TRANSPORTATION AND INFRASTRUCTURE COMMITTEE 24 SEPTEMBER 2014

WESTERN ISLES FERRY SERVICES

Report by Director of Technical Services

PURPOSE OF REPORT To provide the Comhairle with an update on matters associated with the delivery of ferry services to and within the Western Isles.

COMPETENCE

1.1 There are no legal, financial, equalities or other constraints to the recommendations being implemented.

SUMMARY

2.1 A further meeting of the Outer Ferries Task Group was held on 26 June 2014 and a copy of the draft minute and an update on progress against each of the key actions are included as Appendices 1 and 2 to the Report.

2.2 Progress is being made by CalMac with regard to the specification and procurement of a replacement on-line booking system and a copy of CalMac’s press release of 19 August 2014 is included as Appendix 3 to the Report. The contract for the development and delivery of “a state-of-the-art ticketing and booking system” has been awarded by David Macbrayne Ltd, as CalMac’s parent company, to Worldline, a specialist in online transactions, in collaboration with Hogia, the “largest provider of IT systems for ferry and sea freight operators for the European transport market”. The roll-out of the new system by CalMac is scheduled for late 2015.

2.3 Representations to the Minister for Transport and Veterans regarding a number of concerns associated with ferry services to and within the Western Isles continue and considerable effort is being made to improve working relationships between, on one hand, the Comhairle and HITRANS and, on the other, Transport , CalMac Ferries Ltd and Caledonian Maritime Assets Ltd (CMAL).

2.4 Following on from the use of a routes and services methodology in the development of the Scottish Ferries Plan, Transport Scotland and CalMac are now undertaking a detailed analysis of demand and capacity, the outputs of which are to inform vessel deployment and replacement strategies being delivered as part of the implementation of the Plan.

2.5 There are growing concerns that the current engagement and consultation arrangements provided for in the Clyde and Hebrides Ferry Services (CHFS) Public Service Contract are neither effective nor efficient. Alternative arrangements are being developed and proposed by HITRANS in consultation with its constituent authorities and partners, Transport Scotland and CalMac and it is essential that this be considered in the context of the separate but complementary proposal to establish a joint Islands transport forum arising from the “Empowering Scotland’s Island Communities” publication.

2.6 The work of the Ferry Freight Fares Working Group continues. The Report provides a summary of the work carried to-date and that to be carried out over the next several months. It is envisaged that the findings and initial draft reports prepared by consultants appointed by Transport Scotland will be available by November 2014.

RECOMMENDATION

3.1 It is recommended that the Comhairle note the Report.

Contact Officers: Iain Mackinnon, Director of Technical Services; Tel 01851 822656 and ext 211466 Background Papers: None Appendices: 1 OHFTG – Minute of Meeting 26 June 2014 2 OHFTG Action Plan – Progress Update (1 September 2014) 3 CalMac Press Release re Replacement On-Line Booking System (19 August 2014) 4 Letter to Keith Brown MSP (30 June 2014) 5 Letter from Keith Brown MSP (21 July 2014) 6 Ferry Users Groups – Proposed Revised Terms of Reference 7 Ferry Freight Fares Working Group – Criteria for the assessment of options

OUTER HEBRIDES FERRIES TASK GROUP

4.1 Following the inaugural meeting of the Outer Hebrides Ferries Task Group on 11 March 2014, a number of actions are being pursued by the Comhairle and other members of the Group.

4.2 It was agreed that the overarching remit of the Group was: “To develop and implement a coordinated, structured, fully-informed and evidence-based strategy to engage with Scottish Ministers, Transport Scotland, Caledonian Macbrayne (CalMac), Caledonian Maritime Assets Ltd (CMAL) and other relevant stakeholders seeking to improve the standard, the capacity and the affordability of ferry services to the Outer Hebrides ensuring the demands and aspirations of all sectors of the community are met”.

4.3 The main areas of action and lobbying relate to:

 The specification, procurement and commissioning of an improved on-line booking system  The provision of increased capacity on Stornoway/Ullapool, Tarbert/Lochmaddy/Uig and Lochboisdale/Castlebay/ routes  The clarification of the proposed timetabling and allocation of vessels on the Stornoway/Ullapool route following the introduction of MV Loch Seaforth  The reconsideration of the scheduling of the Lochboisdale/ pilot service  The submission of a formal representation to and secure meeting(s) with Scottish Ministers and Transport Scotland to consider and address positive outcomes with the above areas.

4.4 A further meeting of the Task Group was held on 26 June 2014 and a copy of the draft Minute of that meeting is included as Appendix 1 to the Report. An update on progress associated with each of the key tasks is included as Appendix 2 to the Report and, from this, it can be seen that considerable efforts continue to be made and progress is being achieved in most if not all the key areas.

4.5 Progress is being made by CalMac with regard to the specification and procurement of a replacement on-line booking system and a copy of CalMac’s press release of 19 August 2014 is included as Appendix 3 to the Report. The contract for the development and delivery of “a state-of-the-art ticketing and booking system” has been awarded by David Macbrayne Ltd, as CalMac’s parent company, to Worldline, a specialist in online transactions, in collaboration with Hogia, the “largest provider of IT systems for ferry and sea freight operators for the European transport market”. The roll-out of the new system by CalMac is scheduled for late 2015.

4.6 Representations to the Minister for Transport and Veterans on the matter of ferry services to and within the Western Isles continue and copies of the most recent letter to Mr Brown, dated 30 June 2014, and his response, dated 21 July 2014, are included as Appendices 4 and 5 to this Report respectively.

4.7 The meeting of 24 July 2014 suggested in Mr Brown’s was attended by the Director of Technical Services and Ranald Robertson, HITRANS Partnership Director and although their attendance was not as “representatives of the Outer Hebrides Ferries Task Group”, the meeting, also involving senior representatives of Transport Scotland, CalMac and CMAL, was productive in a that it provided another opportunity for the views and the concerns of communities, customers and users of ferry services to be put across to these bodies and for them to respond, in part at least, to them.

