The Council of Ministers does not believe the Steam Packet’s offer is the solution to secure the best possible sea services for Isle of Man.

A decision on whether to accept the Steam Packet offer is ’finely balanced’, says the report to be laid before Tynwald next week.

It appears that the Council of Ministers wanted to take a tougher stance than that which Tynwald will be asked to adopt.

While CoMin recommended the offer be ’declined’, Tynwald will actually be asked, ’whilst noting’ the offer, to authorise the Department of Infrastructure to continue negotiations.

Some of the most common criticisms of the Steam Packet, such as unfair prices, are actually rejected by the report.

’There are a number of public concerns about the IOMSPC operation,’ it says.

’Some, such as the cost of fares, are longstanding but not supported by the evidence. Indeed, several studies have shown fares to be reasonable.

’Concerns about debt levels are more valid but also tend to be misinformed. The debt has not affected fares as these are capped in the User Agreement, but it is true, if perhaps unlikely, that a debt-free operator could have reduced prices and forgone profit.

’The trading of a lifeline service as a debt-bearing asset is also a concern, but the current shareholders have until now invested in the company to secure long-term income rather than short term cash. That may, of course, change in future.’

It adds: ’The proposed offer does address some of these concerns by including safeguards on change of ownership and debt but these safeguards will have to be carefully negotiated if they are to offer effective protection for the island’s interests in practice.

’The offer already provides for government to purchase the vessels but the length of the term precludes any subsequent change of model until 2041, when the vessels would be at best mid-life.

’There is a justifiable concern with the length of the agreement of 25 years, which is longer than the industry norm.’

The report itself does suggest that the government could, in theory, agree that the Steam Packet continues to provide sea services, on the understanding there would be further negotiation.

It states: ’Should Tynwald agree to accept the current IOMSPC offer, then the future delivery of strategic sea services is a straightforward matter.

’Although the offer has been submitted on a "best and final" basis, there has been no detailed negotiation on its content.

’Should Tynwald agree it would like IOMSPC to provide services to the Isle of Man beyond 2026, but that the terms of the offer are not sufficient, the Department of Infrastructure could be instructed to negotiate with IOMSPC on the future content.’