Competition Act 1998 (Coronavirus) (Public Policy Exclusions) (Revocations) Order 2021

Baroness Randerson Excerpts

Monday 1st November 2021 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, I decided to put down this Motion to Regret because it provides an opportunity for us to discuss the role of competition in ferry services. Does it incentivise operators to compete? Can they compete? Is there a role for the competition commission or some other body, because there is also a problem of a lack of transparency? This regulation relates to the competition exclusion for the Isle of Wight ferries during the Covid epidemic. That has now been, quite rightly, removed, but many of us can wonder what the difference is between when the regulation was in force and now, when it is not. I want to address my remarks both to the Isle of Wight services and to the Isles of Scilly services, and I declare an interest, as I live there.

The ferries kept going during the Covid-19 restrictions, thanks to grants from the Government to make up for the lack of passengers. I think they are all very grateful for that. For the ferry routes to these two islands, the total grant was about £10 million, but we do not know which company received it and what it did with it. They were not allowed to compete with each other on the Isle of Wight, while they now are, but I again question what changes have occurred since they were allowed to compete. Does competition, therefore, work in the ferry sector to give customers, passengers and freight a reasonable service at affordable prices? It is quite important for the people who live on these islands. Do they ever really compete, or is something else required to look after the customers’ interests?

We do not know whether the companies make excessive profits, but there is quite a lot of evidence that some of them fail in providing lifeline services for those who need urgent transport, particularly for the NHS. It is true to say that successive Governments have recognised the particular difficulties caused to both businesses and social services, as well as to education services, by barriers imposed on these communities. It is not, perhaps, surprising that schools on the Isle of Wight have long been at the bottom of the league table, with Ofsted constantly imploring improvements. There is no reason why it should be that way, but apparently it is.

Councillor Phil Jordan, who is the Cabinet member for transport on the Isle of Wight Council, has said:

“We have great concerns over the transparency of the operational factors of ferry companies that, in turn, lead to commercial decisions that take little account of the lifeline service the ferry operators provide, or the human cost involved with such commercial decisions.”


There is a lot of evidence that patients going to the mainland for NHS treatment, such as cancer intervention, are given absolutely no priority on some ferries. Quite apart from the costs involved, there is evidence that patients returning from NHS treatment—anaesthetics or invasive cancer treatment, I am told—are not given priority to board ferries. Sometimes, they are refused travel or sent to a later ferry. In other words, as they say colloquially, the sick are being bumped from travel.

The local MP, Bob Seely, has voiced support for a public service order, and the Isle of Wight Council has committed in its corporate plan to achieving a public service order on the Solent ferry operators. We do not know much; perhaps the Minister can tell us where that has got to.

It is the same for the Isles of Scilly. It is a very infrequent ferry service. Loading and baggage handling are, frankly, Victorian. There is no passenger shelter and freight charges are double those of the Scottish equivalent, which are already pretty high. It is good that the council has been awarded £48 million in a levelling-up fund announced by the Chancellor last week for two ferries between Penzance and St Mary’s. The trouble is that this is intended to perpetuate the inefficient, bad services, when they could be run with one ro-ro ship costing half that, about £22 million. I have told them that. The taxpayer is wasting about £19 million. When he responds, can the Minister tell me whether the Government required the council to seek competitive quotes for the new ship and services or ownership of these vessels? Is he happy that this £48 million will perpetuate what I think is an inefficient and expensive monopoly, to the detriment of the islanders—forget about the company?

We have two monopolies to the Isle of Wight and one to Scilly, providing what the Government seem to agree are lifeline services. There is not much monitoring going on as to whether these are effective. You have to ask what customers can do when these services are seen to be failing. You can ask the carrier, but it will say that it is not interested. You can ask the Department for Transport—we do not have a Transport Minister responding tonight, so let us say the Government—which will say that these are commercial services that they cannot influence. Customers may then ask what the remedies are if companies are seen to fail. After all, rail services are tightly controlled, as are many bus services, and there is generally competition for air travel in most places. Where is the community bit? What about affordability, service quality and frequency, for the NHS and other emergency services?