4.8 The primary areas of discussion were:

 Demand and capacity issues across the network;  Current engagement and consultation arrangements as provided for in the Clyde and Hebrides Ferry Services Contract and the need for improvement in their effectiveness and efficiency;  The need for an improved working relationship between, one hand, local authorities and HITRANS and, on the other, Transport Scotland, CalMac and CMAL; and  The timetable and milestones associated with the construction, delivery and commissioning of the MV Loch Seaforth on the Stornoway Ullapool route.

4.9 An important aspect of the above and subsequent discussions, and following on from the meeting with the Minister for Transport and Veterans of 12 June 2014, has been the need to provide solid and robust evidence based arguments to demonstrate if and where capacity issues do exist and, where necessary, to identify and appraise options for the provision of additional capacity, either through the revisiting of timetables, the improved management of demand and/or the reallocation of vessels, or allocation of additional vessels, on affected routes

4.10 Whilst there may be commercial and logistical arguments that capacity issues will always exist at peak times, the growing incidence of constrained capacity on a large number of routes during longer peak periods remains of concern.

4.11 It was clear that, in developing the Scottish Ferries, the “routes and services” methodology used, details of which are available using the following link: http://www.scotland.gov.uk/Publications/2010/06/17134612/8, was very much a “high level” approach comprising six main steps:

a. Define the community's current and future needs, relative to other communities. b. Define the ferry service required to meet these needs. c. Define current service and associated issues. d. Define gaps on the basis of (2) and (3). e. Consider options to address gaps f. Prioritise future spending.

4.12 A more detailed analysis of demands and capacities on these routes is being undertaken by Transport Scotland in consultation with CalMac and CMAL. Not only will this reassess demands, increasing or otherwise, following the “snapshot” of the situation in 2009 and 2010, but will also inform vessel deployment and replacement strategies being delivered as part of the implementation of the Scottish Ferries Plan.

4.13 A review of what research and studies are being undertaken and by which stakeholder is being carried out in consultation with Transport Scotland to avoid duplication of effort and to identify any “gaps” in what is being and needs to be done.

4.14 At the time of writing, it appears that there remains a need for further research investigating the socio-economic impact of ferry services which, for whatever reason, are constraining sustainable growth in sectors such as tourism and shellfish and finfish production and processing. It remains the proposal that HIE and OHTIA, in collaboration with other relevant stakeholders, take the lead in carrying out this research.

ENGAGEMENT AND CONSULTATION ARRANGEMENTS

5.1 Existing engagement and consultation arrangements are provided for in the Clyde and Hebrides Ferry Services Public Service Contract (Section 8: Consultation) summarised as:

8.1 The Parties (Scottish Ministers and CalMac Ferries Ltd) shall consult with each other in good faith throughout the Grant Period in relation to all matters relevant to both the Approved Services and this Agreement, in order to facilitate the continued performance of the Approved Services.

8.2 The Operator (CalMac Ferries Ltd) shall undertake half-yearly consultation meetings throughout the Grant Period with each HITRANS Committee (and such other interested parties as may be approved in advance by Scottish Ministers) to the reasonable satisfaction of the Scottish Ministers, and shall provide the Scottish Ministers with copies of minutes from such meetings. The Scottish Ministers shall be notified in advance of and be entitled to be represented at such meetings and their representative shall be entitled to speak at such meetings.

5.2 As indicated above, there are growing concerns that the above arrangements, facilitated by HITRANS through, insofar as the interests of the Western Isles are concerned, the Hebrides and Argyll Ferry Users Groups (FUGs), do not provide an efficient and effective mechanism for engagement and consultation. The scheduling of meetings on a twice yearly basis does not provide for timeous and meaningful dialogue and consultation between the operator, commercial and non-commercial users and communities on major strategic issues such as vessel replacement and/or operational issues such as those associated with timetables, fares and modal links.

5.3 Transport Scotland and CalMac have both similarly expressed a desire to improve the effectiveness of the process and to ensure best use is made of the time of their staff involved in the various groups, forums and committees.

5.4 HITRANS, in consultation with Transport Scotland and CalMac, is facilitating a review of the Terms of Reference associated with the engagement and consultation process and, at the time of writing, a proposal has been forwarded to the latter two organisations for consideration.

5.5 The proposal comprises the establishment of an alternative two-tier arrangement involving the creation of a strategic transport forum, the remit of which is to provide a platform for engagement on key strategic issues in relation to transport planning and policy and provisions to be made in the CHFS contract.

5.6 As an outcome of the Our Islands: Our Future campaign and as provided for in the ’s “Empowering Scotland’s Island Communities” publication, a joint islands transport forum is to be established to facilitate a greater involvement of the Islands Councils in the design, commissioning and, where appropriate, properly funded delivery of Transport Services to, from and within the Islands, all with the purpose of achieving:

 continuous improvement in air and ferry services to, from and within the Islands;  the most efficient use of air and ferry resources, to the benefit of the Islands and Scottish Government/the public purse; and  that transport services are designed and commissioned with a view to ensuring sustainable economic growth and community development within the Islands.

5.7 As to the remit of such a forum, it is proposed that consideration be given to the following being included:

 Involvement and engagement in the design of air and ferry services, long in advance of formal, pre-tendering consultation exercises;  The Capital Programmes for piers and ferries, including vessel replacement, with a view to maximising efficient use of current and future resources;  Fare structures, for passengers, vehicles, freight and those benefiting from concessionary arrangements;  PSOs/discount schemes/other forms of special assistance;  The capacity for fixed links to replace ferries; and  The production of an annual/bi-annual/tri-annual (advice please) Transport Plan (comparable to the Policing, and Fire and Rescue, Plans) which would be signed off by SG and each Council.

5.8 It is critical that any review of existing engagement and consultation processes be considered in the context of the Our Islands: Our Future proposals to ensure an effective, efficient, structured and coordinated use of resources and a consistency in approach and message.

