To ask Her Majesty’s Government whether their award of £48 million from the Levelling Up Fund to the Council of the Isles of Scilly for the purchase of new ships requires the Council to demonstrate value for money by arranging competitive tenders for the (1) procurement, (2) construction, and (3) operation, of the ships.
My Lords, the Council of the Isles of Scilly submitted a full application, which included an economic and a commercial case. The Department for Transport reviewed these documents through a detailed assessment process, including assessing the value-for-money of the application. The process is set out in the fund’s technical and explanatory notes. Officials from the DfT will be writing to the Council of the Isles of Scilly to set out further business-case requirements.
My Lords, I am grateful to the Minister for that response. However, she did not say whether the council would be required to go out to tender for the supply of the ships or operating the service. At the moment, the application is to give the Isles of Scilly Steamship Company—the monopoly supplier of services—a free gift of something like £48 million to operate a service, with no conditions. Does she think that is the normal way to conduct public sector financial business?
I am pleased to be able to reassure the noble Lord that, of course, the current status of the bid is that it is in its very early stages. As I said, we will be writing to the sponsor setting out further requirements for the business case. By the time this comes for ministerial sign-off, we will have had not only an OBC but also an FBC, and it will be done with the five different businesses cases. That would be normal, according to the Treasury rules. It will be a very rigorous process, during which we will, of course, assess the commercial elements of the bid. The noble Lord should just follow the process carefully; the bid would appreciate his support and guidance in getting it through the government systems.
My Lords, I declare an interest in that I like ships. Notwithstanding what the noble Lord, Lord Berkeley, says, I am delighted that a ship will be provided by some means for the Scilly Isles; it is very much needed. We are still awaiting the refreshed national shipbuilding strategy—we have been waiting rather a long time—but this will presumably be encompassed within that. Will the ship be built in the UK with UK steel? Appledore shipyard, for example, which is very close by, is ready to do the build; we have a lot of shipyards waiting for this work. Will the Government ensure that it meets the very highest standards as a green ship? In that context, we should make it the very best ferry in the world because there are opportunities for sales. Can we please not make a complete pot mess of this, as the Scottish Government have of the ferries that they have been trying to get?
I said that on purpose. It is the case that there will be a proper and correct procurement process that goes alongside this money. It is a significant amount of money and, as it is so significant, the Government will be keeping a close eye on the procurement strategy.
My Lords, the Minister has still not confirmed that high environmental standards will be required. I would welcome her doing that. “Scillonian III” is 44 years old, so these replacements will be built for the long term; they must be of the highest environmental standards. Will those standards also be imposed on onshore infrastructure servicing not just these ships but the many small boats that use the Isles of Scilly?
Yes, the Government are keen to uphold the highest environmental standards. This is one of the attractive things about this bid. We will be funding the building of three vessels and harbour improvements. Part of the harbour improvements will involve improving the electricity supply, which will allow hybrid and electric vessels to use the harbour very effectively. Funding this bid aligns with the Government’s decarbonisation strategy and the Clean Maritime Plan.
I certainly hope that both those things will be true. As the noble Lord will know, there is at the moment a very ageing vessel that chugs back and forth. It is very dirty, it keeps breaking down, the cost of maintenance is very high and it has to be taken out of service for maintenance to take place. It is also the case that, to fund that maintenance, passenger fares go up and demand therefore goes down. There is so much about this bid that is very attractive. We would hope that, out of all of this, we will see better services to the Isles of Scilly.
I cannot comment on the detail of the contract; indeed, I am not entirely sure to which contract the noble Baroness is referring. We will be looking in the business case at the environmental credentials of the bid. These are very decarbonised vessels, and this is a huge step forward for maritime in the area. As I have said, however, the development of the OBC and the FBC will take a couple of years, so there will be many opportunities to discuss this further in the future.
As I have set out many times, the tendering will be part of the business case that will be put forward by the sponsor of this project. We will, of course, be looking in it for open tendering, because we understand, as well as I am sure noble Lords do, that competition is the best way to improve quality and reduce cost.