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It’s been a year of reckoning

We’ve all been counting up the cost of the bankers’ recession, which shows every sign of going on and on. The bankers and the tax avoidance companies are finally being made to pay for their misdeeds. So too are the press. European leaders have been counting up the cost of the crisis in the euro-zone.

The dreadful death-count has continued to rise in the wars in Syria, Afghanistan and Gaza. Climate change has begun to exact its price, with mighty storms and floodings and the wettest summer for 100 years. Scotland is in the countdown to the referendum. The Queen is also in the counting house, reckoning up her 60 years on the throne. And the British Olympians have counted up their 65 medals.

As I look back over my diary, I feel bruised by this tough old year of 2012. It began with the storms of January, the worst for 13 years. The wind blew at over 100 mph on my local Blackford Hill in the centre of Edinburgh. It ended with an icy snap in December, which brought me skidding off my bike, and then another storm which blew in over the harbour walls along the whole east coast. But it is the events in the wider world that have shaken me more.

Where have all the jobs gone ?

Economic growth was virtually non-existent in Britain in 2012. The unemployment rate hovered around 8 per cent all year, with youth unemployment at over 20 per cent. And this while the number of part-timers has risen to a quarter of the workforce and hundreds of thousands have given up looking for work altogether. Average wage rises are well below inflation, 1.4 per cent compared to inflation at around 3 per cent. So consumer spending, especially in Scotland, is down, leading to even less growth in the economy.

The Chancellor’s budget in March did little to change this. In fact, it became known as the “omni-shambles” with u-turns becoming necessary on the pasty tax, the charities tax, and the caravan tax. But there was no turning on the 5 per cent cut in income tax for the highest earners. By the time he came to his autumn statement in December, George Osborne had to admit that national debt was rising, not falling, and that his austerity programme of public sector cuts would have to continue until 2018.

To be seen to be doing something to get the economy growing again, he announced an extra £5 billion of capital spending over the next two years. £330m of that is coming to the Scottish government for new schools, road improvements and house-building.

In the euro-zone, things are even worse. Growth in 2012 is expected to be minus 0.4 per cent. Unemployment is over 11 per cent. In Greece and Spain it’s over 25 per cent. They’ve had to be bailed out, along with Portugal and Ireland, by the European Central bank. The row over whether the European Union budget should be one for growth or austerity has led to increasing calls in Britain for a referendum on our continued membership of the EU.

Bashing the bankers

The banking year began with Fred “the shred” Goodwin having his knighthood taken away by the Queen for his disservices to banking. Stephen Hester, the new man at the Royal Bank of Scotland, was forced by public opinion to forgo his bonus (don’t worry, he still gets a basic salary of £1.2m.) Peter Cummings at HBOS was fined £500,000 for helping to bring the bank to the edge of collapse. Bob Diamond, the quiet American, was forced to quit as chief executive of Barclays Bank when it was caught fiddling the Libor interest rate. And that’s not all the banks have been up to. Alliance and Leicester was fined £7m for mis-selling payment protection insurance. Standard Chartered and Lloyds were fined for sanctions-busting. HSBC was fined for money laundering.

No wonder, the government is tightening up the regulations and bringing in a Canadian Mountie Mark Carney to police the Bank of England and wake it from its slumbers.

Blaming the press

Lord Leveson spent much of the year listening to tales of misbehaviour by the press. Milly Dowler’s parents had indeed a dreadful tale to tell. A parade of celebrities said they too had suffered press intrusion. The inquiry found that reporting by elements of the press had been “reckless and outrageous” and it recommended a strengthened press complaints council, backed up by new legislation. It seems to me, as a humble journalist myself, that Lord Leveson overlooked the fact that the main culprit, the News of the World, has been shut down and two of its editors are facing criminal charges. Phone-hacking is already illegal, so is bribing the police. And he appeared to forget that it was a newspaper, The Guardian, which broke the story that Milly Dowler’s phone had been hacked in the first place.

And it wasn’t a good year for the broadcasters either. The BBC got caught up in the Jimmy Savile scandal. And both the BBC and ITV had to apologise and pay damages for wrongly suggesting that “a senior Conservative of the Thatcher era” was guilty of child abuse.

