1. Scottish Ferries Review Economic Work Package Presentation to Steering Group – 8 July 2009 Tony Jarvis Highlands and Islands Enterprise

2. Scottish Ferries Review Economic Work Package Contents 1.Purpose & key tasks 2.Progress to date 3.Key findings from consultations with coach and tour operators 4.Key findings from economic overview report 5.Next steps Scottish Ferries Review Steering Group – 8 July 2009

3. Purpose Main purpose of the economic work package is taken from the Scottish Government’s ‘High-level Scoping Paper’: ‘Identify where changes and improvements to ferry services can enable the creation of dynamic and growing economies for our island and remote rural communities.’ Requirement to identify how changes to ferry services will: a) Contribute to Scotland’s economic growth b) Reduce economic disadvantage. Scottish Ferries Review Economic Work Package Scottish Ferries Review Steering Group – 8 July 2009

4. Key Tasks 1.Evaluate the current and future economic prospects of the islands / areas served by the ferry network (i.e. identify a baseline and future trends) 2.Assess how far the characteristics of existing ferry provision serve to either support economic development or contribute to challenges faced by these communities. 3.Suggest changes / improvements to ferry services that will best support economic development of these communities. 4.Assess the economic impact of the full range of service options considered in the Ferries Review. 5.Work in tandem with other work packages to achieve the above! Scottish Ferries Review Economic Work Package Scottish Ferries Review Steering Group – 8 July 2009

5. 1.Assessment Framework Paper – March 2009  Set out framework for identifying islands / areas served by the ferry network with either the greatest potential to contribute to Scotland’s economic growth or the greatest economic challenges / disadvantage.  Identified measures and possible data sources upon which assessment will be based. 2.Baseline area analysis – draft report – June 2009.  Presents the baseline analysis of the existing economic position in the islands / areas served by the ferry network  Significant challenge represented by lack of data for many small islands / areas. Progress to date (1) Scottish Ferries Review Economic Work Package Scottish Ferries Review Steering Group – 8 July 2009

6. 3.Future Analysis – draft report – June 2009  Considers possible future population and economic trends in the islands / areas included in the review.  Very few published forecasts or these not sufficiently robust for areas concerned, so reliance upon consultations with economic development professionals (including HIE and local authorities), plus recent population / migration studies produced for Orkney, Outer Hebrides and Shetland. 4.Overview – draft report – July 2009  Uses analysis in 2 & 3 to identify islands / areas with greatest potential to contribute to Scotland’s economic growth and/or greatest challenges / disadvantage. Progress to date (2) Scottish Ferries Review Economic Work Package Scottish Ferries Review Steering Group – 8 July 2009

7. 5.Business survey  Web-based survey open to all businesses who use or otherwise rely upon ferry services. Ran from 19 May to 30 June 2009.  Approx 470 responses, although not all questions answered by each respondent.  Data currently being analysed by SG Transport Analytical Services. 6.Consultations with coach and tour operators – draft report – June 2009 Progress to date (3) Scottish Ferries Review Economic Work Package Scottish Ferries Review Steering Group – 8 July 2009

8. 11 companies interviewed:  2 based in Highlands & Islands, 8 in Scotland, 1 in England  6 operate coach tours, 2 offer self-drive packages, 3 offer both.  Most operate large coaches seating 48-59 passengers, but some operate smaller mini-coaches seating around 16 passengers.  Almost all tours start and end outside Highlands and Islands. Most popular ferry routes used:  Oban-Craignure, Ullapool-Stornoway, Mainland-Skye (8)  Mainland-Orkney (7), Ardrossan-Brodick (6)  Fionnphort-Iona, Uig-Tarbert (5)  Kennacraig-Islay (4), Colintraive-Rhubodach (3) Operator profile Scottish Ferries Review Coach and tour operators Scottish Ferries Review Steering Group – 8 July 2009

9. 1.Operators generally satisfied with current ferry services. Some mixed views on existing fare levels & structure. 2.Operators particularly value predictability and reliability, including timetables & fares being fixed well in advance, and sailing times on a route being the same each day. 3.Little evidence of visitor traffic being deterred by ferry services. On some routes, specific constraints relate to fare levels and limited ability of small ferries to convey coaches. 4.Other key constraints for operators are cost, quality and availability of accommodation and places to eat and drink. 5.Underlying growth in demand to islands / areas served by ferry network – mainly concentrated in more established destinations + growing interest in tours by public transport. 6.Limited scope to stimulate additional winter traffic, unless fares are dramatically reduced. Summary of key findings Scottish Ferries Review Coach and tour operators Scottish Ferries Review Steering Group – 8 July 2009

10.  Based on data / trends identified in the economic baseline and future analysis reports.  Identifies islands / areas with greatest potential to contribute to Scotland’s economic growth and/or greatest economic challenges / disadvantage.  Lack of data in many cases makes quantified scoring or ranking inappropriate; assessment takes account of all available information.  Categories not exclusive – i.e. lack of inclusion in either category does not imply that areas have no potential or do not face economic / demographic challenges.  Does not draw any conclusions regarding role of ferry services in supporting economic growth / addressing challenges – this is next stage.  Findings subject to internal and external review. Content Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

