Realist, not conformist analysis of the latest financial, business and political news

Government Hires Ferry Company With No Ferries Over Brexit

We have an interesting example of Robert Peston having not the first clue about business – well, actually, not having he first clue about how the world works. To deal with Brexit possibilities the government has decided to hire a bit of extra ferry capacity. As we’ve said before it looks like we’re going to be £12.9 billion up on this deal which is nice.

However, The Guardian is getting very het up about the idea that one of the companies hired has never run a ferry, has no ferries and so, well, why have they been hired? One useful answer is that there is no Ramsgate to Ostend ferry at present so no company in the world – no extant at least, the last went bust – has the active experience of running a Ramsgate to Ostend ferry. Whoever is chosen is going to be coming at this for the first time therefore. That the people selected are coming at this for the first time is less of a surprise at this point.

But, you know, outrage!

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]One of the companies contracted by the government to charter ferries in the event of a no-deal Brexit does not own any ships, has not previously operated a ferry service and is not planning to do so until close to the UK’s scheduled departure date from the European Union, it has emerged.[/perfectpullquote]

Is it a revelation that the company which prints The Guardian didn’t know how to print The Guardian until it started printing The Guardian?

However, more ire should be directed at Robert Peston:

We think? We think you should stop dribbling Peston, there have occasionally been rumours that you’re supposed to know about this business stuff.

Come along now, a company is just a legal form of organisation. It exists to organise to do something. And that’s all it is. It can hire or lease the machinery – here the ferries – and all that. It’s just the legal structure within which all of this is done. You know, the legal form by which all of he various assets and knowledge to achieve the task are hired? There is no there there in a company other than what is hired in.

Ronald Coase taught us some interesting stuff about when it is hired in as in employed and hired in as in contracted but that’s a different matter.

But we can take this a little bit further. So, government has awarded this contract. But government might want to run ships yet doesn’t have any to run. So, obviously enough, by the logic being deployed here, government shouldn’t be given the power to issue a contract to have ferries run, should it?

Come along now, the claim is that a company with no ships shouldn’t get a ferry contract. But then a government with no ships shouldn’t get a ferry contract either, should it? Why is out money, cash from us taxpayers, being abstracted by a government to run ferries when that government doesn’t have any ferries?

Ah,you say, but government is the organisation through which the contracting is done to make the ferries work. OK, so, contracting work out is just fine so what’s wrong with Seabourne Freight gaining a contract which they then split and sub out?

Either government shouldn’t be doing it as it has no ships or Seabourne’s just fine as the managers of a contract rather than the owners of the assets. You don’t get to have it both ways….

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Jonathan Harston
Jonathan Harston
4 years ago

My parish council started running the town’s toilets last year. We have never run the town’s toilets before, therefore we should have been prevented from running the town’s toilets and allowed them to all be closed.

Quentin Vole
Quentin Vole
4 years ago

There was a helpful chap from Lloyd’s Register on PM (BBC R4) patiently trying to explain that it was common for shipping lines (particularly when in startup mode) not to own a single ship – they lease them as and when needed. Similarly, many airlines don’t own a single aircraft or even employ any pilots.

But it must be hard to grasp this if you’ve never had any experience of commercial activity.

David Taylor
4 years ago

Indeed most airlines don’t actually own the engines that drive the planes these are now usuall yleased form the manufacturer who retains ownership and manages maintenance and parts replacement.

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