labour Party (1888) with J.Keir Hardie as secretary; Clark was later the ‘mentor’ of Tom Johnston, the ‘father’ of the then state-owned Highland hydro-electric power stations and rural electrification programme (1945/1960s). He is known by Nationalists for introducing the first Scottish Home Rule Bill at Westminster for over 150 years; and because Labour then had no political organisation, he latterly stood as an ‘Independent Liberal’, losing his seat for his strident opposition to the South African (Second Boer) War.

Dr Clark, a medical doctor, was a prominent early advocate of what we now call the Welfare State.

(b) Future for trans-Pentland and other Scottish RO: RO services. The fact that a private operator has succeeded in profitably operating to Orkney without a capital grant or revenue subsidy must hold lessons for other Scottish island routes (c.f. Ullapool to Stornoway).

The new multi-engine double-hull Pentland Ferries ship is designed to operate in swells of 4 metres, thought to occur no more than once per annum on average; the proof will be in her profitable operation from Gills and in the co-operation of all parties (Government departments/agencies, Councils and the private sector) to do their best to ensure that that this novel (to the Scottish islands) type of service succeeds.

This could mark the start of a new, more economical, way forward for Scottish island ferries at less cost to the public purse.

The Scrabster/Stromness service, getting c. £10 million yearly from HM Exchequer to keep it afloat, may turn out to be an historical anomaly; a direct run between these two ports has only operated since 1945.

Almost two centuries of mail service contracts preceded that; firstly by open sailing boat from Huna, at the east end of Gills Bay, and then by steamer from Scrabster.

The main destination was always the General Post Office at Kirkwall, via Scapa Bay, two miles to its south. This was reached from Huna via Burwick, on the southern tip of South Ronaldsay and then overland, but using secondary ferries (roughly) on the sites of the present Churchill Causeways, (built 1940:45) that carry the modern A 961 Burwick to Kirkwall road.

When the steamer service commenced from Scrabster there were usually also secondary calls at Stromness and St Margaret's Hope, Orkney's second and third biggest settlements.

DIRECT SCRABSTER: STROMNESS ROUTE BEGAN IN 1945.

But after 1945, first-class post was diverted permanently to airmail, so the direct Scrabster: Stromness service commenced.

By the late 1980s, Orkney Islands Council was holding (in trust for the island people) considerable sums of private-sector money received as payments from North Sea Oil companies operating out of Scapa Flow; this was not money raised by Council rates/taxes, nor did it emanate from HM Exchequer as 'grants' or 'borrowing consents'.

One such fund is/was designed to strengthen the local economy to enable it to be properly prepared for the day that the 'oil wells run dry'; then expected to be c. 2000.

To that end, it co-operated with a then 'Business Expansion Scheme' (BES) company to provide RO: RO facilities at Gills here and at Burwick, only 8 miles away in late 1980s. The concept was essentially to be a 'shuttle' 30 minute service, possibly bringing Caithness and Orkney (excepting its North Isles) into one commuter 'travel-to-work' area, so offering considerable advantages to extra passengers, including more tourists, as well as freight traffic.

A total of c. £6 million of this private capital was invested, between 70/80% at Burwick and the remainder at Gills, according to Ron Gilbert, the then OIC Chief Executive. Clearly none of this money had been wasted at Gills, as the present terminal is physically built on the base of the 1988/9 one; while lessons learned were incorporated in Pentland Ferries works here, done in arrangement with Gills Harbour’s body.

Poor execution of the contract saw the free-floating Gills link-span (Pentland Ferries one here is hydraulically controlled) becoming dislodged from its mass-concrete 'holding block' in only moderately adverse sea-conditions. As a result, the project was discontinued at Gills until Pentland Ferries took up the cudgels and constructed its facilities to a new improved design here from 1999 onwards.