A year is a long time in politics

The SNP chose Burns Day, of course, to published their white paper on an independence referendum. It suggested the vote should take place sometime in the autumn of 2014 and that the Scottish Parliament should determine the question, or questions, and that 16 and 17 year-olds should be allow to vote. After several months of wrangling, a deal was signed on 15th October in Edinburgh in which David Cameron promised to introduce legislation at Westminster giving the referendum protection against legal challenges, in exchange for Alex Salmond agreeing to have just one question – independence yes or no ?

The “devo-plus” campaign, launched in February, was disappointed that the option trending best in the opinion polls – more devolution – was not being put on the ballot paper. The Yes campaign was duly launched in May and the first march and rally was held in Edinburgh in September. The No campaign, preferring to be called the Better Together campaign, was launched by the three main opposition parties in June.

All things political in Scotland are now seen through the prism of potential independence. In the local council elections in May, for instance, the SNP emerged as the largest party, winning 424 seats to Labour’s 394. It is now involved in running 13 of Scotland’s 32 districts.

At Westminster more cracks in the coalition have emerged. The Liberal Democrats are unhappy with the Conservatives over Europe, the welfare reforms and the NHS. Nick Clegg even insisted on making a separate speech from the Prime Minister on the Leveson inquiry. But the Liberal Democrats have gone along with the Chancellor’s austerity programme and his tax cuts for the rich, in exchange for lifting low-earners out of income tax altogether.

Abroad, France turned decisively left, electing a Socialist president. In Russia, Vladimir Putin won a third presidential term, claiming 64 per cent of the vote. The United States saw its most expensive and divisive election campaign ever. In contrast, Xi Jinping walked stiffly onto the stage at the Chinese Communist Party Congress in Beijing and was declared supreme leader of over a billion people.

In Japan, the chaos caused by the tsunami has scared the voters back to the old regime. And in the emerging democracies in the Middle East there’s a cauldron of tribal, Islamic and secular parties and no one knows which will finally bubble to the top.

War and peace

The civil war in Syria has now claimed the lives of 40,000 people. The West has been forced to stand by and watch as the Assad regime clings to power and pounds rebel areas with heavy artillery and aircraft fire. The UN has been unable to act because Russia and China have vetoed any direct intervention, for reasons which are still unclear.

But Syria is only one of a dozen major conflicts which have been raging this year, each one causing more than a thousand deaths – in Burma, Afghanistan, NW Pakistan, Iraq, Somalia, Yemen, Sudan, Libya, Mali and the drug war in Mexico.

In Afghanistan, more than 3,000 people have been killed this year, 44 of them British soldiers including Captain Walter Barrie (right). It brings the total number of British troops killed in the 12 year-long-war against the Taliban to 438. This year there’s been a dramatic rise in the number of insider attacks by Afghan army and police recruits on Western soldiers sent there to train them. These so-called “green on blue” attacks now constitute 15 per cent of all foreign troop deaths. The latest Scottish soldier to die in this way was Captain Walter Barrie from Glasgow. He was shot dead after a friendly football match with Afghan troops on Remembrance Sunday.

On the peace side of the equation there is not much to report. But Israel did conclude a peace agreement of sorts with Hamas in the Gaza strip. There are talks going on between the government of Sudan and some elements of the rebel fighters in Darfur. And the Colombian government has begun talks with the Farc rebels to bring an end to a conflict that has cost 600,000 lives since it began in the 1960s.

It was the Norwegians who brought the two sides together. And it was again the Norwegians who decided that this year’s Nobel Peace Prize should go to the European Union for keeping the peace in Europe since the Second World War (except, of course, for the conflicts in the former Yugoslavia).

Shocking and inexplicable events

What possessed the captain of the Costa Concordia to take his cruise ship so close to the Italian coast on the night of 13th January ? Although 4,000 passengers and crew were rescued, 32 died. What caused the driver of a Belgian school coach to crash inside a tunnel in the Alps on the way to an Easter ski-ing holiday ? Twenty two children and six adults were killed. What secrets did the Lockerbie bomber Abdelbassset al Megrahi take to his grave when he died at the end of May ? Why were two policewomen shot dead when all they did was attend a routine call at a house in Manchester ? Why was the al-Hilli family gunned down on a remote road in the French Alps ? And how was the school shooting in Newtown Connecticut allowed to happen ?

