- This subsidy is going to be used by CalMac to deliver the Clyde and Hebrides Ferry Services contract, consisting of over 30 ferry routes, between the neighbouring islands and mainland over a period of ten years. It has an estimated amount of £3.7 billion over this period and is a subsidy for a service of public economic interest (SPEI).
- Our key takeaways from the Subsidy Advice Unit (SAU) report are:
- When relying on a market failure argument, the existence of positive externalities (including how a more efficient outcome and economic spillovers) created by the services must be explored. The intended benefits should also be examined for Principle G.
- Evidence should be provided as to how alternatives to the subsidy were considered and deemed not suitable to achieve the policy objective.
- Assessments on the counterfactual should be granular including information on whether the service could be commercially provided taking into account variations in price and frequency of the service.
- When assessing proportionality, explanations and evidence should be provided on:
- the costs of leasing, maintaining and buying new assets to meet the policy objective;
- whether bundling the larger network is the most cost-effective means to achieve the policy objective; and
- why a competitive tender exercise would not permit the policy objective to be met with a lower value subsidy.
- Assessments should systematically set out the potential competition and investment impacts from the subsidy.
Transport Scotland, subsidy to CalMac Ferries Limited
Posted in Subsidy Advice Report Tracker.