Convention of the Highlands and Islands

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1.     Everyone living, working or visiting the Highlands and Islands knows the importance
of transport to the economic and social prosperity of the region. It provides access to
opportunities for business, residents and tourists and is central to daily life – whether that
involves getting to work, visiting friends and family or exporting products overseas. We
recognise the important contribution the Highlands and Islands make to the economic, social
and cultural richness of Scotland and the important role that transport plays in achieving

2.      Transport does not exist for its own sake. In the Highlands and Islands, as across
Scotland, we are working to achieve a safe, reliable, accessible, integrated, effective and
efficient transport system that promotes economic development, social inclusion and
sustainable development. To achieve this we are:

      Supporting vital ferry and air services and infrastructure
      Improving and maintaining the trunk road network
      Encouraging efficient and sustainable freight transport
      Supporting enhanced and integrated public transport and community transport
      Working closely with HITRANS and its member local authorities to develop and
       deliver improvements

3.      Transport in the Highlands and Islands is characterised by its diversity, from trunk
roads to air services, ferries to community buses. This can present challenges, particularly
for integration of services. The natural beauty and unique geography of the region also
present their own challenges: sustaining services in sparsely populated areas, improving roads
while protecting their surroundings and ensuring that infrastructure can cope with diverse
weather conditions. This diversity and the many challenges mean that working together is
essential if we are to deliver a transport system that meets the needs of all in the Highlands
and Islands.


4.      The challenges facing the Highlands and Islands are such that they cannot be met by
acting alone. Partnership working is essential to deliver the improvements in infrastructure,
services and policy integration that are crucial to the future vitality of the region. Over the
past few years we have supported the development of HITRANS, which has succeeded in
bringing together all local authorities in the region, Highlands and Islands Enterprise (HIE)
and the Scottish Council Development and Industry (SCDI) to form a genuinely strategic
regional transport partnership. We support the regional strategy that HITRANS have
developed and will work closely with HITRANS as it continues to develop and as projects
are implemented. We have provided almost £5 million to HITRANS through the Public

Transport Fund, supporting an impressive range of public transport improvements across the
Highlands and Islands – perhaps the most visible being the network of yellow waiting
shelters that now stretch from Arran to Lewis.

5.     We believe that working together at a regional level is essential for the effective
planning of transport infrastructure and services in the Highlands and Islands and the work of
HITRANS and its members has shown the benefits of this strategic approach.


6.      In September 2003 we published a consultation document: Scotland’s Transport: A
new approach to transport in Scotland. This consultation followed up our Partnership
Agreement commitment to establish a strategic national transport authority and regional
delivery partnerships. The consultation that took place during autumn 2003, in which many
Convention members will have been involved, was very fruitful and succeeded in attracting a
wide range of people to contribute their views. In particular the regional consultation events,
hosted by the 4 regional transport partnerships, were well-attended and played an important
role in the wider consultation process – allowing us to hear at first hand views from all over

7.      The consultation sought views on the role of a Scotland-wide executive agency for
transport – tentatively called Transport Scotland – and on the future form and function of
regional transport partnerships. There was a wide range of views, but there was almost
universal acceptance of the merit of a strategic approach to transport developed at a regional
level. We have carefully considered all the responses received to the consultation and intend
setting out our conclusions on the way forward in a White Paper, later this spring.

8.     The White Paper will also incorporate our response to the other transport
consultations that the Executive has sought views on over the past few months and will be a
wide-ranging policy document. Whatever its conclusions may be, we are committed to
continuing to consult and involve local authorities, regional transport partnerships and other
stakeholders as the process moves forward. Working together is key to achieving the
transport system we want to see in Scotland.


9.      We recognise the important role that air services play in the transport system of the
Highlands and Islands and in particular the lifeline they provide to remote and island
communities. However we appreciate that many people are concerned at the general level of
air fares in the Highlands and Islands and recognise the impact that these have on people and
businesses in the region. The Executive currently funds Public Service Obligations (PSOs)
on 3 routes: from Glasgow to Barra, Tiree and Campbeltown, recognising that these routes
would not otherwise operate.

