Let’s have it explained (Leslie Lowes)
According to the current AA tables, the cost of driving a car, including fuel, tyres, maintenance and assuming an average 10,000 miles a year, is about 18 pence per mile.
Readers will note this is considerably less than the 60 pence per mile quoted by the SNP MSP candidate for Shetland, Danus Skene, in reports published by The Shetland Times.
That 60 pence per mile figure includes standing charges, including the depreciation on the value of your car from its original cost allowing for how many miles per year you drive and the as-new cost of your car.
So, using those same AA tables, but just for mileage costs in fuel, tyre wear, maintenance and not inflating it with depreciation and standing charges, the true cost of a journey is much more like 18 pence per mile, not 60 pence per mile. Diesel costs are a fraction less, petrol costs a fraction more, but 18p is a good either/or figure to use.
The distance between Lerwick and Aberdeen is 210 miles, so if I was able to drive my old Swedish Brick over the sea to Aberdeen, my travel costs at 18 pence per mile would work out at £37.80. That should be a Road Equivalent Tariff for a car shipped on the ferry to or from Aberdeen and Lerwick.
The cost of shipping a car via NorthLink in 2016 is somewhat higher than that. The cost would be £109 in the “low season” and a staggering £146 in “peak season”, a charge that hardly encourages visitors to bring their cars with them.
The RET charge of £37.80 for a car compared with either £109 or £146 is a no brainer.
I have not included any fares for driver or passenger. That is because when I drive my car somewhere, I go along free of charge and I don’t charge my passengers for the privilege either.
However, on the boat we are travelling overnight, so on top of the car fare in 2016 we might choose to pay a further £23 minimum, each, for a berth in a shared four-berth cabin, more in peak time at £36.50 in peak season.
Alternatively you could take a reclining seat for £3.50 or a sleeping pod for just £18. However, you choose to spend the night, you could still travel at more affordable rates than we can now.
The Scottish government should either be looking again and urgently, at how it plans to introduce RET to the Shetland ferry service to slash the charges that are currently making travel to and from Shetland so expensive and rising every year.
Or it can explain why Shetland (and Orkney) is being discriminated against by omission, when it has introduced RET to the islands of the west coast of Scotland – but not here.
Leslie Lowes
Kirkidale,
Walls.
Erik Smith
I looked into this a few years ago when the subject came up on Shetlink. The reason for the 60p/mile figure is that the AA assume that the value of a car depreciates to zero after 4 years. This is obviously ludicrous, but it’s the figure the Scottish Gov are using. If you recalculate using a more reasonable figure like 10 years then you get a figure closer to 30p/mile.
You can find the debate at the link below. I was posting as ArabiaTerra.
https://www.shetlink.com/index.php?/topic/49-the-north-boat-northlink-ferries/page-16
Leslie Lowes
My Volvo is now 15 years old, so it is well over a decade ago that its milage cost could be anything like 60p a mile! The Scottish government needs to discuss this issue with Orkney and with Shetland. Maybe we should have a Fair Fares campaign for the Scottish government as well as Flybe.
John Tulloch
Excellent letter, Leslie, you’ve exposed the sleight of hand.
iantinkler
Good grief, According to Danus Skene and the SNP, my trips to work and back cost me £150 per wk. If that is the way the SNP cost things out no wonder they screw it up Scotland’s finances so completely. lol, I agree with Les Lowes, a first for everything.
John Tulloch
I doot da Scottish Government is been catched “R.E.T.” a Shetland an Orkney – “Red-handit, Emptyin da Till”! 🙂
Carl Pickard
That is dynamite.
David Spence
The figures Leslie has presented are very interesting indeed.
However, to make greater comparisons, I would like to know how much the running costs are from Lerwick to Aberdeen (as an average) for Serco, and how much the Scottish Office is giving Serco for the same trip.
If this figure could be broken down as an average compared to the number of passengers the boats get per month/year, I am sure it would make interesting reading. I am also pretty sure these figures Serco, could present, as well as the Scottish Office also presenting the monies given to Serco, as an incentive, sorry, I meant subsidy. lol
Robin Stevenson
Firstly, could we please ask why Tavish Scott did absolutely nothing to bring down ferry fares for people in the Northern Isles while he was transport minister?
Secondly, It is only until such times that the grossly inefficient 2005 Northlink contract [negotiated by the Labour/Lib Dem] is replaced, will we then realize the true worth of the Scottish Government subsidy. and savings passed on to passengers, rather than spending fortunes on the duff financial leasing arrangement with the Royal Bank, compliments of Mr Scott’s Lib/Dems and their coalition pals [Lab]
Thirdly, could we ask, IF the Scottish Government decided to abolish [completely] its subsidy to Northlink ferries and introduced just the RET, just how much would you expect to gain/lose?