Another bad year for the environment

Ice caps melted. Sea levels rose. Storms intensified. Records on rainfall and temperatures were broken. CO2 emissions grew. Fewer birds flew. And still the politicians did nothing much about it.

According to a study in the journal Science, ice melting in the Arctic and Antarctic has caused an 11mm rise in sea levels across the globe in the last 20 years. Arctic sea ice is less than half what it was 40 years ago. And although there has been a pause in global temperature rises, CO2 emission are still rising by 3 per cent a year, according to researchers in the Netherlands where sea level rises matter rather a lot.

Britain had its wettest summer for a hundred years. The United States had its warmest year since records began in 1895. Globally, it was the 9th warmest year on record. Hurricane Sandy struck the Caribbean and the eastern seaboard of America in November and caused over a hundred deaths. It was closely followed by typhoon Bopha in the Philippines which killed over 900 people.

Here in Scotland, over a hundred homes were flooded in the village of Comrie in Perthshire. There was flooding too in the Borders and in Dumfries. In Aberdeen, strange brown/white foam whipped up by the worst September storm for 30 years blanketed the seafront. Then in December, the east coast was swamped again by high tides and stormy seas. The changing climate has brought sea bird numbers tumbling. According to Scottish Natural Heritage, the number of breeding birds has dropped by half in the last 25 years. This year saw continued declines in the number of kittiwakes, fulmars and arctic terns.

The Scottish government missed its interim target for cutting CO2 emissions. It abandoned its new energy efficiency standards for new homes. And yet the environment minister Paul Wheelhouse set out for the UN Climate Change Conference in Doha saying Scotland would be catching up and meeting its world-beating emissions reduction target of 42 per cent by 2020. He doesn’t have much competition, since the 197 countries represented at Doha could only agree on postponing the targets fixed in Kyoto from 2015 to 2020.

The achievements of 2012

The Queen has had a remarkably successful Jubilee year, touring the countries of her United Kingdom, attending everything from pop concerts to cathedral services. And who can forget her standing for four hours in the rain while a flotilla of boats paraded up the Thames ? And it looks like her succession is assured with the Royal Wedding at the end of April and now a great-grandchild on the way.

The London Olympics were another remarkable triumph. As team GB accumulated the medals, it dawned on us Scots that we are quite a sporting nation afterall. We won seven gold medals. Sir Chris Hoy won two of them in cycling. Andy Murray won a gold in London and went on to win the US tennis open championship in New York. The rowers Katherine Grainger and Heather Stanning both won gold. And also on the water Tim Baillie took a gold medal in the canoeing. Finally Scott Brush from the Borders helped Britain win the team event in the horse jumping.

In other sports, Scotland has not done so well. In rugby, we have had a disastrous year, falling to 12th place in the world rankings. Eve Muirhead’s ladies curling team just failed to hold on to their gold medal at the top of the European league, losing out to Russia in the final extra “end”. And in football, we came bottom of our group in the World Cup qualifying rounds.

Celtic, though, have done us proud by winning a place in the final round of the European champions league – beating the mighty Barcelona on the way. It didn’t matter they were held to a draw by St Johnstone the following week.

Rangers meanwhile have had an “annus horribilis” being forced into administration in February over a huge tax bill. Ironically, when it came to court, the tax authorities lost the case but everyone realised the taxman had won a moral victory and that Rangers had been indulging in a tax avoidance scheme which, while it may have been legal, was unfair. The club was demoted to the third division. But it has been reborn under a new owner Charles Green. It has attracted £20m of new investment and is winning its games, hoping to be back in the premier league before too long.

But looking beyond our small world, one of man’s great achievements this year has been to land another spacecraft on Mars. The car-sized “Curiosity” landed in the Gale Crater at 6.14 BST on 6th August, after a 350m mile journey lasting eight months. One of the first areas it explored was Glenelg, now twinned with the Highland village of the same name.

Also leaving the Earth this year were two other space explorers, Neil Armstrong, the first man on the Moon, and Sir Patrick Moore, the eccentric Englishman who presented “The Sky at Night” for over 50 years. He would have enjoyed one of the last achievements of 2012, the discovery, by astronomers at Edinburgh University, of a new galaxy out on the very edge of the universe. The exciting thing about Galaxy UDFj- 39546284 is that it was formed very soon after the big bang 13 billion years ago and it apparently shows us that our universe rolled out from the central bang in a fairly orderly fashion and not in one instant outburst, but rather like one of those spectacular mortar-style fireworks on Hogmanay.