10.     HITRANS have done a lot of work in developing proposals for extending PSOs
across the Highlands and Islands air network with the objectives of reducing fares and
improving services. In line with our Partnership Agreement commitment to evaluate fully
HITRANS’ proposals, we continue to work with HITRANS and are joint-funding a study
into the economic impact of their proposals. The proposed network is ambitious and involves
additional infrastructure and airport revenue costs, and these are currently being estimated.

We are committed to working in partnership with HITRANS to ensure that the proposals are
fully considered and evaluated before any case can be made to the UK Department for
Transport, which needs to accept the proposals in advance of submitting them to the
European Commission.

11.     The links between the Highlands and Islands and the rest of Scotland, the UK and
Europe are equally important. These links play an important role in promoting economic
development through enhancing the accessibility of the Highlands and Islands for businesses,
residents and tourists. The Scottish Executive’s Interim Route Development Fund (IRDF),
set up in November 2002, has been very successful in attracting new routes from Scottish
airports. Three direct routes from the Highlands and Islands have been funded: Inverness-
Birmingham, Kirkwall-Bergen and the forthcoming service between Inverness and
Stockholm. These are in addition to a wide variety of new routes from Edinburgh, Glasgow
International and Glasgow Prestwick Airports. bmi British Midland also began operating a
new service between Inverness and London Heathrow on 28 March.

12.     The aviation infrastructure in the Highlands and Islands impacts on the level of
service and type of aircraft that can operate. Good quality airport terminals also provide a
welcoming environment and positive image for visitors to the region. Scottish Executive
funding for Highlands and Islands Airports Limited (HIAL) has risen dramatically since 1997
(£7 million in 1997/8 to £22.6 million in 2003/04). This has enabled new air terminals to be
developed at Inverness, Stornoway and Kirkwall as well as the installation of instrument
landing systems. Passenger numbers at all HIAL airports have increased by 10% between
2001 and 2003 (from 782,000 to 864,000), and at Inverness by 13% (from 360,000 to
407,000). We are confident that the strong upward trend will continue as HIAL work to
further develop passenger and freight business at its airports.

13.     HIAL is a member of the Sumburgh Airport Strategic Partnership, which is
progressing jointly the extension of the main runway at Sumburgh as part of its objective to
maximise the airport's potential. HIAL is also a partner in the development of the new
business park at Inverness Airport and in partnership with Highland Council and others is
providing £1.4 million towards the cost of a new airport access road. Following preliminary
discussions with Nobles Finance, HIAL and its professional advisers, along with the
Executive, have been considering a number of detailed options for re-structuring the PFI/PPP
contract for the Inverness Airport terminal. The objective is to ensure that the original aims
of the PFI contract are still being met, and that the arrangements for air terminal provision are
in line with our overall aims for Inverness Airport and the Highlands and Islands. HIAL is
open to proposals for enhanced infrastructure and developments at all of its airports.
However, the active participation of local stakeholders is essential if the necessary resources
and commitment are to be achieved, and if the value for money case is to be made.

14.     The Air Transport White Paper ‘The Future of Air Transport’ sets out a strategic
framework for the development of airport capacity in the UK over the next 30 years. Direct
services from the Highlands and Islands reduce the need to rely on connections at other
airports to reach key destinations and reduce overall journey times. The Executive and its
agencies will work with HIAL and airlines to help deliver an air transport network in the
Highlands and Islands which is sustainable in the long term; serves social and economic
needs; and respects the unique environmental heritage of each location. In some cases this
will be assisted using PSOs/the IRDF.


15.     Ferries in the Highlands and Islands provide lifeline services for remote and island
communities. We are committed to maintaining and improving these links and 2003 saw the
introduction of 2 new vessels on Clyde and Hebrides routes and new services between
Tobermory-Kilchoan and on the Sound of Barra. There has also been significant investment
in piers and harbours, including improved facilities for the Small Isles and the new terminal
development at Oban. Unfortunately, efforts to attract a bidder to re-start the Campbeltown-
Ballycastle service have so far proved fruitless, but we will continue to work with all
concerned to determine whether there is a viable way forward. The Northern Isles have
experienced a huge improvement in the standard of ferry services, with the introduction of 3
new vessels operated by NorthLink bringing improved journey times, comfort and quality.