The harbour at Burwick remains only partially complete and is under the control of Orkney Harbours, a Council department; it is used by the summer-season 250 passenger-only boat Pentland Venture from John O'Groats; John O'Groats Ferries operates a daily feeder coach service for foot passengers from Inverness, with Orkney coach-tours laid on from Burwick as well as buses to/from Kirkwall.

SHOULD BURWICK TERMINAL, THE ORKNEY ‘TWIN’ OF GILLS, BE COMPLETED?

The question of Burwick’s completion (while protecting the interests of the tourist-orientated John O’Groats Ferries boat operator) crops up from time to time, especially now in the context of the RO: RO catamaran's arrival; so far the Council has refused to do so.

Nor so far, will Orkney Islands Council conclude an arrangement whereby Pentland Ferries could undertake the necessary works itself, possibly with Burwick under lease to it, with the proviso as above. The view of some Councillors is that, to do so, could be seen as undertaking something with which the Scottish Executive/Government might not be entirely happy with; they might not wish to flag up an 'ingratitude' signal to Edinburgh.

This is because concerted island lobbying succeeded in persuading the then Scottish Executive to approve the new £19 million deep-water pier at Hatston, Kirkwall. Hatston is regularly used by the NorthLink ferries on the indirect Shetland to Aberdeen service, as well as by cruise liners etc. for alongside berthing, plus providing Orkney's main (non-oil) cargo-handling facilities.

But, given the success of the Pentland Ferries operation, might Members be prepared to consider recommending that most careful consideration should be given to Burwick's completion; thus forming the marine 'twin' of Gills, as was envisaged almost two decades ago?

As partners of Pentland Ferries, we believe that useful lessons applicable to the Scottish West Coast could be learned from the successful trade that it has built up via Gills Harbour, despite heavily subsidised direct competition from NorthLink.

‘PENTLAND FERRIES IS PART OF THE SOLUTION TO BETTER ISLAND LINKS’

We anticipate that your Members will agree that Pentland Ferries is part of the solution to the future of Caithness: Orkney ferry services across the Firth.

We hope that members will accept that Pentland Ferries is not part of a problem that, if not addressed, could continue to see large sums of taxpayers' money being expended for perhaps minor public benefits beyond 2012. You should note that the last two office-bearers named are employees of Pentland Ferries Ltd.

Yours sincerely,

BILL MOWAT, Vice-chairman, Gills Harbour Office, Havenfjord, GILLS, CAITHNESS KW1 4YB.

On behalf of :- JOHN GREEN (chair). JOHN ROSS (secretary) BILLY MAGEE (treasurer). March 2008.

GILLS HARBOUR; POSSIBLE ‘SUPPLEMENTARY’ EVIDENCE FOR FERRIES INQUIRY.

I realise that the Select Committee chairman or yourself might rule us ‘offside’ with what follows as closing date may have passed, but, continuing the football analogy, NorthLink seems to have just ‘moved the goalposts’ on its Pentland Firth service, using public money to do so.

My fellow office-bearers are keen that its ‘Families & Friends’ promotion (underpinned by taxpayer’s money) is brought to the Select Committee’s attention, while its Ferries Inquiry is still on going. They wonder if this represents unfair competition.

For this seems to be happening with NorthLink’s announcement last week that it was to greatly expand its 30% ‘Islander Discount’ scheme’ to non-islanders.

NorthLink’s ‘Islander Discount’ scheme used essentially the same criteria as the Scottish Government’s Air Discount Scheme, presently in force in the Highlands and Islands, where applicants have to demonstrate a permanent address in the qualifying ‘defined areas’. In NorthLink’s case this means folk living in Orkney and Shetland.

Now NorthLink is inviting every registered island resident to list six non-islanders as ‘Families & Friends’ so that they can enjoy the same cheaper fares on the Scrabster/Stromness run, as have been previously available only to Orkney residents.

As with the ‘Islander Discount’ scheme, the reduction applies to passengers and their cars, so the numbers of persons qualifying could be quite large.

We wonder if Select Committee Members may consider that this announcement coming at the same time as the launch of the brand-new £10 million Pentland Ferries’ ‘Pentalina’ is a merely a coincidence, or not.

