Hidden subsidy angers Western
A COMPLAINT by Western Ferries has brought to an end a system of ‘secret discounts’ to hauliers on Caledonian Mac-Brayne’s Dunoon Gourock route.
Western Ferries claims that its rival has been using taxpayers’ money to offer secret discounts on the route, in breach of UK and European rules.
The Scottish Executive has conceded that the state owned company has used the subsidy to underwrite discounts of up to 70 percent to hauliers. The discounts have now been stopped.
The Executive said it had no knowledge of the scheme, while CalMac claims that it affected only a small number of hauliers.
Western Ferries said on Friday that it would make a formal complaint to Audit Scotland following the Scottish Executive’s confirmation that CalMac has engaged in unfair pricing activities.
Commenting on the forthcoming complaint, Managing Director, Gordon Ross said: “Western Ferries is appalled that CalMac has been using unlimited amounts of taxpayers’ money to offer massive discounts to hauliers on the Gourock-Dunoon route.
“The Scottish Executive has confirmed in correspondence to us that hauliers have been receiving discounts of over 70 percent. Furthermore, whilst CalMac has been raising fares on an annual basis, they have at the same time been raising the discount level so that some fares have not increased for several years.”
“As a result of CalMac’s actions Western Ferries is now forced to draw the matter to the attention of Audit Scotland. The company will be calling for an investigation into our concerns that CalMac’s Dunoon vehicle service is being unfairly subsidised and that there is a level playing field, now and in the future.
Gordon Ross continued: “CalMac’s vehicle service to Dunoon is intended to be unsubsidised and provided on a commercial basis. CalMac has been given guidance under which commercial services are provided.
“This guidance states that ‘there should be no subsidy leakage from core business activities into non-core ventures which would or could cause unfair competition and market distortion’, and that ‘pricing should be fair and give the private sector no reasonable ground for complaint’.”
He went on to claim that CalMac’s policy of deep discounting not only breached this guidance but also UK and European competition regulations.
He added: “I would imagine that many island-based hauliers will be aghast at these levels of discounts and how some are given special treatment over others. I am also sure they will be asking how discounts of this level are awarded on a route where the service is unsubsidised, whereas on subsidised routes the discount is capped at 15 percent. At the same time Western Ferries will have to calculate how much business it has lost to CalMac as a result of this policy.
“Western Ferries believes that these massive discounts and the period over which they have been gifted, is clear evidence of a deliberate and sustained attack on the company. All we want is to be able to compete fairly on a level playing field, providing first-rate ferry services for the Cowal community. These discounts prevent us from doing that and are being backed up by unlimited amounts of taxpayers’ money.”
Western Ferries has had documentary evidence for almost three years that these practices were taking place. The Company informed the Executive in 2004 and offered to share this evidence with them. Despite this offer, the Scottish Executive has denied for several years and after several investigations, any such discounts. After more evidence came to light recently, the Executive at last confirmed Western Ferries concerns and we have been informed that these discounts have been removed.
However, CalMac responded. “There are no more than six hauliers involved,” said the company’s spokesman, Hugh Dan MacLennan. “Only one of them benefited from a negotiated rate to the extent which is being quoted, and that was for one category of vehicle - very large lorries.
“It’s a historical situation which has existed for a small number of years - approximately 2001-2. We came across it when working on the tender issue and took legal advice on it. We told the hauliers concerned and it ended on December 1.”
He added: “Let’s get a perspective on this; we’re obliged to run vehicular vessels on a passenger route which is subsidised for precisely that - carrying foot passengers. There are enormous fixed costs, uneconomic ships being run on a restricted, hourly basis. It’s all very well to complain about the level of subsidy, but that exists because we have to operate this service within a very restrictive framework. Mr Ross complains about a level playing field, but CalMac is having to play uphill here. Our intention was to reduce our dependence on the subsidy which must have been a good thing.
“Clearly our losses would be much higher than the current £2.5m detailed in the Annual Report if we did not try and increase our revenue by standard business practices.
“If the hauliers have to pay more for vehicles, they will almost certainly pass it on to the customer. As to involving Audit Scotland we will be delighted to cooperate fully with them and will provide any information they want.”
An Executive spokesman said that, despite CalMac being owned by the Executive, ministers did not micromanage the company, they were not involved in that level of day to day detail and were unaware of these discounts.
However, there was a marked lack of the usual diplomatic niceties over the issue of CalMac’s own conduct of the issue: “Ministers are very concerned and expressed serious concern to CalMac about its lack of knowledge about its own pricing policies, particularly on such a sensitive route. CalMac has apologised and written to the companies concerned giving notice that these discounts are now being removed.”
On the accusation the Executive had known about the situation for some time but done nothing the spokesman said: “Western Ferries has certainly been advising us for some time that CalMac was guilty of predatory pricing on the route. CalMac is responsible for setting individual fares levels, including discounting where appropriate. The Executive is not involved in that process. But CalMac assured us that such claims were groundless.”
Western Ferries, however, is hardly likely to stop there. Mr Ross said on Wednesday that this was ‘the tip of the iceberg’, and that he would be submitting a complaint to Audit Scotland early in the new year.