16.     The Executive is continuing to prepare for tendering of the Clyde and Hebrides ferry
services. The consultation on the draft service specifications for the main bundle generated a
large response. In particular, there were strong representations from the local community in
relation to the proposals for the Gourock-Dunoon route. As a result, this route was stripped
out of the single bundle and a separate draft service specification prepared which allows for
the possibility that an operator may bring a vehicle service to this route. Proposals for a
separate tender for Gourock-Dunoon were published for consultation in March 2003. All
consultation responses have been considered in detail and the final service specifications have
been amended to reflect these views where appropriate.

17.    Detailed work to take forward the restructuring of Caledonian MacBrayne (CalMac)
has also continued. CalMac will be split to create a vessel owning company (VesCo) which
will own the vessels, leasing them to the successful bidder for the Clyde & Hebrides Ferry
Services tender, and an operating company (OpsCo), that will be able to bid for the tender.
VesCo will also take ownership of those harbours currently owned by CalMac.
The restructuring of CalMac is complex and the Executive has been working closely with its
consultants to ensure that this goes forward smoothly.

18.    However, the delayed adoption of the revised Guidelines on State aid to maritime
transport and last year’s decision by the European Court of Justice on the Altmark case have
slowed progress. The revised EU State Aid Guidelines on Maritime Transport were
published on 17 January 2004 and a related Communication was published on 23 December
2003. These two documents together provide guidance on the Maritime Cabotage
Regulations. We broadly welcome the thrust of the new Guidelines which seek to introduce
greater flexibility for Member States. Significant progress has been made in those areas
where we made representations including the recognition of mainland to mainland routes,
tendering the routes as a single bundle and the need to ensure the availability of vessels where
these are unique. The consequences for ferry services of the decision, last year, by the
European Court of Justice in the Altmark case are more complex. We will discuss the
implications of both the Altmark ruling and the revised Guidelines with the European
Commission shortly. The timetable for tendering will depend on the outcome of exchanges
with the Commission and progress with restructuring. However, preparations for tendering
are continuing and we anticipate going out to tender later this year.


19.     For business, being able to transport goods efficiently and reliably is a critical factor
in their success. We are keen to see more freight being transported by rail or water, reducing
lorry traffic particularly on our rural roads. Through Freight Facilities Grant we are helping
companies invest in the facilities needed to compete in financial terms with road transport.
Through this scheme BP will now deliver 500,000 tonnes of fuel each year by rail rather than
road to a number of destinations including Fort William and Lairg and Safeway already
transport goods to stores in Inverness, Thurso and Wick by rail. In addition, piers at
Lochaline and Portavadie have been refurbished to enable them to handle timber, previously
transported by road. Through Track Access Grant we are also helping to make rail transport a
more viable option for firms by off-setting the track access charges. This has benefited a
number of timber and other freight operators in the Highlands.

20.     We also plan to have a new Waterborne Freight Grant scheme operating by April this
year (EC state aid clearance permitting). This has been developed in conjunction with the
Department for Transport and will assist with operational costs during the first 3 year start up
period of new shipping routes that transfer freight from road to water. We are keen to see
the trend towards more sustainable methods of freight transport continue: delivering benefits
for firms, communities and the environment.

21.    The Scottish Executive Partnership Agreement includes a commitment to support
proposals to establish international container transhipment hub facilities in Scotland. This
recognises the potential benefits that such major developments could bring to Scotland.
Scapa Flow in Orkney and Hunterston in Ayrshire have been identified as possible locations.
Orkney Islands Council, together with Highlands and Islands Enterprise and Orkney
Enterprise, are working with private sector interests through International Container Hubs Ltd
(ICHL) to promote Scapa Flow. Clydeport PLC, with North Ayrshire Council and Scottish
Enterprise, is leading efforts to develop Hunterston and attract potential investors. While
investment decisions will be a matter for the commercial judgement of the port authorities
and shipping operators, we are working closely with the parties involved to promote the
opportunities these initiatives present.


