Transport: Remote Island Communities in England

Lord Callanan Excerpts

Thursday 20th July 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Callanan) (Con)]

My Lords, first, I pay tribute to the noble Lord, Lord Berkeley, for securing this debate on the transport needs of remote island communities in England. I know that he has for many years taken a keen interest in the future of island connectivity—in particular, to his beloved Isles of Scilly. In the presence of so many other admirers of the Isles of Scilly, at this point I should say in confession, in front of the right reverend Prelate the Bishop of Newcastle, that I have never been to the Isles of Scilly but I have been many times to Lindisfarne, the holy island in the north-east but, given the glowing descriptions from many noble Lords, I look forward to the opportunity to visit the Scilly Islands.

Most of the speakers in the debate have concentrated on the Isles of Scilly, except for the right reverend Prelate, who waxed lyrical about the wonderful Holy Island, in Northumberland, which, as I said, I have visited many times. There is indeed a road connection for part of the year, and it is a source of amazement to me—as it will be to other Members from the north-east—that every year there are tales of people’s cars floating off the causeway. I assure your Lordships that it is not possible for the council to put any bigger signs indicating the required crossing times and the consequences if you do not adhere to them. The most amazing thing is that normally, they are not people who speak a foreign language and do not understand English, but people from the local area or other communities in the United Kingdom, who just wilfully ignore the signs and see their car floating away in the distance as the tide comes in. They normally take to the rescue shelter halfway across. There is no legislation against stupidity, I fear.

I take note of the right reverend Prelate’s suggestion of a park-and-ride scheme. I am sure that she will understand that is a matter for the local authorities to determine. I am sure that under its new leadership, Northumberland County Council will look closely at her suggestion. She is fortunate to represent what is in my biased opinion one of the nicest dioceses in the country.

As an island nation, the movement of goods and people by air and sea is vital to the economic well-being of this country—95% of our trade by volume either arrives or departs by sea—but it is equally vital on a smaller scale for internal traffic within our smaller island communities. Indeed, that is the subject at hand. With three operators and around 9 million passenger crossings each year, as the noble Lord, Lord Berkeley, observed, I am not so sure that the Isle of Wight falls into this category. I read with interest the briefing produced by the House Library, which concentrated to a remarkable extent on the Isle of Wight, which no one could argue is a remote island community. However, it shares with other islands the basic fact that it costs more—consumes more resources—per passenger mile to move people by ferry or by air than by road.

The Isles of Scilly are of course by far the most obvious example of our subject for debate today, and most Members have concentrated on them. Perhaps it will help the House if I briefly recap the background to the Isles of Scilly’s services by sea and by air, to build on the excellent introduction provided by the noble Lord, Lord Berkeley.

Passenger and freight ferry services from the mainland to the Isles of Scilly have always been provided commercially without operating subsidy—under Conservative and Labour Governments, as the noble Lord, Lord Rosser, will be aware.

The noble Lord, Lord Greenway, referred to the passenger ship RMV “Scillonian”, as did several noble Lords. It is now 40 years old, although it underwent a substantial refit in 2012. I have heard the various criticisms, but it is also fair to say that it is duly certificated, registered as seaworthy and entirely fit and appropriate for the services which it provides. If it was not, it would not be allowed to provide them.

In recent years the local partners—led by Cornwall Council—known as the Route Partnership put together a funding bid for a new purpose-built passenger and freight vessel to replace the two current vessels, and for significant harbour improvements at Penzance and St Mary’s. The new vessel was to be owned by Cornwall Council and chartered to an operator by competitive tender. The rationale for that proposed arrangement was that the Isles of Scilly Steamship Company could not afford to replace the current passenger vessel when it reached the end of its useful life, and neither could any other operator provide a financially viable service.

The Department for Transport then invited bids for smaller-scale harbour improvements, but declared that as long as passenger services remained in commercial operation, it did not believe that there was a case for an ongoing subsidy. I am sorry to say that that, in essence, remains the Government’s position now.

