How it plans to take forward its proposals to tender the Gourock to Dunoon ferry service currently operated by Caledonian MacBrayne.

In June 2002 I announced draft proposals for tendering the ferry services currently operated by Caledonian MacBrayne to bring these into line with EU rules. These included proposals for Gourock to Dunoon which involved including this route within a single contract covering the whole of the Clyde and Hebrides network and restricting the service to passenger-only, using passenger-only vessels.Within that framework, we concluded that the Gourock to Dunoon route had to be restricted in line with the passenger-only Public Service Obligation (PSO) which ruled out subsidy in respect of a vehicle service, given the presence of an unsubsidised operator on an adjacent route.We have received a wide response to consultation. Over 400 responses (including standard responses) have been received and the vast majority of these made representations in relation to Gourock to Dunoon. I have also met with local representatives on a number of occasions and we received a number of ideas for other models which might be consistent with the EU rules.In particular, a number of those who responded suggested there could be more flexibility in relation to Gourock to Dunoon if it were taken out of the single contract and tendered separately.We have discussed the way forward with the European Commission and were joined in these discussions by representatives of Argyll and Bute and Inverclyde Councils. As a result, we have identified a way in which we can keep open the possibility of a vehicle service operating on the route between Gourock and Dunoon Piers. This will involve:tendering the Gourock to Dunoon passenger subsidy separately;allowing bidders to bid on the basis of either a passenger-only or a combined passenger and vehicle service; allowing operators the freedom to bring their own vessel solutions, with no binding to the VesCo's vessels. This will enable operators to bid on the basis which they feel is most advantageous; maintaining the restrictions (in terms of frequency and length of operating day) that have applied to the Gourock to Dunoon service currently operated by Caledonian MacBrayne for a number of years to ensure the unsubsidised service close by is not undermined, anddetermining the outcome on the basis of the lowest cost bid (in line with the rules for PSOs), regardless of whether this is for a passenger or combined service.In this way, there is the opportunity for a combined service to win the contract. However, there can be no guarantee that this will be the outcome since this will depend on the bids submitted. The next step will be to develop a separate service specification for Gourock to Dunoon and this will be published for consultation in due course. Consequential amendments will require to be made to the main service specification and I will be announcing decisions in relation to other comments made on the draft service specification for the remainder of the network later this year.