And so we enter a new year, reckoning that we have learnt the lessons of the old one.

Murrayfield <em>Picture: Stanley Howe</em>

Murrayfield Picture: Stanley Howe

So farewell then, Gordon McKie, chief executive of the Scottish Rugby Union, the latest casualty of Scottish rugby’s inability to make a success of the professional game.

McKie was brought in to the SRU in 2005 at a time of absolute crisis. It is difficult to underestimate just how bad the governance of the game was at that time, but Ian McGeechan gives some indication of the scale of the problems in his autobiography when he suggests that the international board was worried, seriously worried, that the SRU might go under, so deep were the financial holes at Murrayfield.

An astute financial manager, McKie was brought in – on the strong advice of bankers HBoS – to sort out the SRU’s finances: and he did so.

The debt was around £20 million at that stage and heading further and further into the red. McKie stabilised the budget, then brought the debt down to its current level where it bobbles around an apparently manageable £15 million.

So let’s be clear, McKie did what he had been brought in to do: he saved Scottish rugby or, rather, he saved the governance structures, the organisation of the SRU and the national stadium.

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But it has slowly dawned on all those involved in the game that McKie hasn’t managed to save the game itself. Despite the odd highlight – Edinburgh’s Magners League second place two years ago being one – Scotland’s two professional teams are still languishing near the bottom of the league and have failed, pretty much universally, to make any impression in Europe.

The national team, despite promising much, recorded just one win in this year’s Six Nations – and that was over Italy at home – the same number of victories it recorded the year before.

Playing numbers are up, particularly among the young. The schools and youth competitions are successful, the national (largely amateur) leagues seem to have settled down well – but where it matters, in the shop window of Scottish rugby, the story is depressingly familiar.

Crowds for Edinburgh and Glasgow games are stubbornly low, and the national team record the occasional success but generally struggle to compete with teams like Wales, Ireland and England.

This appears to be what has, at last, caused McKie’s downfall. Everybody in the game was grateful that he rescued the organisation behind the sport when he did, but they all want – need – to see more success on the pitch to rival the stability and financial competence that is now a part of the fabric off the pitch.

But read some of the strings of comments about McKie’s resignation or the blogs or the tweets and you will detect a fear that those who got the game into such a mess six and seven years ago may return to wreak the same damage all over again.

Back in 2005, when the SRU was in turmoil, I heard a report – which I have never been able to verify absolutely, but it did come from a very reputable source – of one “blazer”, and a very senior “blazer” at that, who was asked about the prospect of putting more rock concerts on at Murrayfield to raise some much-needed cash.

“Oh no,” he was reported to have said. “We don’t want any of that sort of thing at Murrayfield.”

If that was indeed the attitude among some then, thankfully McKie has turned that around: witness Bon Jovi and Kings of Leon playing at the stadium later this year (if only there were more…).

But there is a fear that those who know about rugby don’t know about money, and those who know about money don’t understand rugby.

That is why the appointment of a replacement for McKie is so important. The SRU has the chance to find that person – somebody who has, say, McKie’s financial acumen and Andy Irvine’s rugby brain, someone who knows how the union is going to thrive off the pitch but who also understands instinctively what it needs to thrive on the pitch too.

The name of John Steele has already been mentioned. A former London Scottish coach, Steele was fired at the end of last week from the chief executive’s role at Twickenham.

He would undoubtedly find Murrayfield a step down from Twickenham, he would have less to work with and the problems are certainly greater – but, given the path that Andy Robinson has pioneered (from RFU reject to Scottish Rugby saviour) then maybe Steele wouldn’t be too bad a choice.

Whoever gets the job, though, has to loosen the purse strings just a little. Edinburgh and Glasgow need greater resources. They need to be able to compete, regularly, against their Irish and Welsh counterparts. If they do, the crowds will build – but that takes money, money to hold on to existing stars and money to import some battle-hardened veterans from the southern hemisphere.

Just take Edinburgh’s Heineken Cup match at Murrayfield last year against Northampton as an example. Edinburgh played some exquisite rugby but were ultimately blown away by a Northampton pack based on the biggest, meanest southern hemisphere props the club could buy in – and Northampton went on to the final.

