On 30 March 2023, government informed the Council that the Department for Transport will take the lead on the Isles of Scilly Sea Links project, subject to the Council’s formal approval.
We recognise that some time has passed since our last update to the community so we have taken this opportunity to provide a timeline of the project so far and explain this latest development.
We welcome the government’s greater involvement and are awaiting confirmation from them on how the project will move forward from here.
Timeline of the project so far
In June 2021, the Council of the Isles of Scilly submitted a Levelling Up Fund bid to replace 3 of the vessels currently serving the islands: Scillonian III passenger ferry, Gry Maritha freight ship, and Lyonesse Lady inter-island freight vessel. The bid also included proposals for quay and access works on St Mary’s and at New Grimsby on Tresco. The intention of the bid was to address the fragile state of the shipping transport facilities and associated infrastructure. The existing vessels and infrastructure have become increasingly unreliable and expensive to maintain. Furthermore, the services provided by the Isles of Scilly Steamship Group receive no state subsidy and have small financial margins due to the need for the company to subsidise winter lifeline services, which run at a loss. On this basis, the Council’s bid to government emphasised that it would not be affordable for the Steamship Group to fund the required investment alone and therefore there were grounds for the state to intervene.
In October 2021, government announced that the bid was successful, and that the Council had been allocated £48.4m of Levelling Up Funding for the project. The Council was then required to develop and submit a full business case to the Department for Transport. This business case was submitted in June 2022.
In August 2022, the Maritime Minister, Robert Courts MP, confirmed that the submitted version of the business case could not be taken any further. It was the government’s view that the Council’s proposed approach to procurement did not comply with the Public Contracts Regulations. Concerns were also raised about the lack of opportunities for the introduction of competition to operate the services resulting from the new vessels. The government concluded that the level of legal risk inherent in the approach was too high to support and encouraged the Council and its partners to submit a revised project plan addressing the concerns raised.
In response, the Council wrote to the Steamship Group in September 2022 asking if it would support the revised approach recommended by the Minister. The Council received a response from the Steamship Group in October indicating that they could not commit to a revised business case without more detail from the Council.
At a meeting of the Council’s Scrutiny Committee in December 2022, the Steamship Group set out their concerns regarding the Minister’s letter and how this may affect their approach going forward. In recognition of this, the Council arranged for the Steamship Group to meet with government officials later that month to raise their concerns regarding the risks of competition on the sea links route. This meeting resulted in the Steamship Group submitting an alternative approach for delivery of the project which would see only 49% of the vessel costs being provided by government and the remainder being provided by Steamship Group.
The Minister for Aviation, Maritime and Security, Baroness Vere, responded to the Steamship Group in March 2023, rejecting their proposal on the grounds that it ‘does not avoid the need for public procurement’ and the level of private investment required by the Steamship Group ‘could potentially result in the company having to raise passenger fares and freight charges significantly, increasing the disparity between the islands and the mainland, therefore running counter to levelling up ambitions.’
In the spirit of being able to achieve an outcome which can be fully committed to by all partners, the Council delayed development of a new business case in order to enable our partners to fully negotiate their preferred approach with government. We have since been informed by government that the next stage of the project will now be led by the Department for Transport rather than the Council. Government intends to work closely with the Council to ensure that the final proposal remains subject to local influence, however Members will need to have received further detail on exactly what the role of the Council will be before they can agree to proceed.
The original timeline set by government for this project would have seen the delivery of all vessels and infrastructure work by 31 March 2024. This target date subsequently slipped to 31 March 2025. We can confirm that this revised date will not now be achievable, and we will not be in a position to provide an estimate on project completion until we receive further guidance from government.
Call to action to complete survey before deadline
Government has stressed the importance of gathering the latest views from residents, so we urge anyone who has not yet completed our transport and freight survey to do so ahead of the extended deadline of 10am on Monday, 17 April 2023.
To complete the survey online, residents will need the website address and codes on the letter we sent to each household. However, any residents who are able to call BMG Research before 5pm today (Friday, 14 April), will still be able to complete the survey over the phone.