Caledonian MacBrayne Ltd. (Hansard, 25 July 1984)

§ Mr. Younger

The group has made substantial progress in following up the commission's recommendations since I last reported to the House on 26 July 1983, at columns402–3. It has now prepared a full response, copies of which I am placing in the Library of the House.

The commission found that the relationship between Caledonian MacBrayne and another of the group's subsidiaries, MacBrayne Haulage, was against the public interest and recommended that the relationship should be put at arms length. This has been done, and the group's auditors have certified that there was no material distortion of Caledonian MacBrayne's accounts in 1983 arising from transactions with its sister company. As I have already informed the House, on 12 July 1984, I have now directed the group to dispose of the haulage company.

Caledonian MacBrayne has now taken a number of steps, in response to the commission's recommendations, to improve financial control. For example, improved methods of stock and cost control have been established.

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The company's internal audit arrangements have been improved. Shore ticketing has been introduced at certain major terminals, and ticket inspectors introduced: this should improve revenue security. A new computer system is now being installed.

The commission recommended that only one of Caledonian MacBrayne's J class vessels should be retained on the Gourock-Dunoon service and that the future of the second vessel of this class should be re-assessed. One of these vessels was withdrawn from the route last year. I am however satisfied that disposal of the second vessel would lead to unacceptable difficulties in the provision of other services, where it provides back-up. I have therefore agreed that the company should retain the second vessel meantime, but propose that my Department should continue, in co-operation with the company, to keep this matter under review.

Significant progress has been made in improving the company's capacity to undertake investment appraisal of major new capital projects, and this has been evident in the work undertaken on the new Uig-Tarbert-Lochmaddy vessel, the order for which was placed earlier this year. I look to the company for continuing improvement in this area, in the light of the major programme of further investment which lies ahead.

An important area of the commission's investigation was concerned with fares and tariffs. In response to its recommendations commercial vehicle discounts have been calculated since April 1983 on the basis of a haulage company's use of a specific route, rather than its use of the network as a whole. Further changes have been made this year, in line with the commission's recommendations, on commercial vehicle discounts and on multi-journey discounts for passengers and cars. In addition, a start has now been made towards constructing a more equitable fares structure over the network as a whole, based on the three main cost elements of pier dues and toll and distance charges. The full establishment of a revised fares structure will take several years.

The commission made recommendations to improve the company's arrangements for consumer representation. As a result, the membership of the three shipping services advisory committees have now been widened to include representation from road haulage interests. The committees themselves have decided to retain employees of Caledonian MacBrayne as their chairmen. The committees are still considering the recommendation that they should publish an annual report. Caledonian MacBrayne continues to have reservations about the recommendation that greater financial information should be provided to the advisory committees. They fear that commercially sensitive information could thus be circulated too widely, but they have made available to the committees information on the MAP studies.

I have given very high priority to providing adequate financial support for sea transport services to the Scottish islands. It is in the interests of users and taxpayers alike that these services should be run as efficiently as possible, and I will look to Caledonian MacBrayne and to the Scottish Transport Group to sustain and develop the initiatives they have already taken in response to the Monopolies Commission's report.