Pipes have narrow squeak
Smoke rising from the burning building caught the eye of Arlene and Craig Stirling as they passed Luss on the way home to Strachur from a shopping trip. “My blinking pipes are in there!” (or words to that effect) a shocked Arlene exclaimed.
Arlene was given the set as a Christmas present some 15 years ago, and they had seen loyal service with the Dunoon Grammar School pipe band. Before handing the set on to her nephew, she had decided that the pipes needed a bit of renovation and had taken them to Luss to have the job done.
The Thistle Bagpipe Works was completely destroyed in the blaze on December 6, with just the four walls remaining standing.
Arlene assumed that her precious bagpipes had been lost in the blaze, then she received a phone call from the owner of the premises.
Stewart Harris told her that unfortunately everything had been destroyed - stock such as kilts, souvenirs, bagpipe equipment and all other contents. Everything, that is, except Arlene’s charmed set of pipes.
The ivory-mounted set, estimated to be worth around £1,000, had been placed in a drawer by Stewart’s mother, and this had kept them safe long enough for the fire brigade to rescue them. The only damage was minor water damage to the box in which they were kept.
This might seem an incredibly lucky escape, but there’s more.
Stewart Harris is also the owner of ‘Totally Tartan’ in Antartex Village, Alexandria. Arlene’s miracle pipes were taken there for safe keeping - until the rains came. Another phone call from Stewart Harris came on Sunday December 17 - bad luck had struck his business once again, but this time floods, not fire, was the problem.
Constant heavy rain during the preceding fortnight had caused the River Leven to burst its banks, flooding Antartex Village and the shop in which the pipes were stored. Once again, fortune was on Arlene’s side, as they had been placed on a shelf which remained dry during the flood.
The pipes were finally picked up safe and sound from Alexandria by Arlene, Craig and the family last week, and it is hoped that they become the pipes of peace from now on!


“Don’t count your chickens” – Scottish Water warned
A COUNCILLOR this week warned Scottish Water not to assume that it would succeed in its attempt to compulsorily purchase the Bullwood Quarry site. The company has said that it wants the site for its secondary treatment plant to serve Dunoon and Sandbank.
The council has already turned down the water company’s application to develop the site for this purpose, and Scottish Water has announced it will appeal this decision.
Councillor Dick Walsh, in whose ward the site lies, has been strongly critical of Scottish Water’s performance in the area, and has already crossed swords with them over its much-criticised plans for Innellan.
Commenting on the compulsory purchase announcement, he said: “I fully expected that Scottish Water would move towards a compulsory Purchase Order when considering that the owner of the Bullwood Quarry site was one of the objectors to their planning application. “Suffice to say that application for a compulsory purchase order does not guarantee that it will be granted. “
He pointed out that a number of sites had previously been identified for the plant, so the Bullwood Quarry site is not the only site available, adding: It’s also the case that Scottish Water, during their site investigation work, produced an environmental report that concluded that the Bullwood Quarry site was not suitable.
He echoed the concerns of many people over the appeal procedure which Scottish Water will use in an attempt to have the council’s decision overturned I fully anticipate an appeal being lodged by Scottish Water to the decision taken by the Area Committee. Technically the planning application was lodged was by The Scottish Executive, which also funds Scottish Water .
To date Scottish Water have lodged a number of appeals against planning refusals, and have yet to lose one, which critics claim raise questions raised around transparency and impartiality on the part of the Executive.


Concerns over growing costs of Faslane blockade
Argyll and Bute Council has expressed its concern about the continuing disruption being caused by the Faslane 365 blockade at HM Naval Base Clyde at Faslane.
The move comes after police figures revealed that the cost of policing the blockade was £1.7 million for October and £1 million for November.
The council is also concerned about the impact on police resources.
Councillor George Freeman whose ward covers the base, said: “It does not take a genius to work out that the requirement to divert 100 to 150 police officers from communities across Strathclyde to police the ongoing blockade at Faslane could well have an impact on the level of crime and crime detection rates throughout the Strathclyde area.”
At a meeting of the Full Council in Oban on Wednesday 20 December, at which Councillor Freeman tabled an urgent motion on the blockade, members reiterated their support for the rights of individuals to demonstrate when those participating in any demonstration act within the law, and where their actions do not adversely impact on the rights of other individuals to go about their lawful business.
However, they agreed to consider the impact the blockade is having on people living and working in the Garelochhead and Rosneath Peninsula area and to look at the financial impact of the blockade.
Members also agreed to look at what options may be available to try to minimise the impact that the actions of those taking part in the blockade are having on members of the public and to report back to an early meeting of the Strategic Policy Committee of the Council.
Councillor Freeman added: “As the local Councillor, I am delighted that the Council unanimously agreed with me that this is a serious issue that needs to be addressed as soon as possible”.
“The people who are suffering as a result of this blockade are local people, including young school children, and not the operations within the Base which go on unhindered”.
A letter from the council is being sent to the Justice Minister and Strathclyde Police Board to highlight the concerns of the Council on this matter.