5.9 The Ferry User Groups (FUGs) would continue to act as the forum for stakeholder groups representing users of CalMac ferry services, the associated infrastructure and linked services and facilities to raise concerns regarding the operational aspects of the ferry services which have not been resolved at a local level.

5.10 It is proposed that the revised processes and mechanisms be introduced in the short to medium terms and that lessons learned through their implementation are considered in the development of engagement and consultation processes to be provided for in the next CHFS contract currently scheduled to commence in October 2016.

5.11 The proposed revised Terms of Reference are included as Appendix 6 to the Report and the Comhairle, through the participation of the Chair of the Transportation and Infrastructure Committee as the Comhairle’s representative on the HITRANS Partnership Board, will continue to contribute to the development and implementation of revised arrangements.

FERRY FREIGHT FARES

6.1 In the Ferries Plan 2013-2022, Transport Scotland (TS) committed to carrying out a review of freight fares policy. The aim of this review is to deliver a new fares structure for large commercial vehicles (CVs) and to develop an overarching set of principles and procedures for the setting of fares for freight carried by trailers, containers and other means (excluding CVs), both of which are to be implemented across all Scottish Government (SG) directly subsidised ferry services.

6.2 The Ferries Plan notes that any new fares structure would need to adhere to the following three principles:

 simple and transparent;  does not advantage one part of the network over any other part;  balances the wellbeing of communities against the public sector cost.

6.3 To provide evidence to inform this review, Transport Scotland has commissioned two separate but related pieces of research designed to provide a comprehensive review of current freight fares policy and to develop and assess options for future fare setting.

 Research is being undertaken in-house by Transport Scotland’s Transport Analytical Services (TAS) to review current procedures for the setting of fares for large CVs and to identify and assess alternative fares structures for large CVs.  Research is being undertaken by external consultants, SYSTRA in association with Peter Brett Associates, ProVersa and The Maritime Group, to review current procedures and charging mechanisms for the setting of fares for all ‘other freight’ and to identify and assess options for setting the fares for all ‘other freight’.

6.4 As reported previously, a multi-agency officer Working Group has been established by Transport Scotland with the Director of Technical Services representing Comhairle nan Eilean Siar.

6.5 In order to assess the options developed in both parts of the research in a consistent and objective manner, it was agreed to establish a set of well-defined criteria for assessment based on the principles outlined in paragraph 6.2. A full description of the assessment criteria is set out in the Transport Scotland paper titled “Research to inform the Ferry Freight Fares Review - Criteria for the assessment of options” included as Appendix 7 to the Report and summarised below:

 Acceptability: Acceptable to the freight industry, island business communities and the wider island community.  Affordability: Affordable for the Scottish Government, by ensuring any change to the fares structure is sustainable going forward.  Consistency: Fares are set in a consistent way across the directly subsidised Scottish ferries network so that the freight industry face the same fares regime regardless of which part of the network they operate on and so that no part of the network is advantaged over another part.  Sustainability: The level of fares supports the future sustainability of island local economies and communities.  Transparency and simplicity: Simple for the directly subsidised ferry operators to put in place and operate and transparent so that users can easily understand how fares are set.

6.5. In addition to the above five criteria, a pre-requisite for any option, before the criteria are applied, is that it is legal, i.e. compliant with State Aid rules and other legal requirements.

6.6 At the time of writing, the development and appraisal of options against the above criteria by the respective research teams is ongoing and it is envisaged that the findings and initial draft reports will be available to the Working Group by November 2014. Progress in this important piece of work will continue to be reported to the Comhairle through the Transportation and Infrastructure Committee.

Appendix 1 COMHAIRLE NAN EILEAN SIAR

OUTER HEBRIDES FERRIES TASK GROUP

Minute of Meeting held in the Committee Room 3, principal Council Offices, Stornoway on Thursday 26 June 2014 at 10.00am.

PRESENT Mr Roddie Mackay, CNES (in the Chair) Mr Ronald Mackinnon, CNES Mr Norman L. Macdonald, FSB Mr Alasdair Macleod, CNES Ms Gail Robertson, OHCG Mr Iain Mackinnon, CNES Mr David Wood, OHCG Mr Uisdean Robertson, CNES Mr Ian Fordam, OHTIA Mr Donald Macarthur, OHTIA

APOLOGIES Mr John Mackay, CNES (Chairman) Mr Ranald Robertson, HITRANS Mr Angus Campbell, CNES Mrs Rachel Mackenzie, HIE Mr Calum Iain Maciver, CNES Ms Jane Maciver, SPA Mr Malcom Burr, CNES

IN ATTENDANCE Mr Angus McCormack, CNES Mr Norman A. Macdonald, CNES Mr Donald N. Macleod, CNES Mr Iain Mackenzie, CNES Mr Norman E. Macleod, CNES Mr David Smart, CNES Mr Kenneth Macleod, CNES Mr Neil Macrae, HITRANS Mr Kenneth Murray, CNES Mr D.R. Macleod, FTA Mr Rae Mackenzie, CNES Mr Charlie Nicolson, CNES

CONSTITUTION

Appointment of In the absence of the Chairman it was agreed to appoint Mr Roddie Mackay as Chairman for Chairman the Meeting.

OUTER HEBRIDES FERRIES

Minute of 1 It was agreed to approve the Minute of Meeting of 11 March 2014, subject to a typographical Meeting of 11 amendment to the side heading at Item 3 ‘Tourist’ to ‘Tourism’. March 2014

Western Isles 2 The Director of Technical Services submitted a Report providing an update on matters Ferry Services associated with the delivery of ferry services to the Western Isles. The Report outlined the key areas of action arising from the Meeting of the Task Group on 11 March 2014 and these were provided in more detail in Appendix 1 to the Report. Further evidence of progress was outlined in Appendices 2-6 of the Report.

