Written Question · S4W-14388 · Session 4
What the estimated annual expenditure on Northern Isles ferry services will be in each year to 2025, broken down by (a) public subsidy, (b)…
The question
To ask the Scottish Government what the estimated annual expenditure on Northern Isles ferry services will be in each year to 2025, broken down by (a) public subsidy, (b) vessel procurement, (c) infrastructure investment, (d) leasing and chartering costs, (e) vessel maintenance costs and (f) infrastructure maintenance costs.
The answer
The current Northern Isles ferry services contract runs from 2012 to 2018. We therefore have no estimated cost figures beyond 2018.
There has been a change to the overall cost of the six year Northern Isles ferry services contract. When the service was tendered the contract price, as reflected in Serco’s bid, was £243 million. Following a process with HMRC, Serco have since been advised of their election into the tonnage tax regime, effective from the date they began operating the Northern Isles services on 5 July 2012. As the effect of this has been to reduce the cost of vessel leasing, the six year contract cost is therefore reduced to £223 million. This sum still represents the largest six year subsidy ever provided for ferry services to the Northern Isles.
The contract year of the Scottish Government contract with Serco NorthLink runs from July to July. After the first nine months of year one, current projections suggest that there will likely be an additional subsidy spend of £1 million. This is largely due to increases in the price of marine fuel. Clearly, neither the ferry operator nor the Scottish Government have any influence over global oil prices. These increases indicate the scale of the costs related to supporting our lifeline ferry services. Given this additional subsidy requirement is paid for by the Scottish Government, it illustrates our continuing commitment towards our island and remote rural communities.
Infrastructure investment costs do not form part of the Northern Isles ferry services contract. Vessel leasing, chartering and maintenance costs are included in the overall subsidy figure. We do not provide a further breakdown of the subsidy.
There has been a change to the overall cost of the six year Northern Isles ferry services contract. When the service was tendered the contract price, as reflected in Serco’s bid, was £243 million. Following a process with HMRC, Serco have since been advised of their election into the tonnage tax regime, effective from the date they began operating the Northern Isles services on 5 July 2012. As the effect of this has been to reduce the cost of vessel leasing, the six year contract cost is therefore reduced to £223 million. This sum still represents the largest six year subsidy ever provided for ferry services to the Northern Isles.
The contract year of the Scottish Government contract with Serco NorthLink runs from July to July. After the first nine months of year one, current projections suggest that there will likely be an additional subsidy spend of £1 million. This is largely due to increases in the price of marine fuel. Clearly, neither the ferry operator nor the Scottish Government have any influence over global oil prices. These increases indicate the scale of the costs related to supporting our lifeline ferry services. Given this additional subsidy requirement is paid for by the Scottish Government, it illustrates our continuing commitment towards our island and remote rural communities.
Infrastructure investment costs do not form part of the Northern Isles ferry services contract. Vessel leasing, chartering and maintenance costs are included in the overall subsidy figure. We do not provide a further breakdown of the subsidy.
In the Official Report
No contribution in the Official Report cites S4W-14388 by reference.