CalMac ferries - privatisation surely not the answer
On the bright side for Scotland, it was the only one of the 12 UK nations and regions not to suffer a fall in private sector employment in April. This followed four consecutive months of decline in employment north of the Border, although Scotland had recorded the least-sharp fall among the nations and regions in March.
While the stabilisation of private sector employment in Scotland is no reason to be popping champagne corks, it is a good outcome under the circumstances.
Royal Bank said of the private sector employment picture across the UK: 'April saw a near-universal decrease in employment at the start of the second quarter. Furthermore, in most cases, rates of decline quickened from the month before. Labour market conditions showed resilience in Scotland, where headcounts stabilised following four straight months of decline.'
Sebastian Burnside, chief economist of Royal Bank, said: 'As firms look to mitigate rising costs, we've seen average prices charged for goods and services increase at faster rates, as well as a greater focus on workforces. Labour markets in all areas of the UK have felt the impact to some degree in recent months, with only Scotland avoiding a fall in employment in April.'
In terms of business activity in April, there was mixed news for Scotland.
Overall Scottish private sector manufacturing and services activity fell in April, and at a significant pace. That said, the rate of decline decelerated significantly from that in March, which had seen the fastest drop since November 2022.
According to the Royal Bank report, south-west England was the only part of the UK to record growth in overall private sector manufacturing and services activity last month.
Scotland's seasonally adjusted business activity index, which measures the month-on-month change in the combined output of the manufacturing and services sectors, was 47.4 in April, well adrift of the 50 mark deemed to separate expansion from contraction.
However, the latest number was a significant improvement on the March index of 45.9, even if it was well short of the 49 reading for February.
It placed Scotland 10th among the 12 UK nations and regions on this measure, a slight improvement on the ranking of 11th in the previous monthly table.
And there was not a great deal of difference between much of the UK when it came to changes in business activity in April.
The business activity index for Scotland last month was not far off the reading of 48.1 for north-east England, which was in fourth spot.
Royal Bank made no bones about the difficult backdrop for companies across the UK, flagging the rise in employers' national insurance contributions which was announced in Chancellor Rachel Reeves' October 30 Budget and took effect on April 6. The bank also flagged an increase in minimum wages which came into force on April 1.
Data published by the Office for National Statistics on Thursday showed the UK economy grew by a faster-than-expected 0.7% quarter on quarter in the opening three months of this year. However, economists emphasised the challenges ahead in the wake of the gross domestic product figures.
Mr Burnside said of the Royal Bank survey findings for April: 'Firms across the UK reported a challenging start to the second quarter, with demand for goods and services falling in all areas amid a backdrop of economic uncertainty and rising prices.'
He added: "It's encouraging that firms are still looking to the future with some optimism, although growth expectations are lower than they have typically been in the past. Rising labour costs have added to pressure on businesses, following April's increases in national insurance contributions and minimum wages.'
Elsewhere, CalMac remained in focus last week following the Scottish Government's May 8 announcement of the direct award of the Clyde and Hebrides Ferry Services contract to the incumbent operator.
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Ferguson Marine, the Port Glasgow shipyard owned by the Scottish Government, has also been in the spotlight in recent days over a further cost overrun and delay in the Glen Rosa ferry it is building for CalMac, which is now expected to be delivered in the second quarter of next year.
The contract to build the long-delayed Glen Sannox, which came into service on the Troon to Brodick route in January, and Glen Rosa was awarded and has been managed by Caledonian Maritime Assets Limited, which like CalMac is owned by the Scottish Government.
While CalMac's operations have been affected by the delays to delivery of the vessels, the ferry operator is not involved in the procurement process.
Returning to the direct award of the new, 10-year Clyde and Hebrides Ferry Services contract which runs from October 1 to CalMac, my column in The Herald on Wednesday observed: 'The last thing anyone needs right now is for a private company to be allowed to wade in to run the ferry services and - on top of the recent difficulties endured by communities served by CalMac arising from issues around an ageing fleet which are being addressed anyway - start trying to wring out a substantial profit.
'If anyone is any doubt about that, they need only look at the shambles that has ensued since the privatisation of British Rail, and ask if they would really want that for communities which have generally been served well by CalMac for decades.'
Scotland's ferries clearly constitute a politically charged topic that divides opinion, but privatisation is surely not the answer.
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