STUC Submission to Ferry Services Inquiry 2008
STUC March 2008
STUC Written Submission to the Transport, Infrastructure and Climate Change Committee Inquiry into Ferry Services In Scotland in advance of evidence session on 18 March 2008
1 Introduction
1.1 The STUC welcomes the Committee’s Inquiry into Scotland’s Ferry Services. Whilst our primary concern is the employment prospects of our members, the STUC absolutely recognises that an effective network of ferry services is fundamental to the sustainability of Scotland’s fragile island communities. Any reduction or fragmentation of services will have a potentially devastating impact on the economies and social fabric of island communities where many of our members live and work.
1.2 This written submission is intended to highlight some key issues in advance of the STUC’s evidence session with the Committee on Tuesday 18 March 2008. It is our intention to provide the Committee with another, more comprehensive submission before the deadline for written evidence of 31 March.
1.3 The STUC would like to thank members of the Committee and Committee clerks for their participation in our Trade Union Week event on ferry services held on 17 January 2008.
2 The Impact of Tendering on Scotland’s Ferry Services
2.1 The Committee will be aware that the STUC and our affiliated trade unions with membership in the maritime sector led the ultimately unsuccessful campaign against the tendering of Caledonian MacBrayne’s (Calmac) Clyde and Hebrides Ferry Services between 2000-2007. Our opposition to this exercise was long-standing and strong. It arose from a belief that the EU regulations under which the services were supposedly being tendered appear not to underpin the provision of lifeline ferry services nor contribute to job security and employment of seafarers. The STUC also argued that tendering represented a costly and unsettling process.
2.2 It is the STUC’s strong view that the concerns we expressed throughout the course of the campaign have been more than justified by the experience of the first CHFS tendering process. We also believe that these concerns have implications beyond the CHFS bundle – to the Northern Isles services and transport policy in general.
2.3 Trade union concerns centred on issues around employment and costs
Employment
2.4 There are now very few shipping companies that provide seafarers with opportunities for building a career. For many years Calmac provided security of employment and opportunities for career progression. However this is threatened by the requirement to tender.
2.5 Around 50% of Calmac employees live on the islands and in some island communities the company employs 10% of the local population. The trade unions therefore reject any suggestion that ferry employees are a ‘producer interest’ somehow working against the interests of island communities. The workforce and the community are one and the same.
2.6 The STUC is concerned that the potential six-year period for tendering does not allow for sufficient long-term investment in tonnage, infrastructure and new routes. It was important that CalMac’s network remained intact and tendered as a bundle to prevent ‘cherry picking’ of the best routes. We therefore welcomed the decision to tender the CalMac network as a bundle and to retain in public ownership the vessels, ports, quaysides and terminals. Retaining local seafarers has also served to protect a key pool of maritime expertise and employment in Scotland. The STUC has sought to secure concrete guarantees about existing terms and conditions and confirmation that TUPE will apply for seafarers serving on routes open to tender. Beyond TUPE, guarantees must be provided that the wages, leave, sick pay, accrued redundancy entitlements and pension schemes will be secure in the longer term, to reassure workers that the tendering process is not just a way of attacking their terms and conditions. This will also have a positive impact on recruitment and retention in the maritime sector.
2.7 The STUC and the trade unions representing the workforce must continue to be consulted about the contents of future tender specification documents. We were not consulted over the tender for the Northern Isles services, nor were we consulted over the tender for the route between the Firth of Forth and Zeebrugge, the contract for which was awarded by Scottish Enterprise to a Greek operator (Superfast Ferries) without any guarantees about flag or crewing of the vessel in question. At a time when Government is rightly concerned about the future of our maritime skills base, this appeared to be an act of supreme folly.
2.8 Tendering exacerbates the already fragile career prospects for the Scottish seafarer. Scotland, and indeed the whole of the UK as an island nation, is heavily dependent upon ships for our trade but numbers of UK seafarers, both officers and ratings, have declined dramatically.
2.9 For example in recent years P&O Irish Sea Ferries have dismissed local seafarers on the routes operated from Cairnryan and Troon to Larne in Northern Ireland and replaced them with low wage workers from Spain and the Filipines. The shipowners can continue to replace UK seafarers in this way due to the lack of effective employment protection for workers in the industry.
2.10 In particular shipowners continue to enjoy an exemption from the provisions of the 1976 Race Relations Act, which allows them to pay exploitative rates of pay to foreign national seafarers recruited abroad. The UK Government is currently considering changes to this legislation. Their initial proposals should be published very soon and we certainly hope that they will not pass up another opportunity for reform.
2.11 In addition the National Minimum Wage does not apply to UK seafarers on board ships whilst in UK territorial waters; the legislation only applies whilst the ship is in port or UK internal waters. Again the UK Government is currently examining this and we hope that progress can be made.
Costs
2.12 The STUC commissioned a report, ‘The Financing of Lifeline Ferry Services to the Clyde and Hebrides’ from Jeanette Findlay, Department of Economics, Glasgow University in March 2005. Dr Findlay concluded that the many additional interfaces created by tendering would undermine the cost savings of a unified service. Among the specific costs were:
- The costs of the tendering exercise itself;
- The tax liability from the cessation of trading;
- Additional management layers;
- ension costs;
- endering costs of the first bid; and,
- he possible degradation of vessels.
2.13 The conclusions of Dr Findlay’s report have never been challenged.
2.14 The Committee should bear in mind that these costs relate to a tendering exercise supposedly forced on the Scottish Government under EU competition law. What is the purpose of said Competition law? To introduce competition in order to improve efficiencies. The result? Savings for the taxpayer.
