Ministers do not rule out more public money millions over ferry crisis

Ministers were accused of presiding over an “outrageous mismanagement of public funds” after pressing ahead with the second ferry at the Ferguson shipyard, known only as Hull 802, despite learning it would be cheaper to scrap the vessel and tender for a new one.

It comes as the Scottish Government-owned ferry procurers and owners CMAL indicated two ferries being built in Turkey are being built to schedule and that after a public vote, they will be named as Isle of Islay and Loch Indaal following a public vote.

Analysis of the money trail based on the Scottish Government's own accounting and audits revealed that with an extra £72m sanctioned for this financial year, the cost to the taxpayer of supporting Ferguson Marine both before and after it forced its nationalisation has soared to more than £450m.

Wellbeing economy secretary Neil Gray confirmed on Tuesday that the government will proceed even though the project failed its value for money test.

READ MORE: ScotGov grants £60m+ extra spend on fiasco ferries despite value fail

He issued a rarely-used ministerial direction to overrule the value for money financial test saying completing the vessel at the nationalised yard was the fastest way of delivering more ferry capacity. That came after eight months of 'due diligence' over the extra funding requested by Ferguson Marine for this financial year.

The Ferguson Marine budget in the last financial year was £35.9m but it was overspent by £25.2m.

In 2021/22 ministers approved £115.1m in spending on Ferguson Marine - more than twice the planned budget.

And in 2020/21 a £49.6m budget ended up with expenditure of £84.7m leaving a £35.1m overspend.

Ministers have not ruled out needing to pump even more millions into Ferguson Marine to deal with the ferry-building crisis.

It has been confirmed that if Ferguson Marine needed more money going forward, that that situation would be reviewed, although Mr Gray insisted there is "no blank cheque".

Scottish Conservative shadow transport minister Graham Simpson MSP said: “After years of catastrophic mismanagement and soaring costs, Neil Gray’s decision to continue with 801 and 802 was probably the least worst option, since further delay for islanders would be intolerable.

“But it does mean that we’re still waiting on a long overdue and overbudget project where yet more taxpayers’ money might have to be poured in.

“The Cabinet Secretary can’t simultaneously claim that there’s no blank cheque, but that he can’t tell us the final price. After years of abject failure, the SNP Government must finally get an iron grip on the costs and delivery of this project.”

In March it was confirmed that due to "persistent design gaps and build errors" the first of the two Ferguson Marine vessels, Glen Sannox is scheduled for autumn 2023 rather than the end of May 2023 with a "contract backstop" of no later than the end of December 2023.

Neil Gray

Hull 802 is now not expected to set sail till the autumn of 2024 having already been delayed to the end of March 2024. The contract backstop was stated as being at the end of December 2024.

They were originally due to set sail in mid-2018 with one initially to serve Arran and the other to serve the Skye triangle routes to North Uist and Harris, but they are well over five years late. It is suggested the costs of delivery may quadruple compared to the original £97m contract costs.

The two ferries for CalMac were ordered in 2015 when Ferguson Marine was owned by Jim McColl, a then pro-independence businessman who rescued the Inverclyde yard from administration a year earlier.

When the build ran into trouble, the shipyard firm fell into administration and was nationalised with Mr McColl and the government-owned ferry owning and procurement agency CMAL blaming each other for the fiasco.

Mr Gray accepted that the ministerial direction over funding was "rare" and said that without that the yard would have been put "in jeopardy".

And he added: "I made it explicit to the chief executive that we must ensure that we protect the costs as far as we possibly can, although we have to accept as well that there are economic situations including spiraling inflation that are having an impact at the moment. But I want to ensure that we can protect as far as possible, the budget that has been set."

He said procuring a new vessel to replace Hull 802 would mean it would not be delivered till May, 2027 at the earliest and said that the value for money case for the second delayed vessel Glen Sannox had been met.

He told the BBC: "I've made explicitly clear that and the yard gets, this the chief executive gets this, understands the public consternation that there is that we cannot see it continued and further escalating cost overruns.

"There have been risks that have been outlined that the yard needs to work on and minimise for any further cost overruns."

The long delays in the delivery of Glen Sannox and Hull 802 and a perceived lack of investment have had a major impact on the resilience of the ageing CalMac fleet, which has been hit by frequent breakdowns and soaring maintenance costs.

A Scottish Government spokesperson said: “The Cabinet Secretary has made it explicit to the Ferguson Marine chief executive that remaining costs to complete the Glen Sannox and vessel 802 must be protected as far as possible, whilst making it clear to parliament that inflationary and other significant pressures, such as design gaps and deficiencies could increase the cost to complete.

“The Ferguson Marine chief executive will undertake a detailed review of remaining costs in light of the due diligence assessment, and Scottish Ministers have asked him to update Parliament on this work.”