Government answers Parliamentary Question on IOS Transport

Lord Tony Berkeley asked her Majesty’s Government whether any legislation is required to enable them to provide a Public Service Obligation or Public Service Contract in connection with a passenger or freight transport service to the Isles of Scilly.

Earl Attlee responded:  Whether any proposal for a Public Service Obligation or Public Service Contract was covered by existing legislative powers would depend upon the details of the proposal and the circumstances in which it was made.  Relevant existing legislation includes Council Regulation (EEC) No 3577/92 and section 34 of the Transport Act 1968 in relation to ferries and EC Regulation 1008/2008 in relation to air travel.  Any such proposal would also have to comply with EU State Aid rules.

You can read the written answer here.
You read about EU policies in the Council of the IOS report (pages 72-74) here