The setting of fares is a matter for the board of the Steam Packet, not Tynwald, the Treasury Minister has told members.
David Ashford was asked by Middle MHK Stu Peters about what influence the gov has on ticket pricing and whether tests have been done to examine the benefits of lowering the prices.
Mr Ashford said that as part of the shareholder agreement, established when Manx taxpayers bought the company, the Steam Packet is run at arms-length and that it is the ‘board of the company that is responsible for setting the fares each year’.
He added: ‘The Treasury is the shareholder for the company, which set objectives for the company, which it will take into account when setting its fares policy… These are firstly to retain profitability and solvency, providing for all commitments, ensuring longtime financing for financial investment. Also Treasury will not currently require a dividend, however the company must make stringent efforts to minimise its level of debt and also maintain a strategic maintenance reserve of £8m to be updated based on the formula allowing for 100%, 66% and 33% of planned capital expenditure and maintenance for the respective following three years and also circa £3m of working capital.
‘Financing support has also been provided to the company to allow it to secure lower cost access to funds. Government’s recent bond issue has allowed us to provide funding for the new vessel, the Manxman, at a lower level than the company could’ve secured itself.’
Mr Ashford said he there was ‘little doubt in my mind’ that taxpayers buying the company was, in the grand scheme of things, good for the island and passengers, as well as the Steam Packet itself. He also confirmed that there was no formal considering of the effect of lowering prices, but that the Economic Recovery Group may look at it as part of its consideration in supporting the island’s economy.
Mr Peters also asked the Treasury Minister whether the agreement with the Steam Packet should now be revisited, given the effects of the pandemic, to allow it to play a ‘more dynamic role in the future of the Isle of Man’.
Mr Ashford said it was ‘absolutely essential’ that the company plays a fundamental part in revitalising the island’s tourist economy but that the gov had to be careful when it comes to fares and interfering with the setting of ticket prices.