22.     Most roads in the Highlands and Islands are owned and maintained by local
authorities and many provide vital links – for local travellers and visitors, and for cars, buses
and goods vehicles. In the Executive we are very conscious of the importance of this
network, particularly where alternative routes or forms of transport are not always an option.
Over the past few years we have allocated more than £10 million to local authorities in the
Highlands and Islands to help them address the backlog of maintenance on local roads and
bridges. But there is much more to do, and we have been working with individual councils
and HITRANS to explore ways in which to progress and fund improvements to the road
network. That work includes discussions last year on the study which HITRANS is taking
forward on lifeline rural roads, as well as advising on specific projects such as the upgrading
of the Western Isles Spinal Route.

23.    The Scottish Executive is responsible for maintaining and developing the trunk road
network and between 2003 and 2006, we are investing over £60 million on the network in the
Highlands and Islands. On the A9 we are taking forward a number of targeted

improvements, notably at the Bankfoot and Ballinluig junctions, extension of Crubenmore
dual carriageway and improvements to provide guaranteed safe overtaking from Kincraig to
Dalraddy. A major maintenance programme has commenced between Drumochter and
Inverness and further north on the A9 tenders have been invited for Phase 1 of major
improvements on the Helmsdale to Ord of Caithness section.

24.     The improvements to the A9 are intended to improve the safety of the road, through
providing safer overtaking opportunities and junctions. For example, to improve safety at the
North Kessock junction, we have implemented a number of measures including a 50 mph
speed limit, vehicle-activated signs and a smart sign warning northbound drivers of vehicles
waiting to cross. Last year, the A9 Road Safety Group was reconvened and has
commissioned a number of studies including the effect of driver fatigue as a cause of A9

25.    The A82 is the principal arterial route for the West Highlands and we are aware of the
demand for a greater level of investment in the road. We have commissioned Scott Wilson to
undertake a Route Action Plan of the A82 and we expect this to take around 18 to 24 months
to complete, which is in line with other similar studies carried out in Scotland.

26.     The study will identify short, medium and long-term measures for the route. It is
expected that short-term, low-cost measures will be the first to emerge and it may be possible
to bring these forward on a phased basis during the period of the study. Any major schemes
or proposals that may emerge from the study would be candidates to be considered alongside
emerging and new improvement proposals across the network when looking at priorities for
future expenditure programmes.

27.     The opening of the upgraded section of the A830 between Arisaig and Kinsadel is a
significant milestone in improving the last single-track trunk road in Scotland. Draft road
orders for the remaining section between Arisaig and Loch nan Uamh have recently been
published and this project will be taken forward with respect for the important natural
environment bordering the route. Once complete, this road will provide better access to
Mallaig and should improve safety and journey times on the route.

28.     The A96 is an important strategic link between Inverness, Moray and Aberdeen. We
are aware of calls for investment on this route and are taking forward a number of
improvements. These include climbing lanes at Newtongarry and Coachford and road re-
alignment at Threapland and Delnies, to improve journey times and provide safer overtaking
opportunities. We are also proposing to construct a bypass between Fochabers and
Mosstodloch. A Public Local Inquiry into the project was recently completed and is due to
report late summer. We recognise that through traffic is a concern for many communities
along the route and will continue to work with local authorities on how traffic issues may best
be addressed.

29.     Road safety is a priority for the Executive and one that must be addressed in
partnership with local authorities and others. In particular, to make the areas around schools
safer, we are providing additional funding to local authorities for the introduction of 20 mph
speed limits around schools and related safety projects. On roads with a speed limit of
40 mph or more, a transition to 20 mph will be more difficult to achieve without significant
measures to reinforce the message to drivers that a lower speed limit is appropriate. There
would be a risk that traffic calming on such roads could itself introduce an accident hazard.

We have been working with local authorities and the police on how best to implement 20
mph limits at schools on higher speed roads and guidance for local authorities has recently
been issued.


30.     While we recognise the vital importance of the car in remote and rural areas, many
people, particularly older and disabled people, do not have access to a car and depend on
good public and community transport. Public transport not only contributes to achieving
social inclusion and accessibility objectives, but it also supports economic development,
through helping people access employment and providing links for tourists. By providing an
alternative to the car, it also helps to protect the environment of the region.

31.     Over the past few years we have worked closely with HITRANS and its constituent
authorities to provide £4.865 million from the Public Transport Fund for a range of
improvements across the Highlands and Islands, including the new bus station at Inverness
and the Kirkwall airport bus. In addition the Rural Transport Fund has helped support
additional rural bus and ferry services.

