Stronger financial controls, better forward planning and improved links with service providers and users are essential if Scotland’s ferry services are to be maintained and developed in the future.

That’s the verdict of a major report from Audit Scotland on Transport Scotland’s ferry services, issued today (Thursday October 19th) which shows that Government subsidies to CalMac ferries have risen 185 per cent in ten years. This is mainly due to an increase in services, new vessels and the introduction of the Road Equivalent Tariff (RET).

There are an estimated 66 scheduled ferry routes in Scotland, managed by a range of public and commercial operators.

In 2016/17, Transport Scotland spent £209.7 million on ferry services and assets, such as vessels and harbours.

It operates three main ferry contracts, through which it subsidises 32 ferry routes, carrying over five million people each year.

Between 2007/08 and 2016/17, Transport Scotland’s spending on ferries increased by 115 per cent in real terms.

Over this period, the number of passengers travelling on its subsidised routes increased by 0.3 per cent and car numbers increased by 16.8 per cent.

Transport Scotland’s Ferries Plan sets out proposals to develop ferry services and assets between 2013 and 2022, at an estimated cost of £390 million in capital and £10 million a year in revenue.

Audit Scotland warns that, up to now, there is no Scotland-wide, long- term strategy which takes into account proposed developments to ferry operations, and the condition of about half of the harbours used by Transport Scotland’s ferry operators is unknown. So Transport Scotland will find it challenging to continue to provide ferry services that meet the needs of users within its allocated budget.

Audit Scotland says that the operators of Transport Scotland’s ferry contracts are performing well and, in 2016, about 99 per cent of sailings were on time, once weather-related delays and cancellations are excluded.

But it says Transport Scotland’s arrangements for consulting and involving ferry users could be improved. Transport Scotland does not routinely measure the contribution that ferry services make to social and economic outcomes at a network level, which makes it difficult to determine whether its spending is value for money.

The new contract for the Hebrides and Clyde Services started on time, in October 2016, despite delays and weaknesses in how Transport Scotland managed the procurement project.

The bidders submitted over 800 queries during the tender process and there were delays in providing them with important information, says Audit Scotland.

Transport Scotland has previously treated ferry procurement exercises as individual projects rather than a programme.

It is now developing a more strategic approach for future procurements that should help improve planning, the use of resources and knowledge transfer.

Transport Scotland received one compliant bid for the new CHFS contract, which it awarded to CalMac at a cost of £868 million over eight years. CalMac’s bid met the minimum quality requirements and was £128 million lower than Transport Scotland’s estimate of the contract cost. However, Transport Scotland updated the contract before it began to reflect, for example, planned timetable changes and this has increased the contract cost to £975 million.

Audit Scotland says Transport Scotland should, as part of its Strategic Transport Projects Review, develop a Scotland-wide, long-term strategy for its network of subsidised ferries.

This should take into account progress already made against the Ferries Plan and proposed developments to its ferry operations set out its intended benefits of subsidised ferry services, how these contribute to National Outcomes and how these will be measured, monitored and reported.

It should then consider how this information could be used to inform operational and financial decisions and to demonstrate that ferry services are value for money include an assessment of the long-term affordability of its spending on services and assets.

This may include streamlining and formalising how it consults with and involves ferry users, by giving specific user groups a formal remit to comment on operational and policy matters improve its approach to procuring ferry services.

Other improvements suggested would include ensuring that procurement teams include staff with procurement qualifications and experience of the ferry sector and applying lessons from previous procurement exercises: ensuring there is a sufficient number of people, with the right expertise, to effectively manage ferry contracts; and involving the contract management team in ferry procurement exercises to inform its understanding of contract requirements.

Meanwhile Transport Scotland, along with Caledonian Maritime Assets Limited (CMAL) and the ferry operators, should: better communicate their roles, responsibilities and accountabilities to improve customers and stakeholders understanding.

Responding to Audit Scotland Minister for Transport and the Islands Humza Yousaf says: “We welcome this Audit Scotland report as it confirms that ferry services are performing well and it underlines the Scottish Government’s commitment to our ferry networks and the vital services they perform for our remote and island communities.

“Since 2007, we have invested over £1 billion in our ferry services.

“This Scottish Government was the first to undertake a comprehensive review of our ferry services, culminating in the publication of the Scottish Ferries Plan, which set out the way forward from 2013 until 2022.

“That document recognises the need to continually review our approach to providing these services and reassess the needs of ferry users.

“We intend to bring our existing work into a single document with a consistent and over-arching strategy for all the ferry services supported by Scottish Government, to be rolled forward annually.

“In the longer term, the next Ferries Plan will be a single long-term strategy document that is produced in the context of the National Transport Strategy and the Strategic Transport Projects Review.

“Details of the next Ferries Plan are currently being worked through, but it will be ready in advance of the conclusion of the current Plan in 2022.

“The Scottish Government maintains that the procurement of the Clyde and Hebrides contract was a success, leading to a winning bid from CalMac that contains 350 commitments to improve services.

“As always, we will ensure lessons learned from this procurement will be taken into account in the future..”

The complexities of Scotland's ferry funding are shown in this Audit Scotland chart below