Ministers are drawing up possible plans to buy the Steam Packet, iomtoday has learned.

The move comes as negotiations continue with the ferry operator over a revised strategic sea services deal - and as the Packet announced a 6.4% increase in some fares from January 1.

In July Tynwald voted not to accept the Steam Packet offer to government and to opt instead to continue negotiations for a better deal. The Packet’s offer had included a pledge to invest £170m in a new fleet, facilities and fare initiatives.

But it is understood that the Council of Ministers is now seriously contemplating taking the ferry operation into public ownership.

Nationalisation or acquisition of the Steam Packet were outlined in a review of options presented in a government report to Tynwald in November last year.

This would allow government to gain full control over a national strategic asset including operations and fares. Substantial funding would be needed to purchase the company at an agreed price, however.

Government would not be in charge of the day-to-day running of the ferry services.

Ministers have stayed tight-lipped about the plans.

Treasury Minister Alfred Cannan would say only: ’I would not want to comment on speculation like that.

’The government is looking at a range of options. We continue to discuss the user agreement with the Steam Packet.

’Nothing is off the table. We will continue to look for the best deal for the island to maintain its strategic services.’

At least two Ministers - Graham Cregeen and Bill Malarkey - and known to strongly support the nationalisation of the Steam Packet.

John Quaye, chairman of Manx Independent Carriers, said he would support a move to take the island’s lifeline ferry services into public ownership.

He said: ’The Steam Packet gives us a great service. I don’t have any issue with the staff but the big issue is with the prices.

’The benefit of taking it into public ownership would be that profits stay on the island and we would have some assurances for the future. They need a tough negotiator to get the price down.’

Mr Quaye said the RPI-linked 6.4% increase in freight fares from January 1, as allowed for in the user agreement, would add £500,000 to his company’s costs.

Steam Packet chief executive Mark Woodward said many fares are unchanged at 2017 rates, and some reduced such as the ’TT Taster’ fares.

He said: ’Any increases have been kept below the published rate of inflation in September, and were within the terms of the user agreement.

’Since 1995, average passenger fares have effectively halved in real terms and freight fares have effectively reduced by around 40%.’

RPI inflation in September was 7.6%. It has since fallen to 6.3%.

However, the government’s preferred inflation measure, CPI, is much lower.