Following the meeting last week in Edinburgh with hauliers from the Western Isles and Tiree, the Scottish Government has announced an extra £2.5m in subsidised funding for freight traffic on island ferry routes. This is in addition to the extra help previously announced meaning that all vehicles up to six metres would qualify for RET.
Transport minister Keith Brown said the move was designed to bring fares for all hauliers into line and ensure no fares rise by more than 50% in a single year. The government said it would also lobby Westminster on issues that fell beyond its remit and work on a six-month study into the broader impact of its ferry fares policy.
The extra funding will cover ferry services to Coll, Tiree and the Western Isles. Mr Brown said “We are determined to support our island and remote communities and underlined this last week with new arrangements for small commercial vehicles qualifying for RET on routes to Western Isles, Coll and Tiree. Today we are providing more evidence of our commitment in support of those communities and all hauliers serving those communities. I had a constructive meeting with hauliers last week and one particular concern raised was that previous discount schemes had benefited some hauliers more than others. By capping the rises all hauliers on any given route will pay the same. Our ambition is to see greater connectivity right across the Western Isles, Coll and Tiree, and our pilot has shown the scheme to have had a very positive impact on local economies.”
The Tiree Branch of the Scottish Crofting Federation have been in touch with Keith Brown, Transport Minister in the Scottish Government, with regard to the removal of RET on Commercial Vehicles on ferries. The plan is to replace RET with an amended system of the former “bulk discount rate” which had been in place prior to the introduction of the RET pilot three years ago.
While RET is now extended to vans five metres or less in length, the fact is that most commercial carriers use vans six metres and over in length as five metre vehicles are few and far between. Crofters fear that the Scottish Government is sacrificing the former commercial RET for the sake of introducing RET to other islands without putting any more money into the scheme. One crofter said it does`not bear thinking about what the cost of freight to the island will be if RET is not reintroduced to commercial vehicles.
The Scottish Government report “Assessment of the impacts of the road equivalent tariff” pointed out that RET has made a positive impact on haulage businesses by lowering costs. The reports states that hauliers recorded savings amounting to an estimated 50% of ferry costs, and that whilst all of these savings might not have been passed on to the customers directly it allowed hauliers to offset other increased costs and therefore enabled prices to be pegged where they would otherwise have increased. Despite this, the Scottish Government recently announced the exclusion of commercial vehicles from the newly-extended RET, announcing instead that they would ‘replace RET for larger commercial vehicles on the Western Isles, Coll & Tiree, with an enhanced pre-RET discount scheme’. There is widespread concern that islanders will lose out heavily as a result of these proposed changes. David Muir of the Scottish Crofting Federation said:
“the SCF are calling on the Scottish government to provide urgent clarity on the situation as we are concerned that a reintroduced discount system could take away a great deal of the support that RET has brought to smaller hauliers. Any resulting increase in ferry fare cost will be passed on to customers.”
. Mr Muir concluded that “to support the fragile island economies what is needed is a fair syatem that retains the cost savings for hauliers and other commercials gained in the RET scheme”.
MP Angus MacNeil has called for clarity quickly on the new proposed ferry fares for hauliers if the government continues with its current proposal to get rid of RET for lorries. He said “the decision to remove RET from the hauliers is a mistake. The removal of RET will ultimately lead to an increase in prices for customers in our islands. I will be pressing for a meeting with the trasnport minister early in the year. Meanwhile a campaign group, hauliers for RET, has been assembled to both work on the RET case and to dispel the myth that arose in Edinburgh that island hauliers did not want RET. If this is not sorted freight costs and prices will go up which could ultimately impact on jobs” David Wood, the spokesman for “Hauliers for RET” commented that
“RET has benefited the islands and to remove it from the haulage industry will be detrimental to the whole community. Ultimately our customer will have to pay.”
The Scottish Ferry Services Draft Plan for Consultation states in the short term we are replacing RET for larger commercial vehicles on the Western Isles, Coll and Tiree, with an enhanced pre- RET discount scheme because:-
- The RET evaluation report shows that savings made by hauliers through RET have generally not been passed on to the consumers.
- In 93 per cent of cases, the reduction in ferry fares arising through the RET Pilot have been wholly or partially absorbed at some stage in the supply chain, without being fully passed on to customers. Only 7 per cent of firms in the sample of businesses indicated that the savings had been passed on in full throughout the supply chain from both their suppliers and on to their customers.
- The cost of rolling out RET to larger commercial vehicles is an estimated 40 per cent of the total cost of RET. ? Before the introduction of RET, hauliers received discounts to their fares up to a maximum of 15 per cent dependent on their volume of business with CalMac. Island hauliers told us when we rolled RET out that they were concerned mainland hauliers would be able to compete more effectively with them now that the same discounts applied to all hauliers. We will reinstate the pre-RET discounts that were enjoyed by hauliers and increase for the Western Isles, Coll and Tiree the maximum discount from 15 per cent to 25 per cent.
- For the Western Isles, Coll and Tiree the Government is considering how to extend the current discount eligibility criteria for hauliers.
- The Government is open to discussing with businesses which use larger commercial vehicles the most equitable formula which could be used to apply these discounts so that they benefit both larger and smaller companies.
- These improvements to the discount will be made for the Western Isles, Coll and Tiree only, where hauliers have received the RET discount since October 2008. While the discount has not been passed on to consumers we accept that in these difficult financial times some hauliers may find it difficult to now pay a fully increased fare. The increase to the maximum discount reduces the impact on these hauliers. We will revisit the discount again when we renew the Clyde and Hebrides contract in October 2013.
- We will look in the next CHFS tender to extend the current definition of a commercial vehicle from 5 metres to 6 metres. This will be consistent with the position in the Northern Isles