I will give the House a couple of examples. In Scotland, something called a road equivalent tariff is generally applied on fares and charges. To Islay, this is 29 pence per mile, while to Scilly it is £1.62 per mile, which is five times higher. For the Isle of Wight, on the Southampton to Cowes route, it is 96 pence per mile, which is three times higher. The train fares in the UK are very similar, between 10 pence and 30 pence per mile. As I said, the freight charges to Scilly are double those to Islay. This is not good for the economy. Unlike rail, the ferry fares are not regulated. There is no transparency about the ferry company costs, what might be a reasonable profit or the use of the Covid-related grant. What can people do? Should they ask the carrier or the department?

It is interesting that, over 10 years ago now in 2009, the OFT undertook a market study into the Isle of Wight services and the lack of transparency of their operations. Three operators wrote to the OFT offering increased transparency. One of them, Red Funnel, offered to publish clear information on performance, price per passenger, costs, capacity utilisation, customer satisfaction, reliability, punctuality and market growth. In spite of these commitments, which you might call solemn and binding, 12 years later, none of this has been done by Red Funnel or any of the other operators.

The same applies for the Isles of Scilly. It is a monopoly and there is no such information. There seems to be no pressure on operators to reduce costs or improve services. Where does the pressure come from? It could come from competition or from a government agency. After all, the Government control rail fares.

I do not think that the competition on the Isle of Wight works properly and, as I said, on the Isles of Scilly, the council has refused to commit to put the operations in the levelling-up fund bid out to competitive tender. Why? This failure of competition and governance is clearly having an adverse effect on the economy. Scotland recognises this, but in England I think the Government hope it is all going to go away.

I would like to hear the Minister’s response to the proposal that there needs to be some kind of regulatory oversight to make sure that the companies behave and provide the lifeline services to which they have committed themselves. It is a light touch role but could be done. We have the Office of Rail and Road for the railways and part of the road network; perhaps the remit of that could be expanded to cover ferry services. Maybe it is time for the CMA to be given a remit to examine these issues afresh and, most importantly, keep them under regular surveillance. In conclusion, I believe that some urgent action is required to make competition work for the benefit of consumers. I beg to move.

[Baroness Randerson (LD)]

My Lords, I start by thanking the noble Lord, Lord Berkeley, for tabling this Motion to Regret. I agree with almost everything he said. Of course, there are contrasting models in operation for ferry services around the UK, from market-based models to very much more subsidised models. Those complaining about the Solent services often look to other services for comparison, but the problem is that no two islands are really the same. People are searching for a model which provides the guarantee of service that the isolation of many UK islands requires but also an incentive for efficiency.

To look at a comparison of the islands, let us take Lewis off the west coast of Scotland as an example. Lewis is 130 miles off the mainland. It is about 350 miles from Edinburgh and about 600 miles from London. In contrast, the Isle of Wight is only 14 miles from Portsmouth and there is a ferry service which takes only 45 minutes. There is no regular air service, but there does not need to be one because of the short distances. The Isles of Scilly, whose service I know relatively well, are 35 miles off the coast. There is a sea crossing which is only for those with strong nerves and a strong stomach. It takes nearly three hours on what is a very elderly boat. I was therefore delighted to hear that there is funding to help deal with this situation. In reality, people go backwards and forwards to the Isle of Wight on a daily basis as commuters. You are not a daily commuter on a regular basis on the “Scillonian”, but of course people do go back and forth in a day to take up medical appointments. The vast majority of medical services are provided on the mainland.

We need a nuanced approach. Even in good times, islanders in general across the UK complain about their connectivity. There is, and rightly so, an emphasis on the importance of lifeline services. The SI to which this Motion to Regret relates suspended some elements of the Competition Act in relation to the Solent ferry services. There are three companies involved—one hovercraft service and two ferry services—so there is an element of competition. However, of course, during the pandemic they were apparently down to 10% of the normal passenger numbers and obviously it was not commercially viable. Yet it was obvious that essential services had to continue—freight as well as lifeline services—in terms of life-saving services.