In the meantime, the Isles of Scilly Steamship Company has also undertaken to replace its year-round cargo ferry, the “Gry Maritha”, having acquired a significantly larger vessel, currently named “Mali Rose”, which could also carry up to six passengers in the winter months, at the master’s discretion. This vessel, I understand, requires substantial refurbishment before it can replace the “Gry Maritha”.

The Isles of Scilly Steamship Company has said that it intends to replace the current passenger vessel, the RMV “Scillonian III”, probably with a new build vessel, but that it believes that the ship can continue operating beyond 2020 if necessary. We await developments on that front, but the vessel appears capable of meeting demand during its months of operation.

Although the Government do not believe that there is a case for an ongoing subsidy, we remain committed to ensuring that services to remote island communities continue. The noble Lord, Lord Cameron, referred to subsidies for freight services. The Government have invested over £6 million towards the £11 million project to improve the quays at St Mary’s, dredge Penzance Harbour and undertake land access improvements to improve the vital sea connection between the Isles of Scilly and the mainland for passengers and freight by opening up both harbours to a wider range of vessels in future. Building on the development work initially undertaken by the Council of the Isles of Scilly and Penzance Town Council, Cornwall Council undertook to act as the lead delivery authority and the works were completed in June 2016.

Scheduled commercial flights to the Isles of Scilly commenced as long ago as 1937. Today, regular flights operate to St Mary’s Airport from Land’s End and Newquay airports, and, seasonally, Exeter Airport. The runway at St Mary’s has recently been resurfaced and Land’s End Airport now has its first tarmac runway. Flights are operated commercially—again by the Isles of Scilly Steamship Company under the Skybus brand—and, like ferry services, have continued to operate free from subsidy. The Isles of Scilly Steamship Company has also invested in additional aircraft and expanded its service following the discontinuation in October 2012 of the British International Helicopters’ Penzance to St Mary’s helicopter service. According to the steamship company, passenger traffic by sea has increased in recent years, from just under 105,000 in 2014 to just under 116,000 in 2016. Air passengers have also increased from just under 91,000 to 95,000 in the same period, although this remains below the 155,000 passengers that were transported in 2011, which was the last full year of the helicopter service.

Transport to remote island communities is a free market and other operators are able to enter that market if they wish. In fact, I am aware of the current proposals—as noble Lords have mentioned—to recommence helicopter services to both St Mary’s and Tresco through the construction of a replacement heliport at Penzance. I understand that planning consent was approved by Cornwall Council in March 2017. However, noble Lords will understand that, because the proceedings are subject to judicial review, I am unable to comment further on that service.

The noble Lords, Lord Berkeley, Lord Cameron and Lord Rosser, and the noble Baroness, Lady Randerson, referred to the issue potentially being referred to the Competition and Markets Authority—I think the noble Lord, Lord Teverson, also mentioned this. Let me set out the position. The relevant legislation is Chapter 2 of the Competition Act 1998, on abuse of a dominant position, and Chapter 3, which covers investigation and enforcement. The CMA has wide discretion to construe a relevant market, which could include more than one transport mode and could extend to a market as modest in scale as the Scilly service—much smaller indeed than the Isle of Wight market, which was previously examined by the CMA’s predecessor, the OFT, and the Competition Commission. However, the CMA also operates formal prioritisation principles, which include the size of the market and the impact of the case. Depending on other workload, it may decide that the complaint about the Scilly services does not have sufficient priority to justify the resources required to investigate a case of this sort. It is a matter for the CMA.

A number of Members raised the issue of the Scottish islands and made comparisons with the services there. The Scottish Government, through Transport Scotland, provide financial assistance to reduce the cost of ferry travel on routes that are considered lifelines for remote island communities, and support a number of air routes to the islands through public service obligations. The Scottish Government are, of course, answerable to Scottish taxpayers for their own funding priorities, but I highlight that it is very difficult to compare the needs and services of groups of islands around the UK, and that the situation in Scotland is very different because the services mostly cannot be operated on a commercial basis. While there is no specific legal impediment in relation to public service obligations for remote island communities in England, at the moment the services to the Isles of Scilly are operated on a commercial basis. If the situation changes in this respect, then of course the matter could be reviewed.

