Disastrous ferry contract costs Scots taxpayers extra £100m

He put the blame squarely on "disastrous" previous management at Ferguson Marine in Port Glasgow.

READ MORE: Ferguson Marine shipyard warns it is on brink of administration

The boats will now be around four years late, with an 80 per cent chance that they will be delivered in winter 2021 and autumn 2022 at the earliest instead of mid-2018.

The Government has already written off around £50m in loans to the yard.

A detailed report undertaken by the new management team at the yard said there had been a lack of project management on the contract, with no one person understanding it all.

Some of the basic design work remained incomplete after almost five years, with work done out of sequence, leading to "significant rework".

Specification changes meant most of the pipework in the engine room had to be removed.

Storage of materials and stock-taking had also been inadequate, and it was uncertain whether all the equipment needed had actually been purchased.

It said: "There is no clear understanding as to what has been used on the project, either for the planned work or unplanned work in the form of change or repair. As such there is no clarity as to whether sufficient stock exists to complete the project."

The two vessels had also been poorly cared for resulting in equipment damage, degraded paintwork and rainwater ingress.

It concluded that the total extra cost of delivering the vessels would be between £110.3m and £114.3m, including a seven-month programme of "remedial work" costing £12.8m.

The Scottish Tories said it was an SNP-made fiasco from start to finish.

The Finance Secretary said: "We have been working for over two years to find a resolution to the difficulties at Ferguson Marine and our priorities still remain the completion of the two public sector ferries, protecting jobs, and securing a long-term future for the yard.

READ MORE: Report catalogues failures in Ferguson’s ferry construction 

“This report highlights why public ownership was the only option open to us to deliver these outcomes and why it was the right thing for the Scottish Government to step in when we did.

“In particular, the report sets out in stark detail the failings of the previous management and the impact that this has had on the condition and progress of the ferries being constructed at the yard.

“I am now focussed on the future and want to do everything in my power to make Ferguson Marine a success for its skilled employees and the wider community.

“I am pleased that we are seeing good progress at the yard including the recruitment of new staff. The detailed understanding we now have of what it will take to complete the ferries is also a huge step forward.

“While there is a lot of hard work to be done, the alternative for the Scottish Government was to walk away, which would have resulted in hundreds of job losses, the yard’s closure and our vital ferries not being finished. I am not willing to walk away.”

Mr Mackay nationalised the yard in December to save 350 jobs and safeguard the delivery of the ferries, known as vessels 801 and 802.

Ferguson’s was bought of a previous administration in 2014 by tycoon Jim McColl’s Clyde Blower empire and quickly landed a £97m deal for two innovative dual-fuel CalMac ferries.

However the fixed-price contract was beset by design changes, delays and spiralling costs.

Ferguson’s blamed Caledonian Maritime Assets Ltd (CMAL), the state-owned firm which ordered the vessels, and which in turn blamed Ferguson’s and insisted on a fixed price.

The Scottish Government loaned the yard £45m to get through cash flow problems, but refused to take a stake in the firm in return for absorbing half the £100m over-run.

READ MORE: Ferguson Shipyard officially taken into public ownership

With money problems mounting, Clyde Blowers put the business into administration in August and the Scottish Government took it under temporary control.

After no credible commercial bids came forward, ministers nationalised it earlier this month.

Mr McColl remains a member of the First Minister's Council of Economic Advisers.

Tory transport spokesman Jamie Greene MSP said: “From start to finish the SNP have recklessly mismanaged the Ferguson Marine contract and we mustn’t forget that it is entirely the SNP’s fault that we are in this mess.

“Having buried bad news, we are being told that the total cost to the taxpayer will have doubled to £200M and be over 3 years late in delivery.

“It’s clear that no-one in the SNP has been keeping a watching eye over this project for many years and questions will rightly be raised about the contract award in the first place

“There is still no clarity over what impact nationalisation will have on the shipyard’s ability to bid for contracts, how this will impact its recovery and what the total cost to the public purse will be.

“It’s becoming increasingly clear that a full independent inquiry is the only way to get to the bottom of this fiasco, the SNP Ministers simply must be held to account over this.”

LibDem MSP Mike Rumbles questioned whether ministers had undertaken adequate due diligence before handing the contract for two prototype vessels to a yard under new management.

He said: “The disastrous placing of the orders for the two new vessels has now resulted in almost a doubling of their costs. The taxpayer has been lumped with an extra £100million in costs and a huge delay.

“The Cabinet Secretary is quick to pin the blame on management at Ferguson, but let’s not forget the Scottish Government had a significant role to play in ensuring due diligence was conducted in full. Clearly it was not.

“This huge failure isn’t straight forward or easily escapable. Mr Mackay needs to explain to passengers and the public exactly how this was allowed to go so badly wrong.”