32.    The Public Transport Fund has finished in its current form, but there will be interim
successor arrangements for 2004-05. In the meantime, HITRANS received additional public
transport funding of £1.4 million this year to fund a range of projects that improve
accessibility and integration. This includes the purchase of low-floor buses to connect with
Inverness Airport and Scrabster harbour and the development of new travel interchanges at
Stornoway and Stromness.

33.     Cycling is an environmentally sustainable mode of transport and one that links well
with public transport. We recognise the importance of providing dedicated cycle routes and
interchange facilities. We welcome HITRANS’ investment in improving cycling facilities
across the region, including cycle paths and cycle lockers at stations. This not only has
benefits for commuters, but also helps promote tourism and provides an incentive for people
to cycle more.

34.     Where car ownership or public transport do not meet their needs, community
transport provides a vital service for people across the region. Through the Rural Community
Transport Initiative, the Executive has provided funding to a wide range of innovative
projects that seek to bridge the accessibility gap. A further £1.5 million has been provided
between 2003-06 to pilot a range of demand responsive transport services in rural areas.


35.     Buses have a central role to play in the achievement of the Executive’s transport
objectives on modal shift. The number of passengers on local bus services in Scotland has
risen for the fourth consecutive year. 445 million passenger journeys were recorded in 2002-
03, up 1% on the previous year.

36.    Over the last few years the Executive has made available substantial resources to the
Bus industry (in 2002-03 £50m Bus Service Operators Grant, £65m Concessionary Fares and
£32m Supported Services) to improve public transport in both urban and rural areas. The
Executive plan to pilot new Bus Route Development measures to create better value bus

services. The purpose is to promote under-used routes through enhanced frequency and
marketing. We are holding discussions with bus operators and transport authorities to work
up details of the scheme, and hope to launch the initiative during the first quarter of 2004.

37.     To improve accessibility for older and disabled people, we are committed to building
on the success of the free local off-peak concessionary travel scheme, launched in September
2002. We plan to develop a national free off-peak bus scheme for older and disabled people,
and progressively introduce a scheme of national bus, rail and ferry concessionary travel for
young people, initially for all in full time education or training. Wide consultation,
particularly on implementation, will be a important part of taking these proposals forward.


38.     We are committed to developing the rail network in Scotland, improving services for
passengers and opportunities for rail freight. The Scottish passenger rail franchise is being
relet at present and the new franchise will begin operation later this year. We will also
participate fully in the rail review announced by the Secretary of State for Transport and we
welcome the commitment to consider how more decisions on rail could be devolved to the
Scottish Executive.

39.     The popular commuter rail services into Inverness are also set to be improved through
the Invernet rail project, which the Executive is supporting in partnership with others. This
will provide better public transport options for people travelling into the City and should help
to ease traffic congestion in the city centre – enhancing the urban environment. In
conjunction with HITRANS, NESTRANS and the Strategic Rail Authority, a business case
has been commissioned to examine proposals for improving the Aberdeen-Inverness railway
line. The outcome of this study will inform future development options for the line.


40.     This paper has outlined our priorities for transport in the Highlands and Islands and
how we are working in partnership with HITRANS and others to meet these. There has been
good progress since the Convention last discussed transport and it is important that we keep
this up to deliver real benefits for people living, working and visiting the Highlands and

41.     Over the coming months we will publish a White Paper, which will outline our
proposals for the development of regional transport partnerships and we will go out to tender
for Clyde and Hebrides ferry services. Partnership working will be crucial to delivering
progress, as well as continuing to improve transport across all modes in the Highlands and

42.     We welcome the opportunity the Convention provides to discuss transport priorities
for the region and how we can best achieve these together. Key questions we invite the
Convention to consider as we move forward are:

      What do you need to do to improve transport in the Highlands and Islands?
      How can the Scottish Executive help you to achieve this?
      What lessons can be learned from the Highlands and Islands experience for the rest of

43.     Transport is never short of challenges: whether they are achieving integration between
different transport operators, building a new trunk road or developing new ways of working.
However crucial to success, and achieving more from our collective investment, is the need
to work together, sharing common objectives, in order to achieve the transport system that
people in the Highlands and Islands expect and deserve.

March 2004


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