Strategic approach

Policy Context

  1. The Scottish Ministers set the policy context and strategic direction for ferry services. This will be set out more fully in the Islands Connectivity Plan (ICP) which will replace the current Ferries Plan.
  2. The strategic approach to this draft Long-Term Plan for Vessels and Ports reflects the following:
  • The strategic context provided by the National Transport Strategy (NTS) and the National Islands Plan (NIP).
  • The pressing need for fleet replacement and port renewal due to asset life.
  • The strategic objectives set out in the Infrastructure Investment Plan (IIP): improve resilience, reliability, accessibility and capacity, increase standardisation, and reduce emissions.
  • The strategic challenges facing Scottish Ministers’ ferry networks at this time.

National Islands Plan

  1. The National Islands Plan (2019) sets out a number of Strategic Objectives to meaningfully improve outcomes for island communities. The Island Connectivity Plan, and the delivery plans which support it, can support progress on a number of these objectives, in particular:
  • address population decline and ensure a healthy, balanced population profile
  • improve and promote sustainable economic development
  • improve transport services
  • improve and promote health, social care and wellbeing
  • contribute to climate change mitigation and adaptation and promote clean, affordable and secure energy actions to improve transport services.

National Transport Strategy

  1. The 2020 National Transport Strategy 2 (NTS) is the overarching guidance for all transport interventions in Scotland. The NTS recognises the role of transport in contributing to the Vision for transport in Scotland and the four Priorities of: reducing inequalities; delivering inclusive economic growth, improving health and wellbeing and taking climate action. Although primarily driven by fleet and port renewal and resilience, the delivery of this Long-Term Plan provides opportunities to address objectives set out in the National Transport Strategy and is aligned to its 4 key themes:
  • Reduces inequalities: NTS includes an objective to: “Minimise the connectivity and cost disadvantages faced by island communities and those in remote rural and rural areas, including safeguarding of lifeline services”. Ensuring the continuity and resilience of lifeline services through the replacement of life expired assets, in line with the sustainable investment hierarchy, supports this objective.
  • Deliver inclusive economic growth: the continuity of ferry services is essential to the sustainability and growth of island businesses including in key sectors such as agriculture, aquaculture, food and drink and tourism. The reliability and resilience of ferry services supports the efficiency of freight transport to and from the islands, reducing disruption to import and export, particularly of time-sensitive goods.
  • Improves our health and wellbeing: access to mainland healthcare is a key need for many island, and some remote peninsula, communities; island populations are generally older and therefore have a higher than average use of health services; repopulation is the primary objective of the National Islands Plan and the key investment objectives of increasing reliability and resilience support access to healthcare that current and prospective island residents can have confidence in.
  • Takes climate action: the opportunity to reduce emissions through vessel specification and design support this objective, alongside other initiatives to support the use of the ferry as part of a public, shared or active travel journey.

Strategic Transport Projects Review 2

  1. Transport Scotland’s second Strategic Transport Projects Review (STPR2) will be used to inform transport infrastructure investment in Scotland over the next 20 years. The STPR2 has identified recommendations focusing on the strategic transport network in Scotland. The case for sustained investment in ferries and ports is supported by a number of recommendations in the final report of the STPR2, in particular:
  • Recommendation 24 Ferry vessel renewal and replacement and progressive decarbonisation.
    • Renewal and replacement of the Clyde and Hebrides Ferry Services (CHFS) and Northern Isles Ferry Services (NIFS) vessels including progressive decarbonisation by 2045.
  • Recommendation 42 Investment in port infrastructure to support vessel renewal and replacement and progressive decarbonisation.
    • an investment programme in port infrastructure, including power supplies, to support STPR2 recommendation 24

Also relevant are:

  • Recommendation 18: Supporting integrated journeys at ferry terminals.
    • A detailed review of key ferry terminals to consider physical integration and accessibility improvements in timetable information, signing, ticketing and other facilities required to deliver a seamless and integrated journey between different travel modes. The review will make recommendations on a programme of integration improvements to enhance the traveller experience and accessibility at ferry terminals.
  • Recommendation 41: Potential Sound of Harris/Sound of Barra fixed links and fixed link between Mull and Scottish mainland
    • Further work is undertaken on business cases to better understand the benefits, costs and challenges associated with these options. These studies would consider the feasibility of replacing existing ferry services currently delivered by CalMac as part of the Clyde and Hebrides Ferry Services (CHFS) contract. These studies would also ascertain the potential savings associated with the public sector subsidies required to operate the ferry services and involve input from communities that may potentially be affected

