HC Deb 18 April 1972 vol 835 cc85-8W
Mr. Edward Taylor

asked the Secretary of State for Scotland whether his review of shipping services to the Scottish islands, including the system of charging and support, has been completed; and if he will make a statement.

Mr. Gordon Campbell


The scheduled sea services to the Scottish islands have in the past been criticised as inefficient and expensive to both the user and the taxpayer. The Scottish Transport Group has been taking energetic action to improve the services provided by its subsidiaries with the Government's encouragement and support. I have now concluded that the following additional measures are needed. In devising them I have taken fully into account advice from the Highlands and Islands Development Board, and also the evidence provided in Professor Gaskin's report, published last October, on the impact of freight charges on prices and development in the islands.

That report does not establish a case for a subsidy policy designed to reduce sea transport charges generally but stresses the contribution which modern forms of service can make to holding down costs of operation and to encouraging development. The Government intend to accelerate the modernisation of services and, within present levels of operating subsidy, to secure better value for money.

I believe that the most important contribution which can be made, in transport terms, to the development of the islands is the provision of modernised ships and services capable of handling traffic economically, quickly and securely, by roll on/roll off methods wherever possible. An increased rate of investment for this purpose will therefore have first claim on the resources available for the support of Scottish sea transport services. Capital expenditure by harbour authorities and shipping operators, of which the Government will bear a substantial share, is expected to increase, at constant prices, threefold during the five years from 1971–72 by comparison with the preceding five years.

To encourage modernisation and to promote efficiency, future undertakings presented to Parliament for approval under the Highlands and Islands Shipping Services Act, 1960, will provide for the payment of capital grants towards the improvement of services, and for revenue grants for each loss-making route, fixed in advance for a given period of years. Support will thus be related to individual routes shown to need assistance instead of being related as at present to an operator's overall financial outturn.

To encourage innovation, agreements providing for support will in future be available to new operators of scheduled services who are willing to provide an adequate and assured year-round service on a given route at less cost to the island communities concerned and to the taxpayer. Such operators will be able to make an offer to the Secretary of State for the provision of a service on a route currently in receipt of revenue grant when the period for which the grant has been fixed in advance is about to expire.

Direct Government assistance to shipping operators, by way of capital or revenue grant, will be concentrated on the primary routes. The aim will be to ensure the provision of basic services which are adequate for the needs of the island communities at lowest cost to them and to the taxpayer. Subsidy will not be duplicated for parallel or overlapping services; and local or minor services will be for local authorities to support under Section 34 of the Transport Act, 1968, with the assistance of Government grant in approved cases.

Charges levied on scheduled sea transport services must continue to be based on operating costs in order to provide incentives for the most efficient operation of services and to prevent resources from being misdirected. I believe that these two objectives can best be secured

  1. (i) by requiring modernised services carrying substantial traffic to pay their way without revenue grant after account has been taken of capital assistance for terminals and, if necessary, for vessels; and
  2. (ii) by providing revenue grants for services which do not generate enough traffic to enable a service, even after improvement with capital grant, to be provided at fares and charges comparable to those for the more economic services.

We will encourage operators of roll on/roll off vehicle ferries to charge by reference to vehicle length, irrespective of load. On the modernised, more economic services this is likely to result in significant savings in freight charges for full loads by comparison with existing vehicle ferry charges on sideloading vessels for comparable distances. The system will be simple and straightforward and, through the lower rates which it will represent for many goods, it will help to reduce the burden of freight costs on such specific items as heavy machinery, to which the Gaskin Report has drawn attention.

These arrangements go far to meet the underlying aims of the Highlands and Islands Development Board's proposals. The Government's approach has been accepted by the board, which recognises the steps taken to meet its objective of reducing transport costs. The board will assist in identifying and promoting methods whereby the islanders can take the maximum advantage of the new forms of transport.