The new SRU chief executive needs to build bridges (financial ones if need be) with London Scottish. As a club in the English second tier competition, London Scottish will get £350,000 this year – but only if 14 of their match-day 22 are English qualified. The SRU should trump that and give £400,000 to London Scottish if 14 of their match day 22 are Scottish qualified. That would give Scottish players vital exposure to a league which is close to, if not at times better than, the Celtic League.

They should also use London Scottish to give game time to under-played Scottish hopefuls. Look at what’s going to happen at Glasgow this year? The Warriors have three of the country’s top young fly-halves on their books.

Ruaridh Jackson is going to the World Cup, so Duncan Weir will get game time, but probably only until Jackson comes back. And, as for Scott Wight, the successful number ten brought in from Melrose, all he can expect is the occasional appearance from the subs’ bench, deputising for one of the two in front of him.

Wouldn’t it be better to farm Wight out to London Scottish, where he could get proper game time at a standard probably just as high as the Celtic League?

And if the two pro teams are under the SRU’s control, as the SRU maintain, then what the hell happened to allow Glasgow to have the three best young fly-halves in Scotland while Edinburgh have none?

That is not a criticism directed at the SRU from Edinburgh’s point of view, but from Scottish rugby’s. Only one of those three will get regular game time, the other two will suffer. Meanwhile, over at Edinburgh, David Blair retired – understandably – his brother Alex was forced out – inexplicably – leaving the capital club with one fly-half recovering from long-term injury (Phil Godman) and another (Greig Laidlaw) deputising in that position when he is really a scrum-half.

If the SRU really controls the two pro teams, then Scotland’s two best fly-halves should be the number one tens at the two clubs, Jackson at one and Weir at the other, and playing week in, week out. Both should have able deputies in Wight at one and Alex Blair at the other, and any other fly-halves should be sent south to London Scottish when there is a surplus to requirements north of the border.

But to take these issues by the scruff of the neck needs a chief executive who understands rugby and understands to need to interfere, if that is for the good of the game, the players and the fans.

McKie did many things well, but this wasn’t one of them. If Scottish rugby is to make a go of the professional game, at last, then this is one quality his successor will have to have.

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<em>Picture: Axel Rouvin</em>

Picture: Axel Rouvin

By Stuart Gibson

Scotland is falling behind in the race to forge a digital communications strategy fit for the 21st century.

Wales, Yorkshire, Birmingham and even Cumbria and Cornwall, as well as comparable countries such as Sweden and New Zealand, are pressing ahead with digital development, while the Scottish Government points to further research before any meaningful decisions are made.

How Scotland will compete in national and international markets, which are increasingly dependent on state of the art electronic infrastructure, is unclear. Equally, there is little detectable urgency in ensuring that we succeed in combating digital exclusion, particularly in rural areas.

First generation broadband policy, which is enshrined in an historic 512Kbps universal service commitment, will just about deliver e-mail and patchy internet access, but it desperately needs updating.

Next generation access (“NGA”) infrastructure will provide much quicker downloading of films, music and broadband delivered television. Fast upstream, as well as downstream speeds, will facilitate complex data, large file transfer and bespoke video applications relevant to SMEs. There are significant savings to be gained in remote care and health provisioning, where Scotland is already an international leader.

This opinion piece is part of The Caledonian Mercury’s ongoing debate about Scotland’s national life and is part of our commitment to raise the level of debate in Scotland. If you or your organisation would like a platform to voice your views then please contact us at [email protected].

We must move quickly to establish a framework strategy, led by a minister appointed solely to concentrate on that task. The “digital Scotland minister” must establish a small team of key stakeholders, representing business leaders, the telecoms sector, local authorities and national agencies to produce a practical digital Scotland framework by the end of 2010.

Central to the plan must be the delivery of NGA or “superfast broadband” infrastructure across the vast majority of Scotland. Reform Scotland, in its latest report, Digital Power, suggests a target of taking fibre to within two miles of all communities of more than 1,000 premises and within 20 miles of smaller communities, using microwave and wireless links.

But the point of a plan and dedicated ministerial leadership, which Wales has had for years, is not just about improving infrastructure. It is about creating an industrial-scale digital economy, optimizing public sector procurement and e-health benefits and developing a training and digital skills programme.