The Director of Technical Services informed the Task Group that the Report had been considered by Transportation and Infrastructure Committee on 18 June 2014 and provided an update on matters associated with the delivery of ferry services to the Western Isles, namely:-

(1) provision of increased capacity on Stornoway/Ullapool, Tarbert/Lochmaddy/Uig and Lochboisdale/Castlebay/Oban routes; (2) clarification of the proposed timetabling and allocation of vessels on the Stornoway/Ullapool route following the introduction of MV Loch Seaforth; (3) specification, procurement and commissioning of an improved on-line booking system; (4) reconsideration of the scheduling of the Lochboisdale/Mallaig pilot service; and (5) The submission of a formal representation to and secure meeting(s) with Scottish Ministers and Transport Scotland to consider and address positive outcomes with the above areas.

In relation to (5) above the Director of Technical Services provided a verbal update of a meeting on 12 June 2014 in Edinburgh with Mr Keith Brown MSP, Minister for Transport and Veterans and the Chairman and the Leader of the Comhairle. The Director informed the Task Group that the above key issues had been raised with the Minister and that the meeting had been generally positive, particularly in relation to:-

 the need for and importance of the undertaking of an Economic Study on demand and potential for growth in relation to current and foreseeable ferry capacity issues on all the main routes to the Western Isles;  key stakeholder engagement and collaboration and the need for improved working relationships between the Comhairle and Transport Scotland, CMAL and CalMac; and  the Comhairle’s desire for much-improved collaboration and consultation in the specification and procurement of the Clyde and Hebrides Ferry Services Contract to be in place by October 2016

The Director of Technical Services also read out a formal decision of Comhairle from the previous evening in relation to ferry services:

“It was agreed that, subject to the outcomes of the meetings of the Task Group and the Ferry Users Group to be held on Thursday 26 June, the Chairman and the Chairman of Transportation and Infrastructure Committee write to the Minister seeking, as a matter of urgency, a further meeting involving all key stakeholders, e.g. the Minister, Transport Scotland, CalMac, CNES, HITRANS, the Outer Hebrides Commerce Group, the Outer Hebrides Tourism Industry Association, HIE, the Federation of Small Businesses, the Stornoway Port Authority and the Ullapool Harbour Trust and local hauliers, to enable him, CalMac and CMAL (those organisations that Scottish Ministers have the major shareholding in) to get, first-hand, the concerns and views of the various sectors that would be affected by the forecasted lack of capacity.”

Discussion at the meeting focused on the issues outlined at (1) to (5) above and there was strong representations made, particularly in relation to:

 the retention of a dedicated freight ferry, in addition to MV Loch Seaforth to provide the necessary additional capacity during the summer period  lack of contingency arrangements for breakdown or dry-dock servicing of MV Loch Seaforth  impacts of transporting ‘dangerous goods’ on the MV Loch Seaforth  failure to respond or delays in response to requests for information from Transport Scotland and CALMAC and a general lack of confidence that these bodies were taking suggestions and representations seriously  the provision on the Stornoway/Ullapool route should be considered in parallel to the Tarbert/Uig route  misinformation in respect that hauliers were originally informed that there would be a dedicated night time freight sailing  the consideration by private sector businesses in engaging direct with the freight vessel operator with a view to reducing or eliminating dependence on CALMAC  there was no Western Isles representation on the CALMAC Board  no evidence provided to support the decisions/proposals put forward by Transport Scotland for the replacement vessel for the Stornoway/Ullapool route  relocation of CALMAC HQ from Gurrock to the Western Isles  a call for accountability to the Scottish Government

The Task Group were of the view that these issues should be addressed as a matter of urgency and representations be made immediately to the Scottish Government.

It was agreed, in addition to the decision of Comhairle of 25 June 2014, that

(1) the Director of Technical Services, in consultation with the Chief Executive seek to make representations to Scottish Ministers on behalf of the Task Group, including Uist and Barra representations, on the matters discussed at the Meeting;

(2) a Press Release be issued highlighting the points discussed at the Meeting and to raise public awareness;

(3) the proposed Winter Timetable for the Stornoway/Ullapool route be raised at the Hebrides Ferry Users Group Meeting; and

(4) the Chief Executive, in consultation with the Chief Executives of Orkney and Shetland Islands Councils, seek to formally establish and call the inaugural meeting of the Joint Islands Transport Forum arising from the ‘Our Island: Our Future’ campaign to discuss the impacts of the proposed service

Federation of 3 Mr Norman L. Macdonald, Chairman of the Western Isle Branch of the Federation of Small Small Businesses (FSB) provided a verbal update from a meeting of the Federation of Small Businesses Businesses (Highlands and Islands Branch) with Mr Keith Brown MSP, Minister for Transport (Highlands and and Veterans on 18 June 2014. Mr Macdonald informed the Task Group that most of the Islands Branch) issues discussed at the previous item were covered at that Meeting, particularly ferry Meeting Mr capacity issues and the online booking system. Mr Macdonald reiterated some of the points Keith Brown already raised by the Group and highlighted, as an aside, the FSB had raised the importance MSP, Minister of an interconnector to the islands and that the Minister had indicated that the FSB would be for Transport getting a response from Ms Nicola Sturgeon MPS, Deputy First Minister of Scotland. and Veterans It was agreed to note the verbal update.

Task Group 4 The Director of Technical Services submitted a progress update to 16 June 2014 on the Key Action Plan Tasks and Action Plan agreed by the Task Group at the Meeting on 11 March 2014. The Director indicated that a number of these were in progress or had been completed.

Mr Donald Macarthur, representing OHTIA, provided an update from a recent meeting with Ms Cathy Craig, Commercial Director, CALMAC regarding the online booking system. Mr Macarthur stated that the reasons for the lack of available data were partly attributed to it being ‘commercially sensitive’ or the fault of the ‘antiquated booking system’. Mr MacArthur confirmed that CALMAC were in the process of procuring a new online booking system which would provide more information such as options for alternative routes when booking were full, links to buses and trains and accommodation to enable whole-journey planning. It was anticipated that the new system would allow the collation of data where travellers were unable to make bookings and therefore should give a true reflection of capacity on routes.

It was agreed to:

(1) note progress to date with the Key Task and Action Plan document;

(2) that the Director of Technical Services would update the document based on the discussion at the Meeting, any outcomes achieved following the subsequent meeting of the Hebrides Ferry Users Group and circulate a updated summary to members of the Task Group.

