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Lord James Douglas-Hamilton : I shall restrict my comments to the investment in CalMac.

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For the most part, CalMac services do not make a profit, and a subsidy of about £6 million a year is required. We have always been clear that Caledonian MacBrayne was not a straightforward case for privatisation. The first priority in any arrangements is to guarantee the lifeline services which it provides. It is for that reason that, having studied the issues carefully, we decided that, on the dissolution of the Scottish Transport Group, the ownership of Caledonian MacBrayne should be transferred to the Secretary of State.

We intend to appoint a new board for the company, which will contain persons with commercial expertise, including some with first-hand knowledge of the islands served and their needs. I feel that that is vital to ensure the responsiveness of the company to its customers.

As a matter of priority, we would look to the new board to examine the possibilities of relocating the headquarters nearer the centre of the area which it serves. Oban seems likely to prove a suitable place for that purpose. We shall ask the new board to explore the possibility of transferring to the private sector the Gourock-Dunoon and Wemyss bay- Rothesay routes. I consider it anomalous that CalMac is operating a subsidised service on a similar route to an unsubsidised private operation.

In the longer term, we will expect the board to examine carefully all existing practices in the company's operation with a view to providing more efficient and cost-effective ways of providing at least the present standard of service. No options for the longer term will be excluded, subject to

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the overriding proviso that we must ensure at least the present quality of service to the Islands. I consider that, with its own board and independence, CalMac will be well placed to continue and improve on the present level of services.

The views of the ferry users are important, and we intend to continue to consult them. At present, the main means of consultation for ferry users to make their views known are through shipping services advisory committees and the Scottish Transport Users Consultative Committee. They are doing a good job and that will continue.

In its 1987 manifesto, the Conservative party made it clear that it would continue the substantially increased financial support for the provision and upgrading of ferries and terminals which are vital to the islands. In Scotland, in the period from 1979 to date, the Government have provided grant for ferry pierworks and vessels in Scotland totalling £23.33 million. In the same period, we have also subsidised ferry travel by a total of £78.7 million. For Caledonian MacBrayne, £22 million has been invested in new vessels and £6 million in new piers over the same period. These are substantial sums and demonstrate the importance which the Government attach to investment in shipping services, particularly in Caledonian MacBrayne.

Question put and agreed to.

Adjourned accordingly at fifteeen minutes past Eleven o'clock.

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