§ Mr. John Mackay
asked the Secretary of State for Scotland what proposals he has for reducing freight charges on sea crossings between Orkney and Shetland and the mainland.
§ Mr. Younger
My Department has to-day written to Orkney and Shetland Islands councils informing them that I have decided to introduce an interim scheme of reductions in freight charges on sea services operating on the basis of published schedules and tariffs between the islands and the mainland. I propose to reduce charges for southbound freight by 35 per cent. and for northbound freight by 12½ per cent. Subject to parliamentary approval of the necessary undertaking the scheme will come into operation on 1 September 1979, and for the present scheduled sailings I estimate that it will 335W cost, in the remaining seven months of this financial year, around £800,000. The reductions will apply to scheduled services only and the scheme should ensure that the islands' agricultural industry and the many small businesses in the islands receive maximum benefit from the subsidy.
The scheme will be limited to this financial year alone. Decisions on the future level of subsidy will have to await the outcome of the thoroughgoing review of the whole ferry subsidy system promised in our manifesto which my Department are now undertaking.
In accordance with the Act, I will be paying grant to the North of Scotland, Orkney and Shetland Shipping Company, a subsidiary of P & O, which is the only shipping company offering scheduled services to the islands. The company will then pass on this grant to ferry users by making fare reductions at the specified level. Thus the scheme ensures that the benefits of the subsidy are passed on to the islanders. I should emphasise that P & O have been most co-operative in the discussions leading up to the scheme and have shown great willingness to assist with the proposed arrangements. On 12 July I laid before the House for its approval a draft of an undertaking by myself in terms of the Highlands and Islands Shipping Services Act 1960 to pay grant to the company in order to enable fare reductions to be made.