Item Key Task / Action Resp Progress Update

01 Schedule inaugural meeting of Task Group CnES COMPLETE

02 Finalise terms of reference and membership of OHFTG COMPLETE Task Group

03 Finalise publication of Ferry Availability Review HITRAN COMPLETE – Copy of Report available at: Report 2013 and summarise findings S OHTIA http://www.hitrans.org.uk/Documents/Ferry_Online_Booking_Availability_Review_- _Summer_2013.pdf

Similar research being undertaken in collaboration with CalMac for Summer 2014.

04 Undertake economic impact study across HIE Discussions with Transport Scotland, CalMac, HIE, HITRANS and OHTIA on-going to tourism and other sectors; quantitative and OHTIA carry out gap analysis of range of research and reviews being undertaken across qualitative impacts of capacity shortfall and sector. potential opportunities arising from improvements Economic research to be undertaken by HIE and OHTIA in consultation with CnES, HITRANS, Transport Scotland and CalMac. To complement “demand and capacity” review being carried out by Transport Scotland and CalMac.

05 IMPROVEMENT AREAS

05a Improved on-line booking system CalMac Replacement on-line booking system ordered by CalMac. Copy of Press Release (19 August 2014) included as Appendix 3 to the Report.

05b Increased capacity on Stornoway/Ullapool, TS Research and outputs linked to demand and capacity review being undertaken by Tarbert/Uig/Lochmaddy and CalMac Transport Scotland/CalMac following routes and services methodology and to inform Lochboisdale/Oban/Castlebay routes vessel replacement programme being implemented consistent with Scottish Ferries Plan

05c Obtain clarity on proposed timetabling and CalMac COMPLETE allocation of vessels on Stornoway Ullapool route following introduction of MV Loch Seaforth

Appendix 2 OUTER HEBRIDES FERRIES TASK GROUP KEY TASKS AND ACTION PLAN – Progress Update at 1 September 2014

Item Key Task / Action Resp Progress Update

05d Seek reconsideration of scheduling of TS Representations continue to be made to Transport Scotland directly and through Lochboisdale/Mallaig pilot service Hebrides and Argyll Ferry Users Groups.

06 Submit formal representation to Transport CnES COMPLETE Scotland and CalMac seeking meeting with Scottish Government Minister (Keith Brown Further representation sent 30 June 2014; copy of letter included as Appendix 4 to the MSP) Report. Response from Minster for Transport and Veterans of 21 July 2014, included as Appendix 5 to the Report, indicated that meeting at later date possible.

Appendix 2 (Cont) OUTER HEBRIDES FERRIES TASK GROUP KEY TASKS AND ACTION PLAN – Progress Update at 1 September 2014 Appendix 3 Press Release re CalMac On-Line Booking System

AWARD‐WINNING FERRY OPERATOR ON TRACK FOR NEW TICKETING SYSTEM 19 August 2014

The introduction of a state‐of‐the‐art ticketing and online booking system by award‐winning ferry operator Caledonian MacBrayne (CalMac) has taken a step closer with the award of a contract to Worldline, the European leader and a global player in the payments and transactional services industry.

The initial three‐year contract will see Worldline, a specialist in online transactions, team up with Hogia, the largest provider of IT systems for ferry and sea freight operators for the European transport market, to deliver a modern, integrated ticketing system to support lifeline ferry services on the west coast of Scotland.

Martin Dorchester, Managing Director of CalMac, said: “We have received a raft of awards in recent years in recognition of our focus on customer care but we know we can always do more to improve the customer experience and that is why we are currently undertaking a major programme of improvements to modernise our systems to help us be the best we can be. The award of this contract is an important milestone in that journey as we recognise that our ticketing and online booking systems are starting to show their age and no longer meet the expectations of customers for whom e‐ticketing and the use of mobile technology is becoming the norm.”

“The two companies selected to work with us have unrivalled experience in this field providing between them similar services for a host of rail and ferry operators both in the UK and overseas and we are sure all of our customers will find the new systems easy to use and greatly enhance their experience of travelling with us.”

Scottish Government Transport Minister, Keith Brown MSP, said: “The award of this contract is excellent news, as it brings CalMac another step closer to delivering a state‐of‐the‐art ticketing and booking system that will provide real benefits to ferry passengers. The system will make it quicker and easier for travellers to make bookings and reservations, and will allow smart ticketing technology to be rolled out in the future. I want ferry travel in Scotland to remain an attractive option, and this new system will help enhance the customer experience on board CalMac services.”

The contract is being award by CalMac’s parent company David MacBrayne Ltd. in order that the technology is available for services provided by CalMac Ferries Ltd and Ltd services and other ferry services it may operate in the future.

Worldline [Euronext:WLN], an Atos company and the European leader and a global player in the payments and transactional services industry, currently provides similar services to rail companies across Scotland, England and Europe as well as operating ticket website redspottedhanky.com.

Hogia provides ferry reservation and ticketing systems to ferry companies across the world including, Red Funnel in the UK, Destination Gotland in Sweden and Wagenborg Passenger Services in the Netherlands.

Atos Senior Vice President in Scotland, Gavin Thomson, said the company was delighted to have been awarded the opportunity to support one of Scotland’s iconic businesses: “With the skills and breadth of experience we have across the company, we are ready to support David MacBrayne’s current and future ambitions through this contract,” he said.

Lisa Coleman, CEO Worldline, said: “Working with our partner Hogia, we have extensive experience in providing ticketing and reservations as well as back office services which support transport companies across the world. We are committed to both David MacBrayne and CalMac’s vision and passion for supporting rural communities, tourism industry and their own business transformation.

"Atos has invested heavily in people in Scotland and its highly experienced and motivated team of more than 1500 business technologists work in locations across Scotland including Livingston, , Dundee, Edinburgh and Forres."