John Tulloch
Robin Stevenson, the price now is nothing to do with Tavish Scott, he didn’t bring in RET for one lot and deny it to the others. That’s what this is about – the SNP being caught “RET” – “Red-handed, Emptying the Till”!
Gordon Harmer
Leslie Lowes, has hit the nail right on top of its head; in the next few weeks we can expect Derek Mackay to make a statement that the Scottish government is looking at R.E.T. for Orkney and Shetland. They will come up with some magically revised figures which will suddenly mean reduced fares to the Northern Isles. A confidence trick which will end in a bribe to vote SNP next May; an extension to the carrot we have just been baited with on the ADS scheme.
Robin Stevenson
By that logic no matter what the Scottish Government offer it’ll be seen as a bribe to you then Gordon? in other words, they’re damned if they do and damned if they don’t?
As ever, seems fair?
Gordon Harmer
It is a transparent game Robin, so see through anyone who does not see what is coming is either blind or does not want to see it. Derek Mackay has been saying R.E.T. will increase fares to Shetland but Leslie Lowes has blown the lid of that untruth. So we now know what will come next; Derek Mackay will borrow John Swinney’s abacus and as I said a magic SNP formula will be pulled out of the top hat and hey presto, lower ferry fares. Oh and thanks for your so very predictable reply 😉
Robin Stevenson
In that case Gordon, based on what you see as utterly predictable, perhaps the SNP should just do the opposite of what both you and Tavish are accusing them of? Abolish the ADS and no longer subsidise Northlink ferries? That way, at least, neither of you can accuse them of trying to “buy your votes?”…Just think!..People will stop you in the street to shake your hand and thank you for your…erm…[somewhat expensive] insight? 🙂
Gordon Harmer
If there was not an election looming the opposite is probably just what the SNP would do Robin. Leslie has opened a whole can of worms here which you cannot manage to spin back into their can; 60p a mile, if that was anywhere near right my wife could not afford to travel to her work daily to Lerwick. How about when Mr Mackay does reduce the ferry fares he back dates it, lets say to the day when you central mainland commuters were first given free passage over the Forth road bridge, as a gesture of fairness.
iantinkler
Simple fact Robin Stevenson, The SG/SNP offer absolutely nothing to Shetland And have done for eight long years, only cuts, until there is an election pending, then with great fanfare, a few crumbs and an ex Etonian, ex Labour, ex Liberal, Danus the man, is thrown at us. we are so lucky!!
Brian Smith
It sounds like Wir Shetland will be opposing the improvement in ADS /as well as/ any reduction in ferry fares.
Ali Inkster
Why Brian?
Leslie Lowes
I have done some googling to discover what mileage rate MSPs receive to reimburse their travel costs.
The going rate seems to be a lot lower than the 60p per mile Danus Skene says is the rate used to calculate Road Equivalent Tariff mileage, making RET uneconomical for Orkney and Shetland.
MSP Motor Mileage:
£0.45p per mile for first 10,100 miles and 25p per mile thereafter
Motor Cycle:
0.24p per mile
Pedal Cycle:
£0.20p per mile
Rather less then 60p a mile!
Source:
http://www.scottish.parliament.uk/abouttheparliament/17156.aspx
Johan Adamson
That is the usual rates with no profit included (for tax). But these rates have not risen for a number of years.
Ian Kinniburgh
The AA publish a table setting out the full cost of owning and running a car.
Expressed in cost per mile it varies for a petrol car from a low figure of 25p to a high figure of 211p per mile depending upon a combination of annual mileage and iniitial purchase price depreciated over what seems to be approx a 10 year period.
This is made up of the standing costs or fixed costs of owning the car and the running costs.
The figures I quote were from 2014
John Tulloch
@Ian Kinniburgh,
People buy cars because they need them, day-to-day, not to take them on the Nort Boat. So they have paid for them, already.
Accountants will tell you that the capital cost of a car and related fixed costs are what they term “sunk costs” – once incurred they cannot be recovered. If I have a car and wish to drive from Lerwick to Sumburgh and back, those costs are now irrelevant to my decision on whether to travel by car or public transport.
The cost of my trip to Sumburgh will incur only costs related to the actual mileage travelled in the car i.e. fuel, mileage-related servicing, etc. – accountants refer to these as “marginal costs” and they are the only ones relevant to my decision.
