Condor given £830k emergency grant to save freight

Friday 14 May 2021

Condor was given an emergency grant of £832,000 by Jersey's Government to “maintain freight resilience” last month after losing more than £50m during the pandemic, it has emerged.

The urgent funding boost was granted following a request from the company, and comes in addition to the £47,712 Condor Ferries claimed between April and August 2020 under the co-funded payroll scheme.

The payment was one of a number of ‘ad-hoc’ payments made to local organisations, which included a loan of up to £10m granted to Blue Islands to help the island maintain its connections to UK regional airports and over £1m paid to Liberty Bus between May and December.

Details of the ferry provider's difficult situation were laid out in correspondence between Interim CEO Paul Martin and Economic Development Minister Senator Lyndon Farnham.

Mr Martin had been asked to approve the grant, but said that he didn't feel he had enough information to satisfy himself that "this intervention would represent value for money" as discussions had predated his arrival. He therefore asked Senator Farnham for a formal instruction to approve the money transfer.

In his letter to the Senator, Mr Martin explains that Condor Ferries contacted the Government in August 2020 to advise that it was no longer meeting the profitability levels set out in its operating agreement and suggested measures to reverse the situation.

Mr Martin warned those measures would have had “a material impact” on freight costs and ferry services to Jersey. Both Jersey and Guernsey agreed to explore a new operating agreement with “transitionary support."

The Chief Minister and Senator Farnham offered £682,000 to the company in December 2020 to “bridge the period” until public health restrictions were lifted, and commercial operations could return to normal.

Due to the suspension of the high-speed services having been extended from the end of March to 21 May, additional support was later agreed to bring the total to £832,000. 

Pictured: The Chief Minister, Senator John Le Fondré, and the Deputy Chief Minister, Senator Lyndon Farnham offered £682,000 to the company in December 2020.

Mr Martin said the agreement was likely to benefit islanders and Jersey’s economic recovery by preventing an increase in freight prices and other “cost reduction choices”, which could have cost an estimated £2m to the island’s economy. 

As Principal Accountable Officer, he however said that, having not participated in the discussions with the ferry provider, he couldn’t be sure the grant would represent “value for money” and requested that Senator Farnham provide his written instruction.

Such instructions are issued when an Accountable Officer – the individual within a department personally responsible for its running and finances, which is usually the Director General – has concerns with a Minister’s decision and/or considers it too risky.

They must set out their concerns in writing, and ask that, if the Minister still wishes to proceed, they issue a formal ‘letter of instruction’. A copy of this is then sent to the Government's spending and governance watchdog, the Comptroller and Auditor General, and the Accounting Officer is not then seen to be personally responsible for it.

The Economic Development Minister previously sent two of these letters in response to pushback from the Acting Director General of the newly formed Economy Department, Richard Corrigan on the Visitor Attractions and Events Scheme as well as the Fixed Costs Scheme. 

Pictured: Mr Martin requested a letter of instruction from the Deputy Chief Minister on the grant.

In his letter of instruction to Mr Martin, Senator Farnham described Condor as “a valued strategic partner” who, despite “considerable financial detriment”, continued to provide “critical passenger and freight resilience” to the island during the pandemic. 

He said that Condor had agreed not to increase freight charges for “at least the term of the financial support”, which, if implemented, would cost consumers up to £5.2m every year.

He added the decision aligned with Ministers’ intentions to support the island’s economy both through the pandemic but also to ensure “it is well positioned to recover rapidly as circumstances allow."

In a statement provided to Express, Senator Farnham said the pandemic had had “a severe impact” on Condor Ferries. 

“We recognise the strategic role Condor plays in delivering essential freight, goods and services to the island, and in maintaining passenger routes,” he added. 

“Financial assistance amounting to £832,000 was provided, following a request from Condor, to maintain freight resilience and to allow the company to retain their crews ready for a rapid resumption of services when conditions permitted.

“This financial assistance has helped to ensure a prompt resumption of Condor’s services, and will help Jersey’s economy recover more rapidly. The Government of Jersey is grateful for the essential role Condor has played throughout the pandemic.”

Early on in the pandemic, Condor Ferries provider froze workers’ pay as passengers sailings were called off, announcing it would honour minimum wage increases as a legal requirement, but would cancel the annual salary review which was due in April 2020.

In May, Condor Ferries announced it would be slashing crew numbers on its high-speed vessels.

Since the beginning of the year, the company has been operating a daily Commodore Clipper service to Portsmouth and a weekly sailing to St. Malo. High-speed ferry sailings are due to resume next Friday (21 May) and earlier this week, the company released its summer schedule, “focuses on the peaks, notably at weekends when people want to travel”. 

Pictured: Condor's revenue was down 96% in 2020 and it lost £50m in revenue and cash burn.

In a statement, a spokesperson for the company said the effect of the pandemic was still ongoing. 

“Our passenger business was closed for almost all of 2020 and the pandemic is still having a significant financial effect,” they said. “We are down 96% on revenues and two fifths of the workforce were made redundant in 2020. The financial impact in terms of revenue and cash burn has been in the order of £50m.”