Ends

Notes to Editors

1. Further information about Caledonian MacBrayne is available at www.calmac.co.uk

2. Caledonian MacBrayne and CalMac are trading names of CalMac Ferries Ltd (CFL). These names are used under licence from Caledonian Maritime Assets Limited (CMAL). The lion rampant device is used by CFL with the permission of CMAL.

3. Worldline [Euronext:WLN] is the European leader and a global player in the payments and transactional services industry. Worldline delivers new‐generation services, enabling its customers to offer smooth and innovative solutions to the end consumer. Key actor for B2B2C industries, with 40 years of experience, Worldline supports and contributes to the success of all businesses and administrative services in a perpetually evolving market. Worldline offers a unique and flexible business model built around a global and growing portfolio, thus enabling end‐to‐end support. Worldline activities are organised around three axes: Merchant Services & Terminals, Mobility & e‐

Transactional Services, Financial Processing Services & Software Licensing. Worldline employs more than 7,200 people worldwide and generated 1.12 billion euros revenues (pro forma) in 2013. Worldline is an Atos company. www.worldline.com

For further information contact:

David Cannon Public Affairs Manager CalMac Ferries LtdTel 01475 650371 Mob 07585 092332 [email protected]

Appendix 4

COMHAIRLE NAN EILEAN SIAR

Sandwick Road, Stornoway, HS1 2BW

Rathad Shanndabhaig, Steornabhagh, HS1 2BW

Mr Keith Brown MSP Telephone: 01851 –822601 Facsimile: 01851– 705439 Minister for Transport and Veterans The Scottish Government Victoria Quay ANGUS CAMPBELL EDINBURGH EH6 6QQ LEADER

30 June 2014

Dear Mr Brown

WESTERN ISLES FERRY SERVICES

Can I thank you for our meeting with you in Edinburgh on 12 June 2014. Since then there has been a further meeting of the Outer Hebrides Ferries Task Group held on 26 June 2014 to reiterate the significant and growing concerns regarding the anticipated shortfall in capacity following the introduction of the MV Loch Seaforth, specifically during the summer months starting in 2015.

As suggested by you when we met, the Task Group meeting agreed to the establishment of a multi-agency project working group, the remit of which would be to manage the undertaking of an economic study to provide robust and objective evidence associated with current and foreseeable demand for ferry services to and within the Western Isles, the current capacity constraints affecting the Western Isles and the potential for growth across all sectors in the islands which is otherwise constrained by the inadequacies of ferry services.

Central to this will be collaboration with and the cooperation of Transport Scotland, CalMac Ferries Ltd and Caledonian Maritime Assets Ltd from the outset and, consistent with your own views on the importance of this evidence-based approach, we trust you will ensure that that these bodies will participate in the study, including the sharing of all available and relevant data and intelligence.

The full study will seek to provide the necessary information and data for all Western Isles services. However, in the shorter-term, given the very imminent timescale associated with the development of the summer 2015 timetable for the Stornoway Ullapool route and, we strongly feel, the very real need for the proposed capacity at that time to be augmented by a dedicated freight vessel, the Task Group will seek to carry out a short piece of work, the aim of which is to demonstrate need and the implications to the island communities and business sectors should it not be provided.

In the spirit of continuing collaboration, we would request your participation in a meeting as soon as possible here in the Western Isles involving all relevant stakeholders, including Transport Scotland, CalMac, CMAL, HIE, HITRANS, the Outer Hebrides Tourism Industry Association, the Outer Hebrides Commerce Group, local representatives of the Federation of Small Businesses, the Stornoway Port Authority, the Ullapool Harbour Trust, local hauliers and the Comhairle.

Appendix 4

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We would be very happy to facilitate this meeting on behalf of the Ferries Task Group and from this you will undoubtedly get an opportunity to hear, at first hand, the views and concerns of the various sectors that would be affected by the forecasted lack of capacity.

The strength of feeling about this matter should not be underestimated by anybody and we would wish to make you aware of the very real concerns expressed at the recent meetings of the Task Group and the Hebrides Ferry Users Group that Transport Scotland and CalMac are simply not understanding the views and concerns of the communities served by these lifeline ferry services. For example although there is an estimated 42% increase in car capacity, the addition of freight takes that advantage away and indeed at busy times could mean a reduction of car spaces when we need them most.

It is therefore very important that this meeting, involving you and those agencies accountable to you for the delivery of these services to the islands, be held as soon as possible and certainly in advance of the development of timetable for summer 2015.

I hope this meeting can take place very soon to allow us to work constructively together on this important issue.

Yours sincerely

Cllr Angus Campbell Cllr John Mackay Leader, Comhairle nan Eilean Siar Chair, Transportation and Infrastructure

cc Alasdair Allan MSP

Appendix 5 Appendix 6 CLYDE AND HEBRIDES FERRY SERVICES FERTRY USERS GROUPS PROPOSED REVISED TERMS OF REFERENCE

OPERATOR LIAISON

The Ferry Operator should, through its Regional Management Structure, consult on and discuss matters affecting the operation and performance of the services within their area, within the framework of the contract existing between the Operator and Transport Scotland. This consultation forum will exist separately from, but will work in conjunction with, the scheme of ferry user group arrangements.

FERRY USER GROUPS

There are four Ferry User Groups (FUG) that act as consultative bodies covering the Clyde and Hebrides ferry services operated by Calmac Ferries Ltd that form the Clyde and Hebrides Ferry Services (CHFS) Contract. Consultation arrangements for the ferry services to the Northern Isles are dealt with separately.

The FERRY USER GROUPS are as defined below:

a) The ARGYLL GROUP is concerned with services operated in the , Kintyre, Jura, Gigha, Colonsay, Oban, Mull, Iona, Lismore, Coll, Tiree, Barra, area.

b) The SMALL ISLES, SKYE, RAASAY, KILCHOAN, LOCHALINE Group is concerned with services within this area.

c) The CLYDE Group is concerned with services operated within the Arran, Bute, Cumbrae, area.

d) The HEBRIDES Group is concerned with services operated within the Barra, South and , Harris, Lewis area.

