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Nationalisation by the Scottish Government is ferry bad news for taxpayers

Summary:
It’s the end of an auld song. Not to mention the end of competition. The Scottish Government has just nationalised the last remaining shipbuilder on the lower Clyde and the only builder of merchant ships on the river. And it was all entirely avoidable!Ferguson Marine, of Port Glasgow, was saved from collapse by tycoon Jim McColl in 2014 and landed the £97million contract to build the new Glen Class Ferries for Caledonian MacBrayne. CalMac, as it is known, is the major operator of passenger and vehicle ferries, and ferry services, between the mainland of Scotland and the 22 major islands on Scotland's west coast. And it is wholly owned by—who else?—the Scottish Government. Meanwhile, its sister company CMAL, which owns the ships, ports, harbours and other ferry infrastructure, is wholly

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It’s the end of an auld song. Not to mention the end of competition. The Scottish Government has just nationalised the last remaining shipbuilder on the lower Clyde and the only builder of merchant ships on the river. And it was all entirely avoidable!

Ferguson Marine, of Port Glasgow, was saved from collapse by tycoon Jim McColl in 2014 and landed the £97million contract to build the new Glen Class Ferries for Caledonian MacBrayne. CalMac, as it is known, is the major operator of passenger and vehicle ferries, and ferry services, between the mainland of Scotland and the 22 major islands on Scotland's west coast. And it is wholly owned by—who else?—the Scottish Government. Meanwhile, its sister company CMAL, which owns the ships, ports, harbours and other ferry infrastructure, is wholly owned by—yes, the Scottish Government. 

To add to the completeness of state control, the Scottish Government has also decided that geography does not exist. The idea is that, if the sea did not exist, there would be roads instead, so getting to Brodick, Rothesay, Stornoway, Lerwick or Portree would be cheap. So ferry fares are made cheap too—cut to a ‘road equivalent tariff’. The result of these artificially cheap fares is that island parking spaces and narrow roads are now clogged with large camper vans, full of provisions bought on the mainland. Add to that the fact that islanders themselves now find it cheap to go to the mainland and stock up with provisions, clothes and household items, and you can see why island village shops are closing by the day.

Everyone who uses the ferries knows they are notoriously unreliable. It is not just the weather: true to a nationalised industry’s form, the service is starved of capital, the ships are superannuated and clapped out, and the port infrastructure just isn’t up to the job—never mind up to modern standards. Ferries plough on with crippling faults, and are shuffled about between different routes to plug gaps because there is simply no spare capacity available in case of problems. And yet CalMac and CMAL have vigorously fought off any attempt to introduce competition on their routes. And now they have managed to kill off competition even in building their ships. 

When Ferguson Marine was given the contract for the Glen Class ships, it was effectively a start-up. Its predecessor, Ferguson Shipbuilders, had been broken financially by a Scottish Government contract to build the world’s first sea going Roll On Roll Off vehicle/passenger diesel electric hybrid ferries. But then politicians are more interested in green virtue signalling than they are in taxpayers’ money. 

In 2015, CMAL announced that Ferguson Marine would build two even more novel ferries, operating on either marine diesel or liquefied natural gas—not that any of the 22 islands served by CalMac have anywhere to store liquified natural gas. Nor are there yet any such ferries in service anywhere in the world.

Less than three years later, Fergusons were complaining of design creep, CMAL’s poor understanding of the complexities, bad customer project control and inadequate funding for the extra expenditure—the same problems inflicted on its predecessor. Matters came to a head in 2019 when the Scottish Government refused to stump up £61 million to cover the spiralling costs caused by the same inadequate controls and lack of understanding. So the planned ferry for the Arran route—the busiest, by far—which should have been in service last year, will is not likely to sail before 2020. But Arranachs are not placing optimistic bets on that.

And the answer to all this incompetence by the Scottish Government and its ferry subsidiaries? Buy ferries that actually work from proven ferry shipbuilders in England, Germany or even China, Korea or Japan? No: the politicians’ answer is that Ferguson Marine is being nationalised, so it can be run by the people who have failed so spectacularly in the first place.

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Dr. Eamonn Butler
Eamonn Butler is Director of the Adam Smith Institute, rated one of the world’s leading policy think-tanks. He has degrees in economics, philosophy and psychology, gaining a PhD from the University of St Andrews in 1978.

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