11.  Arran – key strengths in tourism and food & drink, scale of economy, consistent population growth since 1971, good age profile.  Islay – key strengths in tourism and food & drink, plus potential in offshore renewables and contact centres, scale of economy, stable population levels since 2001, good age profile.  Mull – key strengths in tourism and food & drink, scale of economy, significant population growth since 1971 and 2001, good age profile.  Tiree – smaller economy and population decline since 1971, but increased activity in tourism and food & drink, population growth since 2001, + potential growth in tourism and planned major offshore renewables project. Islands / areas with greatest economic potential (1) Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

12.  Skye – key strengths in tourism, food & drink and creative industries, good number of UHI-registered HE students, scale of economy, consistent population growth since 1971, good age profile.  Orkney mainland – key strengths in food & drink, energy, tourism and creative industries, good location for future inward investment, high number of UHI-registered HE students, scale of economy, population growth since 1971 and 2001, good age profile, GRO(S) forecast population growth.  Shetland mainland – key strengths in food & drink, energy, creative industries and tourism, high proportion of companies of scale, good location for future inward investment, high level of export activity, high number of UHI-registered HE students, high educational attainment / workforce qualifications, scale of economy, population growth since 1971, very good age profile. Islands / areas with greatest economic potential (2) Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

13.  Colonsay, Lismore – narrow economic base / lack of economic activity, significant population decline 1971-2001, old age profile, low household income, identified as fragile in consultations.  Small Isles (Canna, Rum, Eigg, Muck) – less than 100 inhabitants per island, population decline 1971-2001, very low household income, identified as fragile in consultations.  Harris & Scalpay – some strengths in tourism and food & drink – but consistent and high population decline since 1971, old age profile, relatively high unemployment rate, low household income, perceived low level of entrepreneurialism, dependence on public sector employment, identified as fragile in consultations and area of further population decline.  South Uist & Eriskay – some strengths in tourism, food and drink, plus above average household income – but consistent and high population decline since 1971, good age profile but forecast to get older, relatively high long term unemployment, identified as fragile in consultations and area of further population decline. Islands / areas facing greatest challenges (1) Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

14.  Eday – narrow economic profile, significant population decline 1971-2001, low household income, identified as fragile in consultations, defined as an ‘unsustainable’ community in Orkney Population Change Study.  Flotta – narrow economic profile, less than 100 inhabitants, old age profile, very low household income, identified as fragile in consultations, defined as an ‘unsustainable’ community in Orkney Population Change Study.  North Ronaldsay – narrow economic profile, less than 100 inhabitants, consistent and high population decline 1971-2001, old age profile, very low household income, identified as fragile in consultations, defined as an ‘unsustainable’ community in Orkney Population Change Study.  Sanday, Stronsay – narrow economic profile, significant population decline 1971- 2001, good age profile but starting to age, very low household income, identified as fragile in consultations, defined as a ‘threatened’ community in Orkney Population Change Study.  Shapinsay – narrow economic profile, consistent and high population decline 1971- 2001, old age profile, very low household income, identified as fragile in consultations. Islands / areas facing greatest challenges (2) Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

15.  Fetlar – narrow economic profile, less than 100 inhabitants, significant population decline since 2001, old age profile, dependence on public sector employment / lack of private sector activity, identified as fragile in consultations.  Unst – significant population decline since 1971 & 2001, rapidly ageing population profile, identified as fragile in consultations. Islands / areas facing greatest challenges (3) Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

16. Bute  Strengths in financial and business services, tourism, food & drink, scale of economy, above average household income.  Challenges in population declines since 1971 and 2001, ageing population profile, relatively high unemployment, identified as area of potential further population decline. Lewis  Some strengths in food & drink, energy and tourism, plus potential in creative industries, financial & business services, high proportion of companies of scale, good potential for inward investment, relatively high number of UHI registered HE students, high educational attainment, scale of economy, population increase since 2001, young population profile.  Challenges in perceived low level of entrepreneurialism, poor workforce qualifications, low GVA, narrow economic base, dependence on public sector employment, population drift from rural areas, ageing population profile, noticeable unemployment rates. Islands / areas exhibiting both potential and challenges Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

17. The following islands / areas had insufficient data to allow categorisation but further consideration will be given to them:  Graemsay  Egilsay  Wyre  Fair Isle  Foula  Papa Stour  Skerries Islands / areas with insufficient data Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

18. Scottish Ferries Review Economic overview report Scottish Ferries Review Steering Group – 8 July 2009

19. 1.Review / finalise economic baseline, future analysis and overview reports. 2.Paper summarising direct employment patterns / economic impacts of the ferry network. 3.Report assessing current performance of ferry network in supporting economic growth / reducing disadvantage + suggesting changes / improvements to services that will best support economic development. Aim to complete these by end of August 2009. Next steps Scottish Ferries Review Economic work package Scottish Ferries Review Steering Group – 8 July 2009