The purpose of the FUG is to provide an opportunity for stakeholder groups representing users of the Caledonian MacBrayne ferry services, the associated infrastructure, and linked services and facilities, to raise concerns regarding the operation of ferry services which have not been able to be resolved at a local level or are not separately covered at that more local level for reasons of strategic impact and shared asset use

The FERRY USER GROUPS will consider and discuss matters affecting the operation and performance of the services within their area, and when considered appropriate, refer unresolved matters to the Tier 2 Ferry Committee Transport Scotland for its consideration in their role as escalation path.

In addition, if requested by Transport Scotland, the Groups will consider and comment on any changes to services proposed by either Transport Scotland or the ferry Operator with a view to ensuring community impact is considered.

STRATEGIC TRANSPORT FORUM

The Scottish Government in the prospectus “Empowering Scotland’s Islands Communities” set out a vision for greater engagement with island communities and Councils on key internal and external transport issues. This prospectus recognizes the unique challenges of connectivity to our islands and the extent to which strong communities and local business rely on effective and fairly-priced transport links, particularly the vital importance of the lifeline ferry services from the mainland to the remote Island Areas.

In dialogue with the Island Councils and other stakeholders to consider partnership governance arrangements there is a real opportunity to include a platform for engagement on key strategic issues in relation to the Clyde and Hebrides (and Northern Isles) ferry services contract. It has been suggested that a collaboration between Transport Scotland, regional transport partnerships and Councils with a focus on island transport issues could be developed around, for example, a twice-yearly islands transport forum. This forum or a sub group under it could focus on strategic ferry issues and policy and draw together a range of key stakeholders including:

 Council Leader / Convener.  The Transport portfolio holders at the relevant local authorities.  Local Authority Chief Executives.  Relevant Local Authority Directors responsible for transportation.  Regional Transport Partnership lead officer(s).  Transport Scotland Ferries Division senior management.  CHFS Operator Chief Executive and relevant senior management.  CMAL Chief Executive and relevant senior management.  HIE  Visit Scotland / Tourism Representatives  Business Representatives

This group would meet twice per annum and would focus on issues of strategic planning and policy. There could be an opportunity to extend its remit to include aviation.

Appendix 7

RESEARCH TO INFORM THE FERRY FREIGHT FARES REVIEW CRITERIA FOR THE ASSESSMENT OF OPTIONS

1. Purpose

1.1. The purpose of this paper is to:

 bring together comments received from the Working Group and SYSTRA on the draft criteria for the assessment of options put forward by both parts of the research to inform the Ferry Freight Fares Review research; and  use the comments received to refine the criteria.

2. Background

Ferry Freight Fares Review

2.1. In the Ferries Plan 2013-2022, Transport Scotland (TS) committed to carrying out a review of freight fares policy. The aim of this review is to deliver a new fares structure for large commercial vehicles (CVs) and to develop an overarching set of principles and procedures for the setting of fares for freight carried by trailers, containers and other means (excluding CVs), both of which are to be implemented across all Scottish Government (SG) directly subsidised ferry services.

2.2. The Ferries Plan notes that any new fares structure would need to adhere to the following three principles:

 simple and transparent;  does not advantage one part of the network over any other part;  balances the wellbeing of communities against the public sector cost.

2.3. To provide evidence to inform this review, Transport Scotland has commissioned two separate but related pieces of research designed to provide a comprehensive review of current freight fares policy and to develop and assess options for future fare setting.

 Research is being undertaken in-house by Transport Analytical Services (TAS) to review current procedures for the setting of fares for large CVs and to identify and assess alternative fares structures for large CVs.  Research is being undertaken by external consultants, SYSTRA in association with Peter Brett Associates, ProVersa and The Maritime Group, to review current procedures and charging mechanisms for the setting of fares for all ‘other freight’ and to identify and assess options for setting the fares for all ‘other freight’.

2.4. A Working Group comprising key stakeholders has been established to oversee the review.

Criteria for Assessment

2.5. In order to assess the options developed in both parts of the research in a consistent and objective manner, it was agreed at the first Working Group meeting that it would be necessary to establish a set of well-defined criteria for assessment based on the principles 1

outlined in paragraph 2.2. Working Group members were asked to provide comments to TAS on potential criteria and it was agreed that TAS would draw on the comments received to produce a short paper for discussion at the second Working Group meeting.

2.6. Comments were received from one Working Group member and TAS produced a paper proposing a set of criteria for assessment. The paper outlined the features of a good criterion, stating each criterion must be:

 Specific: Each criterion should be specific rather than general, outlining what exactly we want to achieve and for whom.  Measurable: Each criterion should be measurable so that success can be assessed. It is suggested that each criterion should be measured on a scale of 0 to 5, rather than a strict yes/no to aid better comparability between options.  Achievable: Each criterion must be achievable and there must be a manageable number of criteria. It is suggested that a maximum of five criteria would be manageable.  Relevant: Each criterion should be based on the guiding principles.

2.7. On that basis, the paper proposed the following five criteria:

 Acceptability: Acceptable to the freight industry and island business communities.  Affordability: Affordable for the Scottish Government, by ensuring any change to the fares structure is sustainable going forward.  Consistency: Consistent across the directly subsidised Scottish ferries network so that the freight industry face the same fares regime regardless of which part of the network they operate on.  Does not advantage one part of the network over any other part: The level of fares must not have any negative impact on the future sustainability of island communities.  Transparency and simplicity: Simple for the directly subsidised ferry operators to put in place and operate and transparent so that users can easily understand how fares are set.

2.8. The paper was discussed at the second Working Group meeting and comments and suggestions for alternative criteria were sought. A number of comments were received during the meeting and members were invited to provide additional specific comments to TAS via email or telephone. Additional comments were received from one Working Group member. Comments on the draft criteria were also sought from SYSTRA, the consultants commissioned to undertake the review of ferry fares for non-CV freight.

2.9. This paper seeks to bring together the comments received from the Working Group and SYSTRA and to use these comments to refine the criteria for assessment.