Ferries Plan Delivery

  1. The ten years since the publication of the Ferries Plan have seen many positive achievements in terms of new routes, increased sailings, reduced fares, new vessels, port renewals and growth in both passenger and vehicle numbers:
  • Increased sailings to Arran, Bute, Coll, Tiree, Small Isles, Colonsay, Mull, Islay and the Outer Hebrides
  • Roll-out of Road Equivalent Tariff (RET) fares for passengers and cars to CHFS completed in 2015 (except Gourock-Dunoon/Kilcreggan and Kerrera which have since been added to the CHFS contract) – saving passengers approximately £25m per year
  • New summer service to Campbeltown
  • New Mallaig-Lochboisdale service
  • Delivery of 3 new small hybrid vessels serving Raasay, Mull and Arran
  • Delivery of MV Loch Seaforth to Stornoway-Ullapool route and upgrade of Stornoway and Ullapool ports
  • Upgrade of Brodick pier; works at Oban (short-term), Lochaline, Wemyss Bay and Tarbert (Harris)
  • Kerrera service brought into CHFS network; new vessel and slips constructed
  • Gourock-Kilcreggan service brought into CHFS network
  • Deployment of second vessels in summer for Arran and Mull
  • Purchase of the 3 NIFS vehicle/passenger vessels and 2 NIFS freight vessels, ensuring continuity of service
  • Ferries Accessibility Fund introduced with the majority of the £500,000 budget now invested in a series of improvements.
  1. A number of other Ferries Plan commitments have not been delivered. The key ones of relevance to this draft Long-Term Plan are:
  • Replacement of major vessels (MVs Hebridean Isles, Isle of Arran and Isle of Mull) – this can be achieved with the delivery of 801/802 and the 2 new Islay vessels (subject to decisions on fleet resilience).
  • Replacement of small vessels (MVs Isle of Cumbrae, Loch Linnhe and Loch Riddon) – small vessels will be replaced as part of the Small Vessel Replacement Programme.
  • Small Isles: changes to timetable and vessel deployment (not supported by those communities).
  • Colonsay: island-based service through deployment of an alternative vessel (proposed vessel not supported by community).
  • Replacement of Lochboisdale and Armadale piers (projects underway or in development).
  • Enhanced winter service to Arran – dependent on delivery of new tonnage (801).
  • Lismore: work towards a single vehicle-passenger service from Point to Port Appin has not progressed due to other priorities.

Strategic Challenges

  1. Alongside this progress, a number of significant challenges have emerged:
  • Sailing frequencies have increased – scheduled sailings on the CHFS network have increased by 24% since 2007/08.
  • Demand has also increased, particularly for vehicle deck space. For example, in the last full year before Covid, CalMac carried over 5 million passengers and around 1.5 million vehicles.
  • Demand increase is due in part to significant reductions in fares with the rollout of RET fares for passengers and vehicles on most CHFS services and more recent targeted fares reductions and freezes on NIFS.
  • As vehicle demand has grown faster than passenger demand, this has created shortages of vehicle space on key routes at peak times.
  • Conversely, significant unused capacity exists year-round for passengers and, outside peak season, for vehicles too.
  • Reliability has declined, noting that the majority of cancellations are due to weather and, more recently, Covid. In 2021, 1% per cent of services were cancelled because of mechanical issues; three times as many were cancelled because of weather conditions; weather is also reported to be worsening.
  • The average age of the fleet has risen; the rate of vessel replacement has not kept pace with requirements and when new vessels have entered the fleet older ones have still been retained rather than disposed.
  • The CHFS major vessel fleet (for the purposes of this draft Plan, the 10 larger vessels generally deployed on longer routes to larger islands; see the Annex for a list) has been fully deployed since 2016 – affecting resilience across the network: disruption to one route can impact on a number of communities due to necessary short-term vessel redeployments; increased demand also makes it more challenging to clear back-logs of traffic in busy periods.
  • The age and condition of some of the vessels has reduced flexibility of deployment during such periods of disruption, with further impacts on network resilience.
  • Mixed picture on connectivity for non-vehicle users.
  • No current operationally and commercially viable low emission option for major vessel replacement.
  • No network-wide Key Performance Indicators (KPIs) for: reliability, resilience, capacity or connectivity.
  • High demand for freight capacity on some routes.
  1. The proposals in this draft Plan will target improvement by guiding investment planning and decision-making, including objectives and priorities.

