The Linkspan User Agreement has played an important role in helping the Isle of Man to secure modern ships, market growth, competitive fares and improved services.

Infrastructure Minister Phil Gawne MHK highlighted the benefits of the agreement during a statement in Tynwald today (Tuesday 21 July 2015) about the future of the Island’s strategic sea services.

The commercial contract gives the Isle of Man Steam Packet Company preferential use of the King Edward Pier linkspan in exchange for a guaranteed minimum level of service. It was first approved by Tynwald in 1995 to provide long-term stability and to enable Government to control aspects of fares and schedules.

The current User Agreement, which was also approved by Tynwald, runs until 2020, with a six-year extension option that can be triggered by either party.

The Department of Infrastructure is reviewing the long-term future of ferry services in order to secure the best possible outcome for the Isle of Man and its economy. The Department has already established that a number of experienced ferry operators may be interested in bidding for the Isle of Man contract if it is put out to tender. A Prior Information Notice in December 2014 attracted 12 responses and of those, five organisations provided further information via a comprehensive questionnaire.

A public consultation will be held this summer to inform the discussions and to establish any issues or concerns over the current service. It is hoped that businesses and passenger groups will join members of the public in submitting their views and priorities. The Minister said that whilst he expected the consultation to generate comments about service standards and delivery, he would be encouraging people to think about the broader issues, such as how the Isle of Man best secures its key trade route to protect economic activity and standards of living.

He explained that whilst the User Agreement had been criticised over the years, it had helped to secure a wide range of benefits without any taxpayer subsidy. There has been a significant improvement in service, with crossings to the North West of England increasing from 382 return sailings a year in 1995 to 936 in 2014. The number of Liverpool sailings has risen from three returns a week between May and September to a daily service between April and October. Over the same period freight capacity has trebled and fares have been capped at 0.5% below inflation until 2010, and at inflation since then.

Minister Gawne said:

‘I want to secure a service that is in the best interests of the Isle of Man, its economy and its people. I am aware that while the Steam Packet wants to extend the User Agreement, there is also a clear need for debt and ownership control. It is also clear that people are not wholly convinced of the value of the User Agreement and it is certainly time for us to look again to ensure it meets the future needs of the Manx public.’

Updating Members on the progress that has been achieved in recent months, Minister Gawne said that effectively Tynwald has three options –

Respect the current agreement whilst preparing to start a tender process in 2022, so that a potential new operator would be in a position to take over when the User Agreement expires in 2026.
Agree to a request from the Steam Packet to end the current User Agreement early and then go out to market.
Invite the Steam Packet to propose a new agreement that offers such exceptional value to the Isle of Man that Tynwald can agree that it would be in the best interests of the Isle of Man to accept it without testing the market with a tender process.

Minister Gawne said:

‘If the Steam Packet takes no action or makes no offer other than to continue with the current agreement, the Department will in 2022 start procurement work to tender the provision of ferry services to and from the Isle of Man. This would allow sufficient time for an operator to purchase a newly built vessel ready to take over services at the end of the User Agreement in 2026. The results of the Prior Information Notice have given us confidence that other ferry companies would be able to submit suitable bids if the Department were to tender for a new operator.’

He added:

‘If on the other hand, the Steam Packet agrees to end the current agreement and test the marketplace or to make Government a significantly enhanced offer regarding an extended agreement, I will advise Members so that Tynwald can consider the best way forward.’

A guide to the User Agreement is available on the Government website at http://www.gov.im/media/1348386/guide-to-the-user-agreement.pdf