Leslie Lowes
But depreciation costs are irrelevant in costing a journey. When you have bought a car, you own it, no matter what the level of depreciation is. It appears that depreciation cost has been used by the Scottish government to inflate the cost per mile for Road Equivalent Tariff and make it appear uneconomical for Orkney and Shetland. Its an accounting trick and it is rubbish! Give us fair fares! Now!
Robin Stevenson
Leslie
As I’m sure you’re aware Shetland Northlink ferries receive the highest subsidy of ANY ferry service in Scotland, once we subtract the Scottish subsidy off, [the normal fare], and then apply RET instead, how much would you be saving? Or how much more would it cost for your journey?
Ali Inkster
Oh dear Wrobin, I will point you to figures 5 and 6 in the link.
http://www.gov.scot/Publications/2010/06/17134718/3
Johan Adamson
Robin, should Shetlanders pay higher fares than the rest of Scotland because, as you say above:
“As I’m sure you’re aware Shetland Northlink ferries receive the highest subsidy of ANY ferry service in Scotland”
Gordon Harmer
Ian Kinniburgh, seems to be quoting somewhat selectively from the AAs figures, looking at those same figures
http://www.theaa.com/resources/Documents/pdf/motoring-advice/running-costs/diesel2014.pdf
I would say the average cost per mile is about half of what the SNP government have worked out.
Leslie LOwes
@Robin Stevenson
I think it was the Norwegians who introduced the idea of Road Equivalent Tariff, as they have many long sea journeys that would be impossible to drive as there are no roads. Road Equivalent Tariff is a means of costing a sea journey as if it was a road journey.
Any subsidy paid to the shipping company is irrelevant in reaching an equitable charge to take a car to Aberdeen by ship. It may well cost more than the RET income provides, to operate the shipping service, but whatever that shortfall may be, that would have to be the subsidy paid out by the government to the shipping company. Notice, that the subsidy is to meet the shortfall between RET and actual operating cost. You cannot calculate RET by saying here is the subsidy, now how much do we need to charge per car to cover the gap. The result would not be RET calculating that way. the secret is in the name of the system. Road Equivalent Tariff. The equivalent cost of going by road, applied to going by sea. Now, when can we expect to get fairer fares?
iantinkler
“As I’m sure you’re aware Shetland Northlink ferries receive the highest subsidy of ANY ferry service in Scotland,” Robin Stevenson, does any ferry service in Scotland charge half as much as Northlink? Enlighten us please, you seem to be the non local SNP mouthpiece here. Incidentally have you ever been on these boats? Tried the food?
LESLIE LOWES
@Robin Stevenson
The Norwegians invented Road Equivalent Tariff as a means of costing transport by sea where there were no roads available. It follows that you cannot calculate an RET based on how much subsidy has been paid and what remains to be covered by the farepayer. You have to start by assessing what a fair RET for the journey will be. Any shortfall between that and the operating cost of the service needs to be met by subsidy. However you have to decide what the RET rate should be in the first place and then work out the rest, not the other way round!
We need fairer fares and we need them now. The cost of travelling from Lerwick to Aberdeen is crippling families. For a holiday for four adults and a car it cost me almost £600 to get to Aberdeen and back in September. If you had to pay £600 to get to the airport just to go on holiday you might have a clearer picture of the costs Shetland families are having to meet on the ferries to Scotland.
Ian Kinniburgh
Not at all Gordon….. http://www.theaa.com/motoring_advice/running_costs/ is the table I quoted from although I happened to look at petrol rather than diesel.
I do however think the cost of buying a car is a real cost especially for the many who use finance agreements and pay monthly throughout the period of ownership.
Personally however, I am disappointed we are ending up in a RET arguement which is about creating a notional pricing structure that reinforces the disadvantage we face due to remoteness. I would have preferred to see a single fare structure for travelling from the three Island communities to the mainland which would level the playing field and make it the same cost to travel across to the Western Isles, Orkney and Shetland for business, tourism or Islanders. If the service is subsidised then the subsidy should be creatively applied to promote equity.
Gordon Harmer
What ever system is used it should equate to what other people in Scotland pay to travel i.e. free passage over Scottish bridges which used to be toll bridges such as the Forth. I disagree that the cost of a car should be part of the equation as this would be totally unfair to anyone who is on the breadline. I remember some years ago I used to buy a car from the auctions for £50, £60 with a full MOT and run that car for a year before going back to the auction and doing the same for another year. For me to have the average cost of what some wealthy person paid for their BMW or Merc etc added on to RET or what ever system was used would be wrong. Where ever we live in Scotland the cost of travel over bridges, tunnels, ferry and inter island ferry should be the same, not free for some and extortionate for others.