Defence in Scotland

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Maritime Transport Services

Motion made, and Question proposed, That the Committee do now adjourn.—[Mrs. McGuire.]

1 pm

Mr. Alan Reid (Argyll and Bute): I am sure that many hon. Members are aware of the parody of the 24th psalm that goes:

    ''The earth is the Lord's, and all it contains, except the Western Isles, which belong to MacBrayne's.''

That parody emphasises the importance of shipping services to islanders and how the shipping companies can exercise control over the economy of islands.

For many years, shipping services to the islands and peninsulas of the Clyde and the Western Isles have been provided by the state-owned Caledonian MacBrayne company. European Union regulations now stipulate that those services be put out to competitive tender, but that transport service, like many others, does not lend itself to competition. It is a monopoly in many ways, because with one exception—Dunoon to Gourock—these lifeline ferry routes will not generate enough traffic to allow two companies to compete on the same route.

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Transport has in many ways been the Achilles heel of the Labour Government. We can think of Railtrack, air traffic control and the London underground. In all cases, problems have arisen when they have tried to bring competition or privatisation into what is effectively a transport monopoly.

The European regulations on maritime transport were passed by the Council of Ministers at its meeting in Brussels on 7 December 1992. The signature on the legislation is that of John MacGregor, who was then President of the Council and a Tory Transport Minister. At the start of the British presidency six months earlier, Mr. MacGregor boasted in a written answer that he would

    ''take forward the increasingly rigorous application of the state aid rules in the transport sector so as to provide for full and proper competition in the single market.''

He certainly succeeded in that aim: he drove the resolution through the Council.

However, Mr. MacGregor clearly had not a clue what he was talking about, because in the same written answer he said:

    ''The anachronism of the United Kingdom and some other member states having their coastal trades open while the rest did not will be ended.''—[Official Report 24 June 1992; Vol. 210, c.248.]

He seemed completely unaware that, within the UK, the Caledonian MacBrayne-operated ferries were not open to competition. When he signed the legislation into law, he seemed unaware of the situation on the CalMac routes.

The legislation was due to come into effect on 1 January 1993, only a few weeks after it was passed. However, both Tory Secretaries of State for Scotland during the latter years of the Tory Government—the noble Lords Lang of Monkton and Forsyth of Drumlean, to give them their new titles—wisely ignored the legislation that their Cabinet colleagues had signed into law. Even the arch-privatiser Lord Forsyth decided that this was a privatisation too far. Incidentally, that gave the lie to the widespread notion that we in Britain obey European laws while other countries do not.

The Commission eventually noticed that the UK was not complying with the maritime legislation and ordered the Scottish Executive to comply. My purpose in applying for the debate was to ask the Minister, even at this late hour, to go to Brussels and ask for a derogation from that hopelessly unworkable legislation. It was designed to open up lucrative coastal trades in southern Europe to competition, not to force privatisation on the totally unprofitable routes on the west coast of Scotland. As I have shown, the President of the Council who signed the legislation into law did not know what he was talking about.

A huge majority of my constituents want CalMac to continue to operate these lifeline services. CalMac has its faults, as we all admit, but it is a public body that can be lobbied and pressurised into making changes. It holds regular consultative meetings with representatives of the islanders that it serves. Crews often live on the islands and are part of the local community. A large proportion of the work force on

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small islands work for CalMac and the crews have a commitment to those islands, whereas a private operator—coming from outside, possibly the far side of Europe—will sail the ships simply for profit, not for the benefit of the island communities.

The European legislation ignores the fact that shipping services comprise many elements—vessels, crews, piers and harbours. To enact the legislation, a vessel-owning company, a vesco, and an operating company, an opco, will be necessary.

The piers and harbours are owned by many different organisations—some by CalMac some by trusts, and others by local authorities. A multiplicity of contracts between all those disparate bodies will be necessary: does that not remind hon. Members of the failed railway privatisation?

