Serco wins £450m Orkney, Shetland ferry contract

Serco Group said it has been selected as preferred bidder to continue managing and operating the Northern Isles ferry services for passengers and freight between the Scottish mainland and the Orkney Islands and Shetland Islands.

Serco said that since it first began managing the service in 2012, passenger numbers have increased 18%, vehicle traffic has increased 38% and freight volumes have increased 24%.

“The new contract will ensure continuity of service, is anticipated to start in the fourth quarter and has a total estimated revenue value to Serco of approximately £450m over the initial six-year term,” said Serco.

“There is an option for Scottish Ministers to extend the contract for a further two years, valued at a further £160m.”

Serco CEO Rupert Soames said: “We are delighted to have been awarded this contract by Scottish Ministers.

“We are very proud of our track record over the past seven years, during which time we have improved almost every aspect of the lifeline service for the communities and businesses of the Northern Isles, while also reducing materially the annual subsidy and thereby reducing the burden on the Scottish taxpayer.

“We look forward to further improving the service in the coming years.”

Minister for Energy, Connectivity and the Islands, Paul Wheelhouse, said: “The Scottish Government remains fully committed to high quality ferry links to the Northern Isles so I am delighted to announce Serco NorthLink as the preferred bidder to operate these services for a further eight years.

“In addition to the new contract, the Scottish Government is also helping island residents with a package of fare reductions.

“Building on the 30% discount for passenger and vehicle fares already enjoyed by islanders, cabin fares on routes from Orkney and Shetland to and from Aberdeen will be reduced by 20% from January, and we will also introduce a three-year islander fares freeze for passengers, non-commercial vehicles and cabins on those routes.

“We have placed our island communities at the heart of the new contract and as preferred bidder Serco are making some exciting new customer focused enhancements.

“These include an extra ten premium cabins on the Aberdeen-Kirkwall-Lerwick routes, a full refurbishment of the terminal lounge at Hatston, earlier boarding at Aberdeen harbour and extended opening hours of NorthLink’s customer services centre.

“We are acutely aware of the particular seasonal and time-sensitive challenges faced by key industries on Orkney and Shetland.

“The new contract includes the flexibility to allow timetabled freight and ferry services to be amended to better reflect changes in demand across the year and from sector to sector.

“We want to support the key areas of tourism, fishing, food and drink, aquaculture and farming and help Orkney and Shetland’s economies to thrive. These new arrangements will help support that.

“The new contract also reflects the Scottish Government’s commitment to the Fair Work Framework, providing pension protections and security of employment for the staff involved in the delivery of the ferry services.     

“It is important to remember that Scottish Ministers will retain control of all of the key issues, such as fares and timetables through the public service contract, and I look forward to continuing to build on our strong working relationship with Serco NorthLink Ferries in the months and years ahead.”

Serco NorthLink union RMT today responded angrily to the news that the Scottish Government has awarded Serco the Northern Isles ferry services contract for up to eight years from October 31.

RMT General Secretary Mick Cash said: “This is a retrograde step and a disgraceful sell out of passengers, workers and taxpayers interests in favour of Serco, a failing empire of private profiteering that is dismantling the NHS, profiting from asylum seekers and defrauding the taxpayer.

“This is a company that within the last few months has unleashed chaos on the Caledonian Sleeper service forcing RMT members into strike action.

“They should be nowhere near public contracts like the lifeline Northern Isles Ferries.

“By handing Serco a lifeline contract worth up to £619m, the SNP Government is pursuing a Blairite procurement policy in the Scottish ferries industry that should be consigned to the dustbin of history.

“Some serious questions need to be asked about the close relationship between Serco and the Scottish Government.

“Cheaper fares and ports investment on the NIFS ferries are funded by the Scottish taxpayer and the five passenger ferries and freight vessels on the contract are publicly owned.

“This decision is a political handbrake on the move toward the publicy owned and operated Scottish ferries network that RMT will continue to campaign for, in the interests of our members and the communities they are a part of.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.