In practice, NorthLink’s standard fares have been somewhat dearer than the commercial rates set by Pentland Ferries (still £25:00 per off-season crossing).

This is despite the payment of c. £70:00 from the public purse to NorthLink for every single passenger sailing across the Pentland Firth with the state shipping line to and from Scrabster: Stromness.

Until now many Orcadians have preferred the quicker ‘short sea route’ via Gills Harbour, to the longer, more ‘sea-sick prone’, route plied by Hamnavoe as, even with the NorthLink Islander Discount scheme, the money difference was small.

Now it seems that NorthLink is planning to use public money to draw business away from the private-sector Pentland Ferries new catamaran by offering the same discount to large numbers of residents on the UK mainland and beyond who, by definition, are likely to be less familiar with Pentland Firth transport matters.

For example, would-be-visitors planning to book into an Orkney B&B establishment can be told on the phone by the landlady that they are eligible for a 30% ferry discount; all she has to do is register their names with NorthLink.

It is known that NorthLink gets extra public-money support allowed under its (essentially open- ended) contract with the Scottish Government (then Executive) to cover world fuel price increases.

In our main submission, we asked members to consider whether it was right and proper that Northlink should be considering coming back seeking yet more taxpayers’ funds to ‘compensate for traffic loss to the new Pentland Ferries catamaran’ Pentalina, as its chairman Bill Davidson said that it might do at public meeting last year in Kirkwall.

Unlike other public-sector bodies it does not seem to have to find ‘efficiency savings’.

A NorthLink spokeswoman Cynthia Spencer was quoted in Orkney Today (17.4.08) claiming that new the ‘Families and Friends’ promotion for non-islanders is an update of the ‘hugely popular’ one it introduced in October, 2002, when NorthLink first started sailing; this brought its parent Caledonian McBrayne beyond its traditional West Coast heartland for the first time.

That claimed ‘success’ would seem to be questionable: by April, 2004, NorthLink had to be given a ‘bail-out’ of an extra £13.4 million of public money on top of its then c. £11 million per annum subsidy to stop it going ‘bust’. This was only 18 months into what was supposed to be a five-year contract.

It thus admitted that its alleged ‘joint venture’ with the Royal Bank of Scotland plc did not involve each party sharing ‘risks and rewards’, as the Bank had to pay out nothing while its interests remained protected in the re-tendering exercise which called for its ship-leasing subsidiary’s vessels to continue to be used.

NorthLink was not barred from re-tendering. Now its annual subsidy on Orkney and Shetland services, as per its six-year Scottish Executive contract starting in 2006, is a minimum of £31 million.

At present, NorthLink does not have to give a route-by-route breakdown of how this public money is spent. As things stand, it would seem to be easy for NorthLink to ‘fudge’ the extra costs of ‘Families and Friends’ and of the probable extra money as ‘compensation’ after Pentalina starts sailing without any elected member being any the wiser.

Members may wish to ask if this is right and proper.

All this seems to happen because the Scottish Government/Executive officially classifies North Link runs as ‘Lifeline Services’, a designation denied to family firm Pentland Ferries. It does not cost the taxpayer a single penny, yet manages to operate a RO: RO thrice daily, year-round service on a shorter, more sheltered, route from Gills Harbour across the Pentland Firth.

Pentland Ferries route is widely recognised as the superior one. On top of that, it is also able to fund the brand-new ‘revolutionary’ catamaran Pentalina from it own resources, without calling on Government state-aid.

Of course, it is ruled ineligible for the ‘Islander Discount’ scheme.

We have earlier asked for ‘as level a playing field’ as possible on the Pentland Firth. This vastly extended fare-cutting scheme, available using public money to the nationalised company but not to the private sector one, would seem to be seeing things head in the opposite direction.

Yours sincerely,

BILL MOWAT (Vice-chairman) On behalf of fellow office-bearers