Objectives

  1. The average age of the total fleet (CHFS and NIFS) in 2022 is around 23 years. We propose a key objective of this draft Plan to reduce the average age of the fleet to around 15 years by the end of this decade.
  2. Engagement with key stakeholders during the development of this draft Plan indicates that reliability and resilience are the key priorities. The importance to users and communities of reliable services has been brought into sharp focus by a number of significant breakdowns during recent years. Investment decisions taken under this Long-Term Plan will place a high priority on vessel and port designs which will provide high standards of technical and operational reliability and improved weather reliability, including the need to adapt to the effects of climate change.
  3. Investment in vessels and ports should improve reliability but cannot eliminate disruption, particularly when it comes to weather and worsening climate impacts. Resilience is therefore vital to maintain a service to communities during times of disruption, and to recover as quickly as possible when services are interrupted. An expansion in the CHFS major vessel fleet, to provide the operator with more flexibility when disruption occurs, is required, at least until this part of the fleet has been substantially modernised.
  4. Increased standardisation, such as that already being pursued through the procurement and construction of 4 “Islay class” vessels and through the Small Vessel Replacement Programme, is another means to greater resilience. There is already a high level of interoperability of vessels within the CHFS major and non-major vessel fleets, and within the NIFS fleet, though with some key exceptions. Given the wide variety of communities and routes served by these fleets, increased standardisation does not need to mean identical vessels but should allow for increased interoperability of vessels and ports.
  5. The Scottish Government is committed to improving the accessibility to transport services of all users. Design of vessels and ports and – as importantly – the passenger interface between the two and with connecting travel will reflect good practice, including the toolkit for improving accessibility at ferry terminals produced by the Mobility and Access Committee for Scotland (MACS).
  6. The scheduled replacement of a vessel can also be used to increase vehicle deck capacity on a route although, on a number of key routes, port space will constrain this. There would also be a significant additional cost to providing sufficient vehicle deck capacity to meet peak demand both directly and in terms of funding excess off-peak capacity throughout the year, including where there is often significant unused passenger capacity even during peak summer. The finalisation of this Long-Term Plan will require consideration of options for the better use of existing and planned capacity. Overall vehicle deck capacity can also be increased in the longer term through investment in additional sailings or additional vessels; vehicle deck capacity can also be freed up through “demand management” measures including the provision of viable alternatives to taking a car on-board.

Engagement and Consultation

  1. The lead party for each investment project – normally CMAL or a third party port owner – is responsible for consulting, engaging and communicating throughout the life of projects to ensure that vessel and port designs respond to user and community needs.
  2. For projects led by CMAL, at the initiation of each project the CMAL project manager will agree with TS and the relevant operator, and publish, a communications and engagement plan which will follow a consistent pattern, typically:
  • A series of public events (in-person and/or on-line) at key stages of the project or programme to inform and seek views.
  • A “reference group” of key stakeholders for more detailed consultation and engagement on the development of the project or programme.
  • A dedicated project page on the CMAL website to host updates and information.
  • A log of all stakeholder comments and how these have been responded to.
  • A report detailing all communications and engagement undertaken during the project, including “lessons learned” for other and future projects.
  1. Evidence and consultation from STPR2 has been used to inform the development of this draft Plan and we will revisit this over the period of delivery of the Plan. Although the STPR2 evidence provides some support it does not provide the detailed views needed on individual projects.
  2. We recognise that there may be some consultation fatigue in communities; however, it is important that sufficient evidence is collected to ensure the right investment decisions are made to support our island and rural communities.