Reform Scotland believes that by 2015 we can substantially deliver on the targets set out within a £200m cost plan, but we must maximise existing fibre deployment and use wireless where practical; the plan must be phased and look to consolidate existing public sector networks and aggregate public sector procurement so that the net bill for government intervention is much less than the total cost.

BT and Virgin Media are building upgraded networks in our major cities, but with a high overlap in essentially the same, commercially viable, locations. There will be no room for altruism and some market intervention will be necessary. The challenge is minimising it and assessing how it is best executed and financed.

Reform Scotland recognises the pressure on public finances and urges a creative examination of funding options, including a broadband PPP model and developing energy and urban regeneration policy alongside broadband policy, in a way which minimises civil engineering costs and maximises access to EU grants and soft loans.

Capital is scarce and hard choices will have to be made. But we need to ask whether, for example, in the context of rapidly growing, global internet based trade, Scotland, located on the edge of Europe, needs a new Forth Bridge crossing more than a modern, fit for purpose electronic network, at a fraction of the cost.

As a first step, the Scottish Government needs to commit to ministerial leadership and get some momentum behind an integrated Digital Scotland plan. The issue is no longer first mover advantage – it is about catching up before we get left behind.

Stuart Gibson is former head of telecoms and media at HBOS and MD of Funded Solutions, a business and banking advisory service.

<em>Picture: Bruce Cowan</em>

Picture: Bruce Cowan

Ministers are considering the effective part-privatisation of the state-owned company behind Scotland’s lifeline ferry services, it emerged today.

They believe such a change to the parent company behind Caledonian MacBrayne could save the taxpayer between £800 million and £1 billion over the next 12 years.

But it would also represent a radical departure for an SNP administration which has been averse to any form of privatisation up until now.

Ministers have been persuaded to examine the proposal in response to the looming cuts to public spending, which will take place over the next few years.

Caledonian MacBrayne runs ferry services to most of Scotland’s west-coast islands. It is wholly state owned and state run and it costs the taxpayer about £100 million a year in subsidies for running costs and another £60 million or so in annual capital costs for new boats and piers.

It is this £60 million a year which ministers believe they can save.

Their plan – revealed in the Times today – would see an end to the current state model.

Caledonian Maritime Assets Limited – the part of ferry operation which owns all the ships and piers – would be turned into a new, private not-for-profit company.

This new entity would be governed by members from island communities and it not be able to make a profit. But it would be a private, rather than a public, company and, as such, it would be able to borrow on the open market.

CMAL needs between £800 million and £1 billion over the next 12 years to fund new ferries and piers. Under the current, state-owned model, this money has to come from the Scottish Government but, under the part-private scheme, it could be raised from the markets – saving the Scottish Government from having to make this investment.

Ministers stressed today that they had no intention of privatising the day-to-day Caledonian MacBrayne ferry operation and this move to possibly part-privatise the holding company behind CalMac was only being considered because of the need to save money.

But the revelation that such a radical change is being considered at all prompted calls from some of the Scottish Government’s critics for a more far-reaching change. Some said they wanted the whole ferry system put out to tender and others said that, if the government accepted this part-privatisation model for ferries, it should do the same for Scottish Water.

However critics on the Left warned that fares and berthing charges could rise as a result. They said the money was only being borrowed by CMAL and it would have to be paid back. That could mean increased charges all round as the new, private, company tried to repay the loans.

The proposal to part-privatise Caledonian Maritime Assets Limited has been included in the Scottish Government’s Ferries Review, which ministers have opened out to public consultation.

The review warned that the status quo – with the company being funded entirely by the Scottish Government – is no longer an option because there is not enough money available to fund all the new boats and infrastructure that CalMac needs.

Instead, ministers suggest a number of options, the most detailed and most likely of which is the proposal to turn CMAL into a not-for-profit private company.

The review states: “If such a company had private sector status it would have the power to borrow commercially.”

Lord Robertson of Port Ellen, the former UK Labour Cabinet Minister, told the Times the Scottish Government was right to look at part-privatising CMAL but it was not being radical enough. He wants the entire CalMac operation examined to see if it can be done better and, if necessary, all the routes opened out to tender.

Lord Robertson lives on Islay so knows what it is like to rely on local ferry services. He is also a non-executive director of Western Ferries, which runs a non-subsidised service between Gourock and Dunoon in competition to the subsidised CalMac operation.

