Professor John Robertson OBA

The above chart from the Evaluation of Road Equivalent Tariff [RET] on the Clyde and Hebridean Network Prepared for Transport Scotland March 2020 reveals a massive increase in ferry usage to the islands with a consequent economic boost, but increasing costs for the taxpayer in lost revenue. The comparison is based on ticket sales only and takes no account of retail revenue, which is likely to have increased as a result of the increased numbers of passengers.

What is the RET?

In October 2008, Transport Scotland introduced the Road Equivalent Tariff (RET) fares policy as a pilot on routes to the Outer Hebrides, Coll and Tiree (and made permanent in 2012). The principle of RET is that ferry fares should be set on the basis of travelling an equivalent distance by road plus a fixed fare element aimed at cost recovery. RET was intended to reduce the cost disadvantage faced by island communities and promote the islands as places to live, work, visit, invest and conduct business. In 2012, the policy was extended to cover Colonsay, Gigha and Islay. It was then further extended to the two Arran routes and Campbelltown in 2014. Finally, in October 2015, RET was rolled-out to all remaining routes, including the high-volume routes of Oban – Craignure, Wemyss Bay – Rothesay and Largs – Cumbrae.

How much has RET cost the Scottish Government in revenue foregone?

RET is now costing the Scottish Government around £25m per annum in revenue support, around two thirds of which is supporting reductions in car fares.¹

What has the RET achieved?

Increase demand for ferry services by making ferry travel more affordable and accessible. Increase tourism and supporting existing tourism markets. Enhance local economies and the wider national economy.

Do the so-called representatives of the islanders ever recognise this?

Nope.

As well as this subsidy in the form of lost tax revenue, the Scottish Government directly subsidises CalMac, by £3.7 billion over ten years.²

What would happen without these subsidies and a privatised ferry service? Something like this:

Isle of Wight ferry prices at two to seven times CalMac rates prevent tourists coming

Sources:

1. https://www.transport.gov.scot/media/49397/evaluation-of-road-equivalent-tariff-on-the-clyde-and-hebridean-network.pdf
2. https://www.gov.uk/government/publications/report-on-the-proposed-subsidy-to-calmac-ferries-limited-by-transport-scotland

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