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MP’s Statement following 7 Apr 2011 Meeting

posted Apr 12, 2011, 3:27 PM by Richard Cliffe

Taken from the Mp's statement following the meeting on 7 Apr 2011:

This was a very constructive meeting. A clear and shared determination to safeguard and improve the Penzance to Scilly Ferry Link was reaffirmed. The meeting was unanimous in its commitment to:

1.    Respond enthusiastically to the challenge set out in the Transport Minister’s letter dated 31st March 2011 which invited local stakeholders to work with the Department “to develop a simpler, lower cost solution for passenger traffic between Penzance and St Mary’s” and acknowledges with gratitude that the Department “will give priority to considering funding such a solution.” The meeting recognised that this would inevitably mean that any such solution would need to work within the parameters of existing permissions, development lines and harbour revision orders. The meeting felt that, with all stakeholders fully engaged, it was confident that such an ambitious challenge could be met;

2.    Recognises and values the significant contribution of Cornwall Council and unanimously encourages the Council to join local stakeholders, elected representatives and civil society representatives and organisations to assist in meeting that challenge. In particular invites Cornwall Council’s suggestions on proposed structures to effectively progress a bid.

 

Editor's Comments.

Whilst the MP’s efforts to mend bridges is to be applauded the reality of the current situation is not reflected in the statement released.  From this statement and comments from others who attended two areas of misunderstanding appear to exist:

 

1.      The failure to obtain DfT grant funding means that no funds are currently available for harbours either in Penzance or St Mary’s.  Whilst the DfT were only covering 57% of the £62 million the remainder is not available for harbours because:

a.     The £15 million from Cornwall Council was for the vessel only and was to be repaid in full from vessel charter fees.

b.     The £11.75 million EU ERDF funding was match funding to the grant.  There is no grant so there is no EU funding.  A new project would take 2 years+ to work up and the ERDF programme expires in 2013.

2.       The decision letter suggests funding for vessels not harbours would be considered. My  explanation for this interpretation is offered below.

 

Ministers Decision Letter - Interpretation

 There appears to be confusion about what the Minister’s letter means.  My understanding is that the Minister is very cool on the idea of funding harbours at all but has make a gesture regarding funding for another less expensive vessel solution.  Whether this is meaningful is another matter.

 Why do I interpret the decision letter as saying no to Harbours?

  • The Minister could have funded the harbours and not the vessel but did not. 
  • The Minister could also have indicated that a revised harbour plan adjusted for the proposed IOSSC solution (no Pier extensions) would be looked upon favourably but he did not.
  • The Minister could have acknowledged the serious regulatory and other deficiencies in the harbours and indicated that a less costly solution dealing with the most pressing issues would be given serious consideration – he did not.
  • With regards to harbours he said “the extent to which harbour works may or may no be required will continue to be considered”   What he is saying is that after 7 years of project work the case for Government investment in harbours has yet to made or at least he is not yet convinced.  Realistically, given the financial pressure he is under, he is unlikely to be convinced but he leaves the way open to try and convince him – he could hardly do otherwise.  Compare that coolness with his promise regarding “a simpler lower cost solution for passenger traffic” where he states “I confirm we will give priority to considering funding such a solution”.

 

Alternative Harbour Project

Unless there is some clarification from DfT suggesting otherwise, there is negligible prospect of success in any new solution for Penzance Harbour getting DfT grant funding.  There is no new case that can be made to justify a different decision because the case for investing in the harbours (both of them) is essentially not accepted.  Any plan to develop a new solution based upon DfT grant funding runs into the following problems:

 ·         It takes ~2 years plus, and often longer, to work up a major project to the point where funding can be sought. 

·         EU funding (33%) is unlikely because the current allocation of  £11.75 million is being reallocated to other projects in Cornwall (to prevent return to the EU) and the 7 year ERDF programme ends in 2013 – too soon for a new harbour project to be worked up.

·         The cost of working up a project could be £1 million+.  This spending is a total loss if the project fails to be funded.  Cornwall Council reportedly lost £2 million in costs not covered by grants.

·         Any credible project is going to run into some of the controversial issues that undermined Option A – namely sea defence of South Pier and allocation of harbour space for improved freight handling. These are important because:

o        Overtopping by the sea is a danger to vessels, staff and passengers. It is also gradually destroying the Pier’s structure.   It is one of the reasons why eventually Penzance Harbour might be declared unsuitable for passenger ferry operations.  It is difficult to justify long term investment in terminal facilities and not address this issue.

o        The freight facilities are inadequate and keeping them in the harbour has proved controversial.  The IOSSC does not want an out of town freight handling area because it adds costs and they need to trim costs to the bone to be able to finance their own replacement vessels.

 

Alternative Vessel Project

 The Ministers reference to help with a simpler less expensive transport solution is likely to stem from the financial assessment of the IOSSC.  The  DfT is likely to have concluded that ~£10 million in borrowing for replacement vessels was impossible for the IOSSC to sustain.  The reference to give “priority to considering funding” may just be a ‘bone’‘ thrown to the IOSSC to encourage them.  The IOSSC Chairman has been quoted as stating that the IOSSC should be given a grant as happened in the past.  Such help would be very difficult to deliver for the following reasons:

·         One-off subs to private companies without competition are not allowed under EU public procurement rules.  This was why the last plan involved the vessel being owned by the public and operators having to compete to operate it for 12 years at a time.

·         Any new transport (vessel) solution would have to involve a publicly owned vessel and a competition to operate it.  This is not what the IOSSC is looking for.

·         Working up a new ‘transport’ solution requires substantial project management funds.  No offer to fund these costs has been made and Cornwall Council has indicated it does not want to get its fingers burnt twice.

·         Two vessel solutions have not proved to be sustainable in the long term.   Any plan involving the public funding one of the two vessels will be risky financially.

  

Priorities for Penzance Harbour.

Whilst there is no harm, and possibly a lot to be gained, in developing a phased plan for the regeneration of Penzance Harbour the first priority would logically be essential harbour repairs and improvements needed to maintain the ferry link.  This is a area where IOSSC and Cornwall Council need to cooperate closely and urgently now that Govt funding is not forthcoming.

Any plan to work up a multi-million pound harbour regeneration project needs to carefully consider who is going to fund it  and the likelihood of funding being received  otherwise scarce resources could be squandered. 

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