Council urges Yousaf to tender ferry contract

Serco NorthLink passenger vessel MV Hrossey at Holmsgarth. Photo: Lerwick Port Authority.
Serco NorthLink passenger vessel MV Hrossey at Holmsgarth. Photo: Lerwick Port Authority.

SHETLAND Islands Council is to write to Scotland’s transport minister urging him to put the NorthLink ferry contract out to tender rather than taking the operation in-house.

At a meeting in Lerwick Town Hall on Wednesday morning, councillors agreed to respond to Humza Yousaf’s policy review by highlighting a “significantly stronger view” than previously among various stakeholders in favour of tendering.


SIC transport planning manager Michael Craigie’s report noted evidence that tendering “can present different creative and innovative service solutions”, but a direct award to an in-house operator was “capable of providing similar levels of efficiency and service delivery” while avoiding the high costs of tendering.

The government is looking to extend the existing Northern Isles ferry contract, held by Serco NorthLink, until October 2019 while it determines the service’s future direction.

Craigie told members that the subsidy level on the route between Aberdeen, Kirkwall and Lerwick had come down by around 25 per cent in the past five years.


He said value for money was “at the forefront of the choice to be made, and the feeling of our stakeholders is tendering gives a better value for money solution”.

The service was first put out to tender in 2002, with NorthLink Ferries – a partnership, between state-owned West Coast ferry operator Calmac and Royal Bank of Scotland – running the route until 2012 when, to many people’s surprise, it was awarded to multinational services provider Serco.

Craigie’s report highlighted views expressed locally that the culture of Calmac/RBS “meant the service was not delivered as efficiently” and the contract was “not at all responsive to needs”.


“There is a widely held view amongst stakeholders that an in-house provided service may mean a return to this sort of experience,” he wrote.

The report also noted constraints the government faces in raising funds to invest in infrastructure, which is “a potential barrier to service improvements in terms of bigger vessels and appropriate infrastructure for the Northern Isles services”.

Craigie suggests the contract “could be structured in terms of length and conditions of contract to enable private investment to be made into vessels and perhaps harbour infrastructure”.

Several councillors, including environment and transport committee chairman Ryan Thomson, pointed out that local consultations had demonstrated “overwhelming” support for “a tendering approach that has delivered, eventually, a high quality service”.

Shetland Central member Mark Burgess pointed out that CalMac would be “as eligible as anyone to bid for the contract”, so he could see no disadvantage in going ahead with a tendering exercise.

Members unanimously gave their backing for officials to draw up a response to Yousaf along those lines.