Funding

  1. This Long-Term Plan will require significant and sustained funding for its successful delivery. This Plan is a strategy for investment and sets out the focus of funding over the period of the Infrastructure Investment Plan (2021-2026) and the optimal investment programme over the longer term.
  2. The Scottish Government’s Infrastructure Investment Plan committed to investment of at least £580 million in ports and vessels, in addition to the completion of MV Glen Sannox / Hull 802, to support and improve Scotland’s ferry services. This funding allocation is historic both in terms of the value and the time horizon but it was always acknowledged that it was less than would be required to deliver all the projects identified in the IIP in full, and that further investment in the fleet and associated shore side infrastructure would be required.
  3. Individual investment proposals are developed in line with Transport Scotland guidance and based on robust business cases which make the case for multi-annual budget commitments. Investment proposals need to cover not just one-off capital costs but also ongoing operating costs of the crew, fuel, harbour dues and other costs of operating a vessel or the staffing, maintenance and other costs of operating a port.
  4. In the context of constrained public finances in the years ahead, we must ensure that investments achieve Value For Money (VFM) and are affordable.
  5. VFM is a judgement based on the benefits and costs of options meeting project objectives. This is informed by the Scottish Government’s aims set out in the National Islands Plan and the National Transport Strategy. We will capture Value by taking a holistic view of the benefits and costs of the investment – it is recognised that there are a number of costs and benefits associated with ferry services that cannot be easily quantified or monetised such as integration, accessibility and social inclusion. Assessing VFM ensures that recommended proposals meet objectives and strategic goals, where value includes the social, economic and environmental benefits of public investment, including where there is an opportunity through a vessel replacement or port renewal to make service enhancements which address identified transport connectivity needs.
  6. The cost of that investment is offset in part through fares revenue, which need to be balanced with maintaining the principles of affordable and sustainable fares structures to support our island communities. This draft Plan for vessels and ports cannot therefore be considered or finalised in isolation from the other elements of the Islands Connectivity Plan, including renewed community needs assessments of services and a holistic review of future ferry fares options.
  7. Affordability is confirmation, at the time of the investment decision, that the necessary funding is, and will be available, in the financial years covered by the construction project.
  8. The investment programme set out in this draft Plan represents the optimal programme, and has been informed by initial stakeholder engagement, to deliver the “baseline scenario” (see below). It is important to highlight that although funding has been made available for the initial years of the Plan (2021-2026), the full programme of investment in future years falls into the decision-making responsibility of future Parliaments and Governments and is therefore not yet backed by funding. Given the long time period of the Plan some reprioritisation and flexibility is expected to be required as the availability of funding will ultimately determine the programme of delivery.
  9. Individual investment decisions will be taken in the context of budget allocations and market conditions prevailing over time, and guided by the approach to “Investment Prioritisation” described below. This approach has been proposed to prioritise the funding allocated to the Vessels and Ports Plan only and does not apply to the prioritisation of other Transport Scotland or Scottish Government investment.
  10. Transport Scotland normally uses capital funding (CDEL) for vessels and ports projects. Grants to the operators to support ongoing ferry services provided through the CHFS and NIFS contracts use resource funding (RDEL). Pressure on RDEL is extremely tight and this is expected to continue. The programme proposed in this draft Long-Term Plan therefore assumes that investment projects for the replacement or renewal of current vessel and port assets should not lead to increases in the costs of operating those assets and, wherever possible, should seek opportunities for operating costs to be reduced, enabling savings to be reinvested in services.

Investment Prioritisation

  1. This draft Plan is based on renewing the vessel and port assets required for the sustainability of the current network of routes and services. It therefore sets out the requirements for investments to achieve required reliability and resilience improvements within the fleet and achieve a target average vessel age of around 15 years by the end of this decade. However, when individual projects reach key decision points, the necessary funding may not be available. An objective and transparent approach to prioritisation is therefore needed.
  2. In such circumstances, the approach to investment prioritisation proposed in this draft Plan is to firstly ensure that the fundamentals for sustainable services and communities are in place. In cases where affordability requires difficult decisions to be taken, the following three elements would be prioritised (these are not in order and would all be considered together):
    1. The sustainability of ferry services by maintaining and increasing reliability and resilience.
    2. Ferry routes and services providing the primary transport connection for people, goods and services required for the sustainability of each community.
    3. Those communities identified as at greater risk of depopulation and economic decline. This Plan will not identify those communities – this will be based on analysis and advice from the Scottish Government and local authorities.
  3. Prioritisation decisions would be approved by Ministers.

Monitoring and Review

  1. The final version of this Long-Term Plan will set out arrangements for its ongoing monitoring and periodic review.
  2. Monitoring of implementation will be ongoing, primarily through regular reporting from individual projects and programmes.
  3. Progress against, and routine updates to, the Long-Term Plan as a whole would be reported annually. This would reflect:
    • Progress with project implementation
    • Changes arising from decisions made during project / programme implementation
    • Outputs of mid-life reviews and refreshed needs assessments.
  4. The Plan would also be reviewed and updated every 2-3 years so that there is always a 20-25 year forward look, recognising that this Plan cannot be static.
  5. To measure the success of the Long-Term Plan as a whole, we intend to develop a set of KPIs. Potential measures are likely to include:
  • Average fleet age (as proposed in this draft Plan)
  • Network reliability
  • Service and/or vessel/port outages – frequency and duration
  • Network carryings
  • Age of the oldest vessel in the fleet and/or age of vessels at replacement
  • Rolling average number of vessels replaced
  • Relevant indicator on port age/condition
  • Capacity and capacity utilisation (passengers and vehicles)