2.15 That the CHFS exercise was never going to fulfil the purpose of the regulations under which it was being tendered should have provided the Scottish Government with an unchallengeable case against tendering. It was disappointing that this case was never made with sufficient belief and rigour.
2.16 Since the signing of the new contract, anecdotal evidence of additional costs has started to feed through. For instance, at our seminar in January, NAUTILUS UK representatives explained that it is now necessary to write to Guernsey (where the ‘offshored’ contracts are now held) for matters that would have previously been easy to deal with locally i.e. the promotion of a rating.
3 Competition
3.1 Tendering ferry services (particularly if the CHFS bundle was, in the future, to fall into the hands of another operator) jeopardises commitment to and investment in key areas that a company seeking profits would not regard as of primary importance e.g. environmental policies, promoting tourism, the Gaelic language and training for the longer-term.
3.2 We continue to contend that lifeline ferry services which receive subsidies from Member States and, where it can be shown that the subsidised service will have no impact on any other Member State’s economy and do not distort competition between Members States, should be exempted from having to put out to public tender.
3.3 Community law allows a Member State to stipulate crewing requirements for vessels engaged on island ferry services (see EEC Council Regulation 3577/92 on Maritime Cabotage Article 3.2), particularly where those services are of socio-economic importance. Other countries do this (e.g. Greece, which requires application of the Greek National Collective Agreement). The Scottish Government must ensure that ferry services do not become open to all-comers with cut-throat competition and inevitable decline in operational, safety and employment standards. An example was evidenced by the flag of convenience registered passenger ferry Taygran Trader, operating in competition with CalMac on the route between Ullapool and Stornoway. This vessel represented a classic case of social dumping (something which other EU members states would step in to prevent) by employing cheaper Polish officers and Spanish ratings on a wholly domestic route.
3.4 Within the context of competition, it is also important to assess the impact of subsidies on different transport modes. Ferries, for instance, in many circumstances have to compete for freight with road and rail – both having extensive infrastructures that are provided by government. The Air Discount Scheme introduced in 2006 as a subsidy for island residents flying to and from the mainland has a clear potential to affect the competitive regime between shipping and aviation. And it is essential that subsidies are not provided to shipping services that undermine quality operators with a commitment to high safety standards, good working conditions and the use of modern tonnage.
4 Frequency and timetabling of services
4.1 Tendering limits the scope for the delivery of new services. It is inevitable in such processes that the principal must set a prescriptive contract for the agent. This is particularly frustrating given that improving services is supposed to be a consequence of tendering.
4.2 Trade unions are not opposed to flexibility in order to ensure that the services are at all times what users need. However, we do expect consultation and agreement with the workforce and their trade union representatives before any changes are made and before any decision is taken regarding redeployment of vessels or other aspects of the service which may affect seafarers’ working and living arrangements.
4.3 The trade unions cautiously welcome the implementation of the Road Equivalent Tariff pilot scheme. It is our intention to revisit this issue in more detail in our further written submission to the Committee.
5 Capacity
5.1 There are serious shortfalls in ferry capacity throughout Northern Europe and these have hampered some companies seeking to introduce new services. The STUC is concerned that such pressures could potentially lead to the use of unsuitable tonnage registered under flags of convenience and operating with inadequate terms and conditions for the crew. It is of particular importance that any services developed or operated with state support provide positive employment, training and economic benefits for Scotland – particularly at a time of growing national and international seafarer skill shortages. It is also important that there is a clear commitment to the spoken English and Gaelic competencies amongst the seafarers employed on key passenger ferry services.
5.2 It is important that the Scottish government seeks to not only safeguard the standards of existing services, but also works to secure the deployment of modern, specialist and technologically advanced new tonnage that can provide improved performance levels on Scottish ferry services.
5.3 At our trade union week seminar in January, ferry workers raised serious concerns over capacity: who takes responsibility for the longer-term planning for fleet and capacity? We could justify the need to double the fleet but nothing no vessels are on order at present. Whose responsibility is it to ensure that piers and harbours going to be up to meeting any expansion in fleet?
6 Integration with other transport modes
6.1 Integration remains the holy grail of Scottish transport policy. Improving the integration between ferries and other transport modes will help to deliver environmental benefits and significant cost savings (e.g. through more efficient modal transfer facilities in ports).
6.2 Marketing and ticketing through a common timetable, ticketing and fares database for all ferry routes, along with the provision of details of connecting bus and rail services and other ferry services run by local authorities and non-competing private operators and improved public transport linkages are essential.
6.3 However, as with the Scotrail franchise, tendering of ferry services works against integration. Evidence is increasingly widespread that the new performance and penalties regime works against the decentralised, discretionary decision making necessary for effective integration.
7 Training/Union Learning
7.1 Scotland will very soon be facing a crewing crisis due to the inadequate numbers of seafarers being trained. The number of ratings being trained has come to a virtual standstill.
7.2 Whilst no exact figures are available for Scotland, in the UK the last figure recorded was approximately 50 ratings in 2005 and numbers have continued to fall. The leading crewing agency Clyde Marine has advised our affiliates of the need to train more seafaring deck and engine ratings. At the moment too many companies are chasing a dwindling supply of seafarers whose age profile is steadily rising.
7.3 Another hidden consequence of tendering is starting to reveal itself through the problems experienced by workers unable to undertake workplace-learning activities. RMT Union Learning project workers have been unable to negotiate internet access on board Cal Mac ships so that those undertaking adult learning courses could have continued with their studies during their off-duty time whilst on their rostered two weeks on duty.
7.4 This is a serious disincentive to members wishing to undertake learning activities. The reason given for the failure to provide the facilities is cost which is hugely frustrating given the waste of resources through fragmentation.
Copyright
STUC March 2008