3. Comments from the Working Group and SYSTRA

3.1. The feedback received from the Working Group and SYSTRA broadly fell into three categories: general comments; comments specific to the existing draft criteria; and suggestions for new or alternative criteria. The feedback received is summarised below under these three headings.

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General comments

 The criteria need to be less subjective and more detailed. However, defining the criteria too tightly may make the process too restrictive.  The criteria should be weighted in terms of their relative importance to allow better comparability of options.  Descriptors for the scoring should be provided, e.g. to explain what corresponds to a marking of 0 and what corresponds to marking of 5. The description for each score on the scale should perhaps be tailored for each criterion.  Whilst the number of criteria must be manageable, important criteria should not be excluded for the sake of limiting the number of criteria to a maximum of five.

Comments on existing criteria

 The description and title of criteria 4 cover slightly different areas - the title seems to be about equity/fairness whilst the description is about sustainability. They should perhaps be separated into two criteria.  Criteria 4 (does not advantage one part of the network over any other part), will only be suitable if we take the view that all islands are the same and therefore should be treated the same (horizontal equity). If, however, we take the view that islands are different to each other (e.g. the more remote, smaller islands face greater problems to the closer, larger islands) and therefore there is a case for treating them differently (vertical equity), then then there is a case for advantaging one part of the network over another. Different groups may have different views on which form of equity (horizontal or vertical) we should be aiming to achieve therefore an equity criterion might be quite difficult to achieve. Rather than making this criterion about equity/fairness, it could be about supporting local communities.  Criteria 4 (does not advantage one part of the network over any other part) currently lends itself to a yes/no answer, rather than a scale of 0–5 marking. It will only be possible not to disadvantage one part of the network over any other part unless: a) the current fares structure is kept in place; b) all fares are increased by the same percentage; or c) all fares are decreased by the same percentage. As such, a new fares structure that reduced all fares (albeit by different percentages) across the islands would currently fail against the criterion as it stands. It may therefore be sensible to take out the word ‘any’ so that options can be assessed on their relative impact on advantaging / disadvantaging other parts of the network.  Criteria 4 (the level of fares must not have any negative impact on the future sustainability of island communities) will not be achievable unless a) fares are kept the same (or increased in line with inflation); or b) reduced for all islands - even if the overall fares structure is technically fairer.  The acceptability criterion should perhaps be widened from just the freight industry and the business community to include the wider island community.

Suggestions for additional / alternative criteria

 Operability: Feasible for ferry operators to implement and operate.  Legal: Compliant with State Aid rules and other legal requirements.

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4. Criteria for assessment

4.1. On the basis of the comments received from the Working Group and SYSTRA and further consideration by TAS and TS Ferries Unit, the following have been agreed as the final draft criteria. These criteria may be reviewed again at a later stage of the review to ensure that they are suitable.

 Acceptability: Acceptable to the freight industry, island business communities and the wider island community.  Affordability: Affordable for the Scottish Government, by ensuring any change to the fares structure is sustainable going forward.  Consistency: Fares are set in a consistent manner, i.e. in a way that involves applying the new ‘fares regime’, e.g. distance based or volume based, in a consistent and equal basis across all directly subsidised Scottish ferry routes. Applying the fares regime consistently will remove any perceived anomalies in the setting of freight fares, and will ensure that no part of the network is advantaged relative to another part.  Sustainability: The level of fares supports the future sustainability of island local economies and communities.  Transparency and simplicity: Simple for the directly subsidised ferry operators to put in place and operate1 and transparent so that users can easily understand how fares are set.

4.2. In addition to the above five criteria, a pre-requisite for any option, before the criteria are applied, is that it is legal, i.e. compliant with State Aid rules and other legal requirements.

4.3. Following consideration by TAS and TS Ferries Unit, for the purposes of the research, equal weightings will be assigned to the five criteria. When assessing the options, the research will explore the difference alternative weightings make to the outcome (scoring) as part of sensitivity testing. In this way, the research will show the impact that different weightings have on the options, whilst remaining impartial. It will then be a policy decision for the Minister to decide on the relative importance of the criteria and on the option to be taken forward.

4.4. A scale of 1-5 should be used to assess the extent to which each option meets the criteria. Descriptors of the scoring, which are tailored to each criterion, are provided below:

 Acceptability: 1: unacceptable to all groups; 2: unacceptable to most groups; 3: unacceptable to some groups and acceptable to others; 4: acceptable to most groups; 5: acceptable to all groups  Affordability: 1: increases the subsidy paid significantly; 2: increases the subsidy a little; 3: no impact on the subsidy; 4: reduces the subsidy paid a little; 5: reduces the subsidy paid significantly.  Consistency: 1: fares are set in different ways across all parts of the directly subsidised ferries network and there is significant advantage for some parts of the network over other parts; 2: fares are set in different ways across most of the directly subsidised

1 It should be noted that ‘operability’, an additional criterion suggested by the Working Group, is covered off by the ‘transparency and simplicity’ criterion as its description requires that the option is “simple for operators to put in place and operate”. 4

ferries network and there is some advantage for some parts of the network over other parts; 3: fares are set in the same way in some parts of the network but not others and there is little advantage for some parts of the network over other parts; 4: fares are set in the same way across most of the directly subsidised ferries network and there is very little advantage for any part of the network over other parts; 5: fares are set in the same way across the whole directly subsidised ferries network and there is no advantage for any part of the network over other parts.  Sustainability: 1: significantly risks the future sustainability of island economies and communities; 2: risks future sustainability somewhat: 3: no likely impact on future sustainability; 4: likely to increase future sustainability somewhat; 5: likely to increase future sustainability significantly.  Transparency and simplicity: 1: unfeasible to put in place and operate and very difficult to understand; 2: difficult to put in place and operate and quite difficult to understand; 3: no more easy to put in place or more transparent/easy to understand than the current framework; 4: relatively simple to put in place and operate, fairly transparent and quite easy to understand; 5: very simple to put in place and operate, fully transparent and very easy to understand.

Transport Analytical Services Transport Scotland July 2014

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