Impact of the Removal of RET Fares from Commercial Vehicles on The Western Isles, Coll and Tiree

1 Introduction

1.1 Overview

1.1.1 This document investigates and reports on the impact of the removal of Road Equivalent Tariff (RET) ferry fares for Commercial Vehicles (CVs) using services to and from the Western Isles, Coll and Tiree.

1.2 Background to Road Equivalent Tariff for Commercial Vehicles

1.2.1 In October 2008, the Scottish Government introduced a pilot RET scheme for all fare types on ferry services between the Scottish mainland and the Western Isles, Coll and Tiree. The rationale behind the pilot was to support the island economies by removing any cost disadvantage incurred by users as a consequence of travelling by ferry between these islands and the mainland. Under the scheme, users of the ferries would pay a fare equivalent to the cost of driving the same distance by road plus a flat 'boarding fare' designed to aid cost recovery.

1.2.2 At the outset, the pilot scheme was programmed to last until March 2011 but was extended for a full year to March 2012. The pilot was accompanied by a substantial monitoring and evaluation exercise to gather information and analyse the economic and wider impacts of the new fares system. On the completion of the pilot and the monitoring and evaluation exercise, Scottish Government Ministers announced a decision to begin a phased roll-out of RET fares for all island communities with mainland ferry services. However, the phased roll out was not to include RET fares for CVs and these fares were also to be removed on those routes included in the pilot. Instead, fares for commercial vehicles on routes to and from the Western Isles, Coll and Tiree were to return to pre‑RET levels, taking account of inflationary impacts since 2008.

1.2.3 To reduce the impacts of a sudden move to non-RET fare levels, transitional arrangements were put in place. Under the transitional arrangements, each year the new fare would be the mid-point between the current fare and the non-RET fare, with the Scottish Government funding the difference. Additionally, a cap was put in place so that no fare would rise by more than 50% in any one year. In April 2012 new CV fares were introduced on each of the RET routes in line with these arrangements. In April 2013 the Scottish Government limited the next increase in fares to 10% across all routes.

1.2.4 In recognition of the significant increase in CV fares to their non-RET level, Transport Scotland commissioned this study to fully investigate the impact of the new fares structure on the economies of the Western Isles, Coll and Tiree. The precise aim of the study was to work with key stakeholders and hauliers to investigate the broader socio-economic impacts of removing RET fares for CVs.

1.3 Working Group

1.3.1 A Working Group of key stakeholders was convened to explore the impact of removing RET from CVs and to support and guide this study. The group consisted of Transport Scotland; Argyll & Bute Council; Comhairle nan Eilean Siar; Highlands & Islands Enterprise, HITRANS; the Outer Hebrides Commerce Group; the Freight Transport Association; and the Road Haulage Association.

1.4 Format of this Report

1.4.1 Figure 1.1 illustrates the various elements of the study, in line with the 'Aims and Objectives' set out in the Project Brief.

Figure 1.1 Elements of Study

Figure 1.1 Elements of Study

1.4.2 Each task in Figure 1.1 is covered in the remaining chapters as follows:

  • Chapter 2 provides background and context by documenting fares for CV operators under different fares scenarios ie pre-RET; RET; and through the transitional arrangements back to post-RET fares;
  • Chapter 3 provides an overview of the research methodology and the approach to the evidence gathering and data collection;
  • Chapter 4 considers the impact of the removal of CV RET ferry fares on the haulage industry;
  • Chapter 5 considers the impact of the change in ferry fares on the business community;
  • Chapter 6 reviews supply-chain linkages within the islands to understand the incidence of the ferry fares increases;
  • Chapter 7 considers the geographic impact across the Western Isles, Coll and Tiree communities of the removal of RET CV fares;
  • Chapter 8 considers the wider economic and social impacts of the change in CV fares;
  • Chapter 9 illustrates the cost to the taxpayer of different fares scenarios; and
  • Chapter 10 provides emerging findings.

1.4.3 The aim of this report is to deliver clear and succinct findings for Transport Scotland and the Scottish Government and to provide an evidence base to inform future decision making. We have limited the report to around 100 pages plus an Executive Summary. However, it should be noted that there are a number of detailed working papers and consultation notes which provide further information to support the findings set out in the report.