Keep your hands in your pockets and count your cash before automatically celebrating the Scottish Government’s announcement that in October this year, 2104, Road Equivalent Tariff [RET] fares – more heavily subsidsed fares – are to be introduced on all of the remaining CalMac ferry routes in the Clyde and Hebridean Ferry Services network.
This will offer significant fare reduction on the present subsidies to passengers, cars, small commercial vehicles and coaches.
This is the start of a feel good bubble to be created for the immediate wake of the government’s anticipated ‘Yes’ vote in the indy referendum. It is also a ‘forward magnet’, promising freebies to come after the indy vote – but you have to vote for it to get the prezzy.
While having our eyes open on the political strategy in this, our issue with it is less political than centred on fiscal responsibility and more sophisticated thinking than this strategy reveals.
There is a good argument for universally giving island residents heavily discounted fares to and from their islands.
There is a good argument for hefting the footfall of visitors to the islands by reducing ferry fares.
Of course the taxpayers on mainland and islands, will have to bear the cost of the universal RET fare subsidies. But this is not the end of that requirement to pay. There are some serious consequences to be considered here.
They are:
- island capacity, with infrastructural and environmental cost
- ferry capacity with potential much greater financial cost to the taxpayer
- later reduction or removal of RET subsidy, with political and possibly economic cost.
Then there is the unintended potential consequence of the timing of this announcement on the substantial UK self-drive holiday market.
Island capacity
This is about the absorption capacity of the smaller islands – with some of those to which RET was applied earlier having experienced overcrowding, a surplus of motorhomes, freefall camping and littering.
It is also about the impact of potential substantially greater motor traffic on fragile island roads – with the subsequent infrastructural costs.
Ferry capacity
Since there really is no such thing as a free lunch, the ultimate cost here is a serious issue.
Supposing there are cases where reduced fares attract sufficient usage by residents and, particularly, by seasonal visitors to make it difficult, but not impossible, for the current ferries to cope?
This has happened with some islands whose fares had RET reductions in one of the earlier stages of its introduction
This situation leads to rising complaints from jslanders, unable sometimes to get on the most convenient ferries of their choice, to and from their island. The unrest puts progressive pressure on a the government of the day to bring in an additional boat or to replace a current boat with a bigger one.
With existing ferries able to cope, but under some pressure and with local complaint, additional capacity may not be strictly necessary and would not be supplied in a commercial service.
There is a ceiling to the number of visitors who will ever want to come to Scotland, with our prevailing climate, with our poor infrastructure, with our connectivity uncertain and with our famous midges.
But a state owned and state subsidised service can be politically responsive to local complaint. So, if additional capacity was introduced to a route, this would immediately and substantially ramp up the cost of providing the service; with no business case seeing the return on investment in the cost of the commissioning or chartering of new tonnage .
In this quite conceivable circumstance, the cost per head and per vehicle of the subsidy provided would neither be supportable or defensible.
The political cost of having to reduce or remove RET
It is not hard to conceive of budgetary circumstances where the overall cost of state subsidies would have to be reduced, temporarily at least.
The political reality is that people lose sight of subsidy, become familiar with the subsidised cost they pay from their own personal budgets and adjust their spending elsewhere accordingly.
When subsidies are removed or reduced, there are inevitable howls of protest, with governments accused of ‘hiking prices’.
Depending on the political climate of the time of protest and the weakness or strength of the government of the day, if the state of the economy is precarious but not in imminent danger of collapse, there is the likelihood of a cave-in with the retention of the subsidy and the pain postponed to feed a later crisis.
For prospective self-drive visitors to the islands in 2014
The message now is to wait for next year.
It will be much cheaper – and that really does matter for family visitors in tight times.
The wise procedure, following the Ferries Review commitment to introduce RET to the remaining routes, would have been to have held the announcement until the 2014 season was over.
But the indy-driven political necessity of this announcement has been aggravated by the SNP’s private disappointment in not achieving its intended gain of the sixth Scottish seat in Europarl, by seeing that seat go to its fellow separatist party, UKIP – and by the strategy of putting ‘forward magnets’ in place to ‘pull’ the indy vote in September – and create a feel good bubble for its immediate aftermath.
A more intelligent approach
Not every route needs RET to support its use by visitors.
It is not best fiscal management for government to give away unnecessary state subsidy.
Oban-Craignure, for instance, is a busy, well used route and, within the non-commercial perspectives of a subsidised service, ‘makes a profit’.
There are other routes with strong usage showings.
It is simplistic to introduce a ‘one-size fits all’ solution when an equally beneficial, equally attractive – but more fiscally prudent one – exists.
Assume that, as a given, all island residents are given RET fares to and from their islands.
As a matter of familiar routine, airlines and trains offer very heavily discounted seats on off peak and less popular services – and on seats booked and paid for [with no refund] well in advance.
The software to manage such systems for online self-booking exists and would cost little to introduce here. There is no earthly reason not to do so.
Visitors – and visiting families – whose priority is their budget could get RET level fares by travelling at less convenient times or by booking and paying in advance.
Those for whom convenience is the priority will happily pay what are already subsidised fares, but without the additional RET subsidy.
This is a no-brainer. It achieves the RET support for attracting more visitors – while saving some money for the public purse.
The routes now for RET
- Berneray – Leverburgh (Sound of Harris)
- Barra – Eriskay (Sound of Barra)
- Sconser – Raasay (Raasay)
- Mallaig – Armadale (Skye)
- Mallaig – Eigg – Muck – Rum – Canna (Small Isles)
- Oban – Craignure (Mull)
- Tobermory – Kilchoan (Mull)
- Lochaline – Fishnish (Mull)
- Fionnphort – Iona (Iona)
- Oban – Lismore (Lismore)
- Wemyss Bay – Rothesay (Bute)
- Colintraive – Rhubodach (Bute)
- Largs – Cumbrae Slip (Cumbrae)
- Tarbert – Portavadie