The noble Lords, Lord Berkeley and Lord Rosser, also raised the issue of the abuse of a monopoly—the same company providing both air and sea connections. We do not believe that this, in itself, is sufficient evidence to show abuse; despite the modest capacity of the terminals, it remains open to other providers to provide ferry and/or air services to the Scillies. I would be delighted if the market came to support more than one operator; however, that is not yet happening from either Penzance or elsewhere. The fact that it is not suggests that there is not some huge super-profit being exploited, into which a competitor could easily make inroads. The growth in passenger traffic at least suggests that fares are not prohibitive.

I will answer some of the other questions that noble Lords have raised. The noble Lord, Lord Berkeley—I think—asked about the quality and reliability of the air service. I totally appreciate the annoyance and distress caused to passengers when such events occur, but this is a matter for the interested parties, including the relevant local councils and users, to take up with the operator of the commercial services. Of course, it is for the pilot in command to decide whether to operate a flight in adverse weather conditions. The noble Lord also asked why cheaper air or ferry services cannot be offered for permanent residents. I understand that discounts are already available for permanent residents; further discounts would, again, be a matter for the interested parties to consider, including the operators, users and local councils. So long as EU treaty rules apply, in the first instance it would be for them to produce a draft notification justifying the preferential terms as aid of a social character in a remote region.

The noble Lord, Lord Cameron, raised the issue of the Scottish islands—I think I have responded already to that question—and asked about an air discount scheme. The air discount scheme for flights within Scotland is of course a matter for the Scottish Government. The scheme is not applicable to air routes in Scotland supported by public service obligations. Any exemption applied for in respect of air routes to the Isles of Scilly would have to be eligible for this type of aid under European Union state aid guidelines.

The noble Lord, Lord Bradshaw, raised the issue of the current train franchise and sleeper service from London. The current Great Western franchise is due to be replaced by April 2020 and officials have begun engaging with interested parties to identify potential priorities for the route franchise. I will ensure that the noble Lord’s points about the sleeper service are considered as part of the franchise replacement process. In addition, train services to Penzance are being substantially upgraded. A new £360 million fleet of bi-mode intercity express trains will replace the older high-speed trains on the London route, bringing journey time savings. Local services to Plymouth are being upgraded to two trains an hour, enabled by Network Rail’s re-signalling work. We particularly welcome the substantial contributions being made by Cornwall Council and the Cornwall and Isles of Scilly local enterprise partnership to the modernisation of the Night Riviera sleeper trains and improvements to stations in Cornwall and London for sleeper passengers.

The noble Baroness, Lady Randerson, made a very good point about the provision of emergency medical evacuations. Where commercial transport is not suitable or available, there are arrangements in place to evacuate patients who require emergency treatment using either Cornwall Air Ambulance or search and rescue services, both of which are based at Cornwall Airport Newquay.

The term “lifeline” is often used to describe vital transport connections between mainland and island communities. Although this term carries no formal or legal status, the Government recognise the importance of passenger and freight services to remote island communities in England, and that is why we remain committed to ensuring that these continue. My officials have met delegations on a number of occasions to discuss transportation to and from island communities such as the Isles of Scilly, and I assure noble Lords who have spoken in the debate that they remain available to do so in the future.

[Lord Rosser]

My Lords, is it the Government’s view that the present air and sea services to the Isles of Scilly, including the current fares and charges, are having a dampening effect on the economy of the Isles of Scilly?

[Lord Callanan]

As I said earlier, passenger traffic is increasing. The services continue to be operated on a commercial basis. I accept the points noble Lords have made about the desirability of increased connections—of course, everybody would like increased connections and better services to their communities—but there is no evidence of a detrimental effect on the community.