Cost and completion date of delayed Ferguson ferries 'still unclear'

Audit Scotland said it is 'deeply concerning' that the costs and completion date of the vessels remains unknown.

Cost and completion date of delayed Ferguson Marine ferries still ‘unclear’, Audit Scotland warns STV News

The costs and completion dates of two over-budget and long-delayed ferries remain unknown, a report has warned.

Audit Scotland said it is “deeply concerning” that there is still doubt over when the publicly-owned Ferguson Marine shipyard will finish the construction of the two lifelines ships.

Vessels 801 and 802 are already five years late and estimated costs have ballooned to £293m. The original estimate was £97m.

Scotland’s auditor general said the latest estimates suggested an extra £9.5m of funding is required for the ferries.

Stephen Boyle said that doubt remained over the long-term viability of the Port Glasgow shipyard, which was nationalised in 2019.

A report has warned that doubts remain over the future viability of the Ferguson Marine shipyard.FMPG

The Scottish Government has issued a review into the future of the shipyard, which is ongoing.

Among the issues raised by his report was the £87,000 in bonus payments made to senior managers at the shipyard during 2021/2022.

Boyle said it was “unacceptable” that the performance bonuses were awarded without Scottish Government approval.

He said it was not clear how the performance of the managers was assessed.

The auditor general said: “It is deeply concerning that the costs to complete these ferries have continued to escalate, whilst the island communities these boats are meant to serve remain significantly impacted.

“Despite substantial sums of public money being invested, there is still no certainty over how much the ferries will cost, when they will be ready or whether the shipyard has a viable future.

“It is unacceptable that performance bonuses were awarded to senior managers at the shipyard, without proper governance for such payments. The Scottish Government needs to make sure its rules over pay are followed by this public body.”

David Tydeman, CEO of Ferguson Marine Port Glasgow (FMPG), said the board of directors accepted the feedback from the auditor general.

He said: “We have taken on board the remarks from the auditor general for Scotland.

“The Ferguson Marine board has already introduced greater transparency and governance in terms of future retention incentives.

“Scottish ministers appointed a new chair, Andrew Miller, in January 2023 and we now have in place a framework that will improve the governance of future performance-related payments.

“We appreciate the points Mr Boyle is making regarding the completion of the ferries/funding gap, given that the shipyard is funded by public money. 

“However, it is important to understand that the gap he identifies is largely to cover increased contingency expenditure – recommended by independent experts appointed by the Scottish Government, as well as funding for additional warranty spend that may arise in the 12 months after we hand over the vessels.”

Tydeman said the construction costs to build both vessels are not a “major contributing factor” to the funding gap. 

David Tydeman said Ferguson Marine had a 'strong future'.STV News

He said there is a “strong future” for the yard through winning contracts from companies such as Caledonian Maritime Assets Ltd (CMAL) and BAE Systems to make ships and frigates.

“Securing this business, alongside completion of the two dual fuel vessels, is now our primary focus and central to the future of the yard,” he said.

Tydeman added: “Securing this programme of work would allow us to steadily increase efficiency, programme management, labour profiles and outputs, and place the yard in a competitive position for future larger and more complex ships, including those required by the offshore wind farm market over the next 15 years.”

The Scottish Tory’s shadow transport minister, Graham Simpson MSP, said the report was “utterly damning”.

He said: “Even at the already eye-watering cost of more than £300m there is still a shortfall in funding and we have no guarantees from the SNP transport minister that these ferries will be completed.

“Betrayed islanders will be wondering when this SNP ferry fiasco will ever end.

“The report also contains the remarkable revelation that the future of Ferguson Marine remains uncertain despite hundreds of millions of taxpayers’ money being poured into it on the SNP’s watch.”

He said the Scottish Government needed to “urgently” update the public on its plans for the yard and ensure its future viability.

He continued: “It is also deeply concerning that widespread failure has been so handsomely rewarded with management receiving near six-figure bonuses, even without SNP government approval.

“The SNP’s ferry scandal demands an independent inquiry to find out the whole truth of this appalling saga.”

A spokesperson for the Scottish Government said it is committed to helping the shipyard secure a long-term, sustainable future.

They said: “We expect the company to provide a strategic business plan to ministers in due course for comment and agreement.

“It is a concern that FMPG did not inform or seek approval from the Scottish Government before bonus payments were paid to senior managers. This should be done as a matter of good governance.

“However, the new senior management team is committed to consulting with the Scottish Government as required on this issue in the future.

“Significant progress has been made by the chief executive and chair of the board on the governance structure at the shipyard over the last 12 months.

“We deeply regret that work on the two ferries is taking longer than it should.

“The Scottish Government remains focused on supporting our island communities that rely on this type of vessel.”

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