Bill for CalMac tender is £15m

Key quote:

"Other countries stand up to Europe and negotiate a good deal. The Scottish Lib Dems have capitulated to Brussels and Westminster and paid for the privilege." - Fergus Ewing, SNP transport spokesman

Story in full A SHAKE-UP of Scotland's main ferry company - forced by European competition rules - has cost more than £15 million and made the operation hundreds of thousands of pounds a year more expensive to run, ministers have admitted.

The SNP claims the restructuring of Caledonian MacBrayne has been "the most expensive exercise in futility from a supine [Scottish] Executive".

However, Tavish Scott, the transport minister, said ministers could not break the law by defying the European Commission directive, which required them to put CalMac's routes out to competitive tender.

News of the costs comes five weeks after the tender process was left in tatters when CalMac's last remaining challenger for its west coast network pulled out, claiming the process was flawed.

And there was not one bid last year for CalMac's Gourock-Dunoon route, which was tendered separately because of existing competition from Western Ferries.

In response to a parliamentary question from Jim Mather, a Highlands and Islands SNP MSP, Mr Scott said the tendering exercise had cost the Executive at least £15,366,769.

The lion's share - £11 million - was due to a one-off clawback of tax relief by the Treasury because CalMac was split into separate ferry-operating and vessel-owning companies.

Tax relief was previously claimed by CalMac because it both owned and operated its ferries, and related to its past investment in new vessels, but this will no longer be applicable.

The Executive said the tax loss was non-recurring.

However, the establishment last year of Caledonian Maritime Assets, the new vessel-owning firm, will add nearly £300,000 a year in extra senior staff costs alone.

Its chief executive is paid £80,000, with three other directors paid £60,000 each.

These new posts are in addition to four equivalent posts at CalMac - now CalMac Ferries - which carry similar salaries.

The tendering costs also include nearly £1.7 million in Executive staff costs, £1.1 million in CalMac restructuring costs and almost £938,000 in external legal advice for the Executive.

However, the Executive's staff costs do not include those of some senior officials or ministers, because their time cannot be accounted for separately.

Last year, the Executive paid CalMac some £32 million in subsidy to top up its income of about £52 million.

Fergus Ewing, the SNP transport spokesman, said: "The Scottish taxpayer and Scotland's ferry-users have seen a sum equivalent to almost one half of the total cost of the ferry subsidy for a year, go on the tender exercise.

"Other countries stand up to Europe and negotiate a good deal. The Scottish Lib Dems have capitulated to Brussels and Westminster and paid for the privilege."

David Davidson, the Scottish Conservative transport spokesman, said: "Sadly, I am not at all surprised by these figures, which merely underscore what we have always known, namely that the Lib-Lab pact's handling of the CalMac tender has been a farce from the start."

A spokesman for Mr Scott said: "The Executive's priority, as it has always been, is to protect lifeline ferry services.

"We were presented with no alternative but to tender in order to ensure that the subsidy was in line with European law.

"Ministers are not allowed to break the law," he said. "That doesn't mean I like the laws."

TENDER TIMETABLE

THE Scottish Executive has been embroiled in the competitive tender process for Caledonian MacBrayne's routes for eight years.

1999: European Commission orders competitive tendering for CalMac. Ministers win the concession to tender the routes as a single bundle.

2002: The Executive launches public consultation on the tendering process as discussions with commission continue.

2004: Following prolonged negotiations with Brussels, the Executive concedes it will have to proceed with tendering.

December 2004: Ministers are defeated in a Holyrood vote by MSPs who call for the tender process to be abandoned.

May 2005: MSPs vote to comply with commission over tendering.

February 2006: CalMac sets up offshore firm Caledonian MacBrayne Crewing (Guernsey) so that its 800 seagoing staff can avoid paying National Insurance.

May 2006: Western Ferries - one of only two rivals to CalMac - withdraws from the tendering battle, criticising the process.

June 2006: The Scotsman reports that V.Ships, the only other challenger, may also withdraw after it loses the competition for the NorthLink ferry contract to CalMac.

October 2006: CalMac is split up, with Caledonian Maritime Assets established to take over ownership of its ferries and terminals.

January 2007: V.Ships confirms that it is pulling out of the tender competition.