What will happen if the opco goes bankrupt? Will the state still retain the expertise to step in and pick up the pieces? I doubt it. The lack of flexibility is another problem. Under European rules, the contract will last for five years, but circumstances change every year and a five-year operating contract does not provide flexibility. Under current arrangements, no one would dream of setting timetables for five years in advance, but that will have to be done. For other reasons, five years is not long enough—not for an operator to get a return on investment in a new vessel, for example. The danger is that no investment in new ferries will be made.

Problems are already apparent because of the lack of investment caused by uncertainty. Dunoon pier is, I regret to say, ready to fall into the sea. Whenever there is a gale, people living in Dunoon look out the next morning hoping that the pier will still be there. Uncertainty is preventing the necessary investment—either for repairing the current structure or for constructing a new berthing facility. The Scottish Executive and the European regional development fund will not commit funds because they do not know what type of vessel will be sailing on this route. CalMac cannot say what type of vessel, because it does not know whether it will win the contract. That demonstrates how the infrastructure of piers, harbours and vessels is linked. The new rules will cause complete nonsense and the danger is that the farce will continue because we will always be fewer than five years away from the end of a contract.

Uncertainty over the future has also prevented CalMac from bidding for the Campbeltown-Ballycastle route. It is the local people's preferred bidder, after the complete mess that the private company, Sea Containers, made of operating the service. The Minister has worked hard towards restarting this service, which failed under a private operator. What stage has the tendering process reached?

I can provide the Minster with another horror example—as well as Railtrack—of a transport route that failed under the same system proposed for the CalMac routes—the Jura ferry, which runs from Jura across to Port Askaig on Islay. It is owned by a public body—Argyll and Bute council—as are the berthing facilities at either side, but is run by a private operator.

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The result has been sheer farce: sailings frequently cancelled, making children late for school, and the distillery on Jura losing vital deliveries. The system has failed miserably and does not suggest itself as a suitable model for the large-scale CalMac contract. Both this farce and that of the Dunoon pier demonstrate the need for an integrated system comprising vessels, operators and berthing facilities—a system that the European legislation removes.

The legislation has already wasted a great deal of taxpayers' money. CalMac has spent considerable sums engaging consultants and devoted a great deal of energy preparing for the tendering process. That time and energy would have been better spent improving ferry services.

There is also confusion within the rules as to whether the state aid can provide for services to remote peninsulas. The 1992 legislation says that state subsidies can only be paid for services between two islands or between mainland and island. That ignores the geography of the west coast of Scotland, where there are many long peninsulas and where a short sea voyage can save many hours of driving. The legislation may cause confusion by not defining what an island is. Hon. Members may think that whether a piece of land is an island or not is obvious, but I invite hon. Members to ponder whether Skye is still an island. Do Kintyre and Knapdale comprise an island because the Crinan canal separates them from the rest of Scotland? The question is important—the future of the Portavadie-Tarbert ferry could depend on it.

The British Tories made no effort to secure special status for special areas, but other countries were not so lax. France, Spain, Portugal and Greece all obtained derogations of some sort. In Spain's case, it was written into the legislation that—I apologise to any Spanish speakers for what I am about to say and the Minister may correct me—Ceuta and Melilla were to be treated as islands, ignoring the fact that those communities are clearly part of the African continent. Thanks to the Tories, there is no special status for remote peninsulas such as Kintyre.

The islands and peninsulas of the west coast of Scotland have a very fragile economy. The unwanted legislation could well wreck those economies completely. It was never designed for such an application and was promoted by a Tory Minister who demonstrated that he had not got a clue about circumstances in Scotland. Local people want to keep CalMac. I urge the Minister to consult local opinion and to go to Brussels and seek a derogation from the legislation to allow CalMac's present arrangements to continue. I hope that he will not support a privatisation that even Lord Forsyth shied away from implementing.

1.11 pm

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