Pentland Ferries invites new transport minister to Orkney to unlock subsidy delay

Commercial ferry company, Pentland Ferries, has written to the new cabinet secretary for transport, infrastructure and connectivity, Michael Matheson MSP, inviting him to Orkney to discuss the delay in implementing the Scottish Government’s passenger subsidy.

The family-run company have welcomed the Scottish Government RET scheme, designed to reduce passenger fares, and have said they want it to go ahead as soon as possible, but are waiting on confirmation that the scheme is legal.

The company, which receives no government subsidies, have said they have taken legal advice which shows that the version of the RET scheme as set out by the Scottish Government, may not yet comply fully with state aid rules.

Pentland Ferries have also said the minister recently confirmed that the business would be liable for the costs of the passenger subsidies if their scheme was deemed illegal. This could run into millions of pounds and put at risk the future viability of the business.

The company have also met with local Orkney MSP, Liam McArthur, to express their concerns about the delay.

As the start of this month, as Mr Matheson stepped into the shoes of the previous minister for transport Humza Yousaf, it was announced that lack of agreement between the Scottish Government and Pentland Ferries had led to no discounted fares being introduced in Pentland Firth ferry routes, by the Government’s self-set deadline of the end of last month.

Andrew Banks, Managing Director and Owner of Pentland Ferries said: “We want these passenger subsidies implemented as soon as possible but we need to be 100 per cent sure that the scheme complies with state aid rules.  We have never had any subsidy from the government and even though this scheme gives money to the passenger, not the operator, the minister has told us that we would be liable for any repayment if at a future date the scheme is deemed illegal. This could run into the millions and could finish us off.

“We cannot take that risk and we have a responsibility to our staff, our community and family to make sure the scheme works for everyone. We want to work with the Minister and his team to discuss a way forward so that we can all benefit from reduced fares. This scheme will be fantastic for our business, attracting more visitors to the islands and making it cheaper to travel to the mainland for residents. So we want this unlocked as soon as possible. We welcome the Minister’s willingness to gain a full understanding of the detail and very much hope to be able to meet him in Orkney soon.”

The minister, Mr Matheson, was asked for a response to the comments from Pentland Ferries and Mr Banks. At the time he replied, Transport Scotland said the invitation had not yet been received so the minister could not comment.

However, Mr Matheson did say: “The Scottish Government remains committed to delivering reduced ferry fares to the Northern Isles. I am conscious that there is a great deal of interest in this issue amongst users of the services. As I begin my new role as Transport Secretary, I want to ensure that I gain a full understanding of the detail — it is already very clear to me that planning to introduce reduced fares on the Northern Isles network has been a complex and challenging piece of work.

“As a first step, we will cut fares on the Aberdeen-Lerwick and Kirkwall-Lerwick services from June 30. These reductions will be around 20 per cent for both passengers and cars.

“On routes to Orkney, it has been necessary to engage with commercial operators on the Pentland Firth. We set out a very fair and reasonable proposal that would maintain competition, enabling them to protect their existing market share. Unfortunately, not all the commercial operators have felt able to agree to our proposals. This means we cannot currently implement reduced fares on any of the routes to and from Orkney without the risk of legal challenge.

“This is both disappointing and frustrating, but I am determined to work through the issue to see what more can be done. I have asked Transport Scotland to undertake some further work to see what measures, if any, we can take. As part of that, we are willing to reopen talks with commercial operators.  I will provide a further update to stakeholders and to Parliament as soon as I can, with a view to bringing the full benefits of the scheme to the people of Orkney and Shetland.”