Summary observations and key recommendations

Summary Observations

Report Overview

In recognition of the challenges associated with delivering ferry services on the CHFS network, EY was commissioned to develop a framework that would aid Transport Scotland in understanding the range of options that could be implemented to improve service delivery. Preferred options should be capable of enhancing passenger experience, supporting local communities and be accountable, transparent and capable of achieving Best Value.


To develop a long-list of options for consideration, we completed a benchmarking exercise that focussed on two groups of comparators:

  • Overseas ferry operations delivering similar types of services (i.e. lifeline) to those being delivered under the CHFS contract; and
  • Other domestic infrastructure that provide critical services, often under contract with the Scottish Government.

The benchmarking exercise was informed by interviews with industry and government figures, as well as reviews of relevant documentation, including government policy papers, company annual reports and academic papers.

Framework of Strategic Options

No predominant approach was identified during the benchmarking. Rather, a broad range of regulatory models and corporate structures, as well as contractual arrangements, were observed.

The various attributes of each case study were used to develop a long-list of options. These options, not mutually exclusive of one another, can be categorised within one of the following four groupings:

  • Regulation: The introduction of greater regulation to the ferries sector
  • Integration: The integration or assimilation of certain members of the Tripartite
  • Privatisation: The sale of either CMAL or CFL (or their assets)
  • Decentralisation: The transfer of responsibility for delivery of some or all ferry services to local authorities.

As well as providing an overview of each option, this report provides an indication of the responsibilities of each Tripartite member under each of the long-listed models.

Evaluation of Strategic Options

Having established a framework of strategic options for consideration, we developed an evaluation methodology with reference to TS’ mission of delivering “a safe, efficient, cost-effective and sustainable transport system”. Specific criterion relating to the following were identified:

  • The impact of an option on Passenger Experience and Local Communities
  • The extent to which an option is Deliverable
  • The impact of an option on Accountability and Transparency

Our qualitative assessment set out to identify those options that could have a favourable impact on the above criteria versus the status quo. Options that scored well across the range of criteria were judged as having high potential to contribute towards Best Value.

Outcome of Evaluation

The preliminary evaluation found merit in greater regulation and integration, but noted substantial challenges in relation to privatisation. The benefits of decentralisation were judged to be mixed according to the capabilities and objectives of each local authority.

Introducing a commissioner or regulator scored favourably in our evaluation because, depending on the precise form, regulation presents a comparatively straight forward opportunity to introduce added oversight and an independent perspective on the sector. Integration also performed well because of the potential to streamline the sector and realise efficiencies, although potential deliverability challenges were noted regarding any transfer of CMAL assets. This issue would need to be understood fully as part of a detailed assessment before proceeding.

Decentralisation scored poorly because of the potential to further complicate an already complex sector. With the exception of divesting DML’s non-core operations, which may have merit depending on Ministerial priorities, privatisation was viewed poorly because it would deprive Ministers of direct control over assets critical to delivering lifeline services.

Key Recommendations

Short-term Recommendations

  • Engage local communities on their preferences for reform of the ferries sector

While structural decentralisation was not favoured in our assessment, key merits noted in our appraisal of the decentralisation options were the opportunity to improve transparency around the Tripartite’s decision making processes and to develop policy that is more aligned with that of local authorities. Decentralisation was not deemed as essential in the effort to achieve this; however, regular engagement and consultation with local communities is likely to be. As a next step, TS should consult with local communities to understand their views on the options for reform as set out in this report.

  • Identify the optimal commercial arrangements for delivery of the CHFS3 contract

In addition to the range of regulatory models and corporate structures presented in this report, in completing the benchmarking exercise, a wide variety of contractual arrangements were noted. These related to the transfer of risk, the length of contracts and the means by which contracts were awarded (by Direct Award or competitive tender). The contractual arrangements complement the wider delivery model. Taken together these are the means by which the sector can successfully deliver against Ministerial priorities.

The current CHFS contract terminates in September 2024 and EY suggests that preparations for CHFS3 commence 18 to 24 months in advance of this date. Before this TS should give consideration to the optimal commercial arrangements for CHFS3. To do this TS should seek maximum clarity from Ministers on their policy objectives for the ferries sector so that it can begin to formulate a coherent plan for how it will achieve these objectives via its commercial relationship with the operator and the overriding delivery model for the sector.

Medium-term Recommendations

  • Undertake a full economic assessment of the impact of introducing a commissioner or regulator

Our preliminary assessment of the long-list of options found strong grounds for considering in more detail the introduction of either a commissioner or regulator. A commissioner or regulator could provide greater independent oversight and would be consistent with trends observed in ferry operations overseas and in similar domestic sectors, such as rail. It should be understood if there is Ministerial appetite to introduce more independent oversight of the sector and if so a full economic assessment of such a model should be undertaken. This exercise should include an exploration of the commissioner / regulator’s remit.

  • Complete a Business Case for the CMAL and CFL integration option

This preliminary assessment also found that the integration of CMAL and CFL could support Best Value by a) improving the efficiency of service delivery; and b) enhancing transparency via clearer roles and responsibilities. As a next step, it is recommended that TS undertake a fuller appraisal of this option via a Business Case exercise. This should support progression towards a preferred way forward for the future CHFS network.

< Previous | Contents | Next >

Back to top