Ferguson Marine: Demands to scrap 'nonsensical' bonus pay rules

Calls have been made for a review of Scotland's public sector pay rules after the Scottish Government-owned Ferguson Marine indicated more bonuses were on the cards for executives in the wake of the ferry-building fiasco.

Questions were raised after The Herald revealed that nationalised Ferguson Marine planned to plough ahead with controversial bonuses in 2023/24 despite the First Minister stating his expectation was they would not be paid.

The move has come in the wake of bonuses paid to executives at other state-owned companies Scottish Water and ferry operator CalMac.

It was confirmed to The Herald that chief executive David Tydeman who received almost £40,000 in bonuses in 2022/23 will be eligible for more in this financial year in the wake of an internal review over the perks.

The state-owned shipyard has already been criticised for the award of a new wave of executive bonuses in the wake of the ferry-building fiasco with awards reaching over £200,000 in three years.

The bonuses against a background on the operator of the last remaining shipyard on the lower Clyde, which was rescued from administration by the Scottish Government in 2019, struggling to complete two lifeline ferries Glen Sannox and Glen Rosa which are due to be delivered at least six years late with capital costs expected to more than quadruple from the original £97m contract.

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A total of £86,551 was paid in 2022/23 to executives at Ferguson Marine (Port Glasgow) despite past concerns from the First Minister about the payouts.

David Tydeman, the yard's chief executive received almost £40,000 in bonuses, with a further £47,217 paid to eight other staff.

It is part of a performance related bonus scheme aimed at incentivising and retaining staff.

It comes despite the fact that the Scottish Government's public sector pay policy rules, which regulate how public money is being spent, have maintained a suspension of performance related bonuses for over seven years.

£86,551 in bonuses was paid in 2022/23 to executives at Ferguson Marine in Port Glasgow (Image: Newsquest)
According to the Scottish Government, the suspension allows public bodies to maximise the resources available to them to "address fair pay issues and pay restoration".

The pay policy acts as a reference point for all major public sector workforce groups across Scotland including NHS Scotland, fire-fighters and police officers, teachers and further education workers.

The wide range of organisations covered range from ferry owners Caledonian Maritime Assets Limited, Highlands and Islands Airports Limited the Scottish National Investment Bank and Scottish Enterprise to Crown Estate Scotland, Historic Environment Scotland, NatureScot and the Scottish Prison Service.

Audit Scotland said that the bonus payments at Ferguson Marine represent a "significant deviation" from the Scottish Government's pay policy.

That is despite the fact that Ferguson Marine is not on the list of publicly funded bodies that have to abide by the rules.

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One that is on the list, state-owned Scottish Water, has not received the same level of audit and government scrutiny over bonuses as Ferguson Marine.  

It has had approval to give much greater bonuses than Ferguson Marine in a bid to retain staff in the same way that the shipyard firm has.

The three key executives of the nation's state-owned water supplier have received nearly £1m in bonuses in the past five years.

Scottish Water says it has a longstanding exemption from the rules in "recognition of its operating model and the need to retain staff in competition with the private sector".

State-owned Scottish Water has approval to give larger bonuses in an effort to retain staff from moving to the private sector (Image: Newsquest)
Executives at state-owned ferry operator CalMac, which is also not on the list of public sector companies and bodies covered by the pay policy, have received over £300,000 in performance bonuses and perks between 2016 when the Clyde and Hebrides ferry contract was awarded to the ferry operator and 2022.

They were described as "payments for failure" by some ferry user group officials who are shocked by the bonuses in the wake of concerns over how CalMac has managed lifeline ferry services with an ageing, underinvested fleet of vessels.

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Katy Clark, the West Scotland MSP who is Scottish Labour's community safety spokesperson said there needed to be a rethink of the pay policy.

"The public sector pay strategy states clearly that the Scottish Government’s policy is to ‘maintain the suspension of non-consolidated performance related pay’ or ‘bonuses’," she said.

"The bonuses reported at Ferguson Marine and Scottish Water, which in both cases amount to hundreds of thousands of pounds, make a complete mockery of that policy.

"It’s not acceptable for ministers to hide behind contractual obligations or ‘renumeration committees’. These are publicly funded bodies and the buck stops with the Scottish Government.

"The application of this guidance needs to be thoroughly reviewed across the entire public sector."

One union official believed that the pay policy of the Scottish Government was "nonsensical", should be scrapped and redrawn with consultation with the unions in the wake of the bonuses revelations because "not even those making the policy seems to follow it".

A Scottish Government spokesperson said: "Our approach to public sector pay is fair and progressive with specific controls for higher earners, to help ensure that public sector pay remains affordable and delivers value for money. All remuneration packages are assessed to ensure they are an appropriate use of public resources to deliver the public services we need."