He said: “We have to be radical about how we provide for these island communities. There is no reason why, if the private sector can run a service, why it is not doing it. There is something almost scandalous about the fact that CalMac loses money on every route in Scotland. Some of these are very, very popular and some of these could be run very profitably by other companies.

“It seems ludicrous to keep this monolithic, state-owned monopoly operating almost without limit.”

Jackson Carlaw, for the Tories, said that the Scottish Government’s conversion to part-privatisation should open the door for other, similar, moves.

He said: “Because of the financial pressures, the government is prepared to look at things they have never been prepared to look at before. If they are prepared to look at transferring CMAL to a not-for-profit operation then there is nothing to stop them looking at Scottish Water in the same way.”

The Scottish Government has resisted calls for it to part-privatise, or mutualise, Scottish Water. But the model it is considering for CMAL is similar to one its critics want it to adopt for Scottish Water.

A senior Scottish Government source stressed that the two operations were completely different and just because part-privatisation was being considered for one did not mean it would be considered for another.

The source admitted the CMAL plan was under “serious consideration” but he added: “We will see wait to see what people say in response to the consultation before we make a decision.”

However, critics warned that, if CMAL does become a private entity and borrows money from the markets, it will have to pay that money back and that could mean higher fares, greater berthing fees and increased costs for passengers all round.

Ian Macintyre, the Scotland and Northern Ireland organiser for the RMT union, was adamant that the whole ferry operation should stay “publicly owned and publicly run and publicly accountable”.

“Rather than borrowing money from the markets, wouldn’t it be better for CalMac to borrow from the part-nationalised banks which we own, like RBS and HBOS? That way we could keep investing in the fleet without using the markets,” he said.

<em>Illustration: Sarah Tanat-Jones

Illustration: Sarah Tanat-Jones

The Scottish Council for Voluntary Organisations has launched a people’s petition calling on Lloyds Banking Group to reverse its decision to end its funding to the Lloyds TSB Foundation for Scotland.
It says that charities and community groups from across the country have joined forces over the campaign, arguing that the foundation is facing an uncertain future after the group ended the agreement that guarantees it a share of the bank’s pre-tax profits.
The petitioners claim the bank decided to reduce the proportion of its annual pre-tax profits it awards to its four UK foundations from 1 per cent to 0.5 per cent. The bank cited financial pressures as a result of the recession, and set out plans to appoint senior bank staff as trustees.
The terms were rejected by trustees at the Lloyds TSB Foundation for Scotland. But they were accepted by the other three foundations south of the Border. The bank subsequently told the Scottish foundation it would not receive any more funding after its current covenant expires.

Martin Sime, chief executive of the SCVO, described the decision as “a cynical one, putting the interests of this taxpayer-funded bank before the needs of communities across Scotland”.

In a letter to Sir Win Bischoff, chairman of the Lloyds Banking Group, the SCVO’s convener explained that the organisations that depend on funding from the foundation are already facing serious difficulties. “Increased demand for their services coupled with falling income from both the public sector and private donors means that many will have to cut services or close altogether. Lloyds Banking Group’s decision to terminate the covenant with the foundation puts the interests of the bank before the needs of people and communities across Scotland.”

However, a spokesman for Lloyds Banking Group said that the Scottish Foundation had refused to sit at the negotiating table. Those from England and Wales, Northern Ireland and the Channel Islands had done so and all had accepted the bank’s terms.
He explained that, under the existing covenant, the various foundations should not have received anything, since “we weren’t actually making any profit”. But he added that the group was now a much bigger entity and that even the reduced share of future profits should mean than the foundations receive more than they previously had.
The bank also issued a statement in which it said that “our door remains open” to the Scottish Foundation and that the settlement “would ensure that charities in Scotland receive a stable, secure and growing level of grants which is especially important at a time when charities across the UK face severe funding pressure.”

It went on to confirm that, in the absence of an agreement with the foundation, the bank was establishing an independent Bank of Scotland Foundation which would, in time, become its sole community investment vehicle north of the Border.

The petition was launched on the day Lloyds’ chairman told its AGM that it expects “good earnings momentum over the next years”. The bank returned to profit in the first quarter of the year and was well-positioned for growth as it continues to absorb HBOS, which it bought two years ago.