[Updated below] CMAL is the Scottish Government owned company which holds and manages assets related to ferry services and maritime infrastructure – vessels used on the Clyde and Hebridean ferry routes, piers, harbours and terminals etc.
It was established by the Scottish Government in the breaking up of the former version of Caledonian MacBrayne Ltd, splitting the asset holding and management function from the operation of ferry services.
CMAL came into being to provide the former service; and CalMac became a ferry operator only. Both companies are government owned and state subsidised.
The Scottish Government had to get special dispensation from the European Commission for the arrangement. The argument was that the variety of piers, harbours and berthing arrangements has required the building up of a fleet with route specific vessels, with certain but limited flexibility in their use on alternative routes.
When Caledonian MacBrayne’s corporate functions were split in this way, with the assets going to CMAL and CalMac focusing on ferry service provision, the current and extended Clyde and Hebridean Ferry Services [CHFS] contract given to CalMac obliges the company to use CMAL vessels. In reality, there is little alternative.
The problem is the decades-long underinvestment in the ageing CMAL fleet by a series of Scottish governments. The condition of the fleet has been a known and inevitably worsening problem for some time, highlighted in the recent number of service outages with vessels withdrawn for repairs. The greater vulnerability of ageing vessels adds to their operating cots. These days too the continuing availability of parts is an issue of increasing concern.
The fact that breakdowns are limited is a tribute to the skills of CalMac’s technical staff.
Alongside these physical strains, there is constant public call for ever more frequent services. Popularity-hungry governments have tended to accede to such requests, however underused and highly uneconomic such service developments usually are.
The result is that an already ageing fleet is being ever more heavily used.
The recent severe weather and the sea conditions it created had its impact – visible in the withdrawal from service of vessels for repair. The subjection of elderly gear to regular slamming and heavy vibrations naturally takes a toll.
It is not yet known whether the new Clyde and Hebridean Ferry Services contract, when it goes to tender, will require bidders – including CalMac – to use the CMAL: vessels, or whether they will have the option of bringing in their own boats.
With the current Scottish Government publicly committed to retaining the current Clyde and west coast ferry service network in a single contract, it is hard to see any bidder in a position to bring in their own boats for the entire network. But might they be able to use some of CAL’s vessels and bring in from elsewhere some general utility vessels with as much flexibility as possible across the routes?
A bid to attract the government would be an offer to take over the CMAL fleet and take on responsibility for replacing its vessels. The ageing fleet is a depreciating asset of little serious attraction to the traditional asset stripper but a bidder using this tactic as a lure to get the CHFS contract would take the traditional route of selling them off to the third world, where they would have more allure.
The finance it would take to buy over thirty vessels – or a major portion of a fleet of this size and variety – would not be easily or cheaply available. It would certainly require an incentive to potential bidders above the current EU imposed 6 year contract interval. Any operator planning to supply their own boats – or potentially required to do so – would need a much longer contract period to return on that level of investment.
The Scottish Government is aware of this problem, making it known publicly that it is interested to explore the possibility of being able to offer a longer contract.
However, as the Scottish Ferries Review itself accepted, requiring a successful bidder to bring its own boats would only seem to remove from the Scottish Government the cost of investment on new vessels for CMAL. This cost would still come home to roost, indirectly, in being passed on to the government by the operator in the form of operating subsidy.
The value here to the Scottish Government though, is that, as again it has admitted in the Ferries Review: ‘It is generally easier for the public purse to provide regular operating money than it is to provide large one off capital funding contributions.’ A passing question here is why then the unfettered borrowing an independent country could go to the markets to secure has been such a big issue in the independence debate?
Supposing the Scottish Government were permitted to increase the contract length to a modest enough ten years, at a cost of around £75 million a year, would that be enough to attract some private sector operator with a necessary eye to profit?
Serco, operator of NorthLink Ferries, serving the Northern Isles, has the depth of pocket – or had. However, that company is presently preoccupied with retrieving its own corporate reputation and its standing with the British Government, which has sin-binned it from applying for government contracts following its exposure for ripping off the same government in claiming fees for tagging prisoners who had died or who had been discharged, their sentence spent.
Serco came to Scotland with an eye to the Clyde and Hebridean Ferry Services contract – but that was in the days of public sector innocence when governments did not know about the company’s profitable business practices. How much would Serco be interested these days, given the greater scrutiny that would have to be applied to its operations?
If the government did manage to transfer to a private sector operator the responsibility both for the ageing CMAL fleet and for reinvestment in it, CMAL would then be a state owned company managing the state assets of ports and harbours at an economic cost to users. Is this a sustainable role? Its astute former MD Guy Platten obviously jumped ship with an eye to the future.
Whatever happens, it is hard to see CMAL as a viable fleet owner for very long.
The question, indeed, may be. ‘Does CMAL have a future?’
Update 18.30 26th January:
Prompted by reader, Jean Knowles’ judicious comment below, this article clearly needs to express what it had left to readers to conclude.
We are looking at the beginning of the end of the way our vital west coast ferry services have been delivered.
That is not a prediction of trouble, simply a statement of fact.
The lack of an ongoing funded reinvestment plan that makes this change inevitable is an indictment of short termist governments down the decades, with the gap between the cost and the achievable widening with every dereliction.
With state owned CMAL’s future as a fleet owner inevitably on a near future timeline, as soon as government ceases to own the vessels, the nature of the provision of the lifeline services will change – and costs will have to rise.