Bosses at Ferguson Marine should receive no bonuses in this financial year, Humza Yousaf has declared.
It comes as it emerged bonus payouts totalling £87,000 were made to six senior members of staff in 2021-22 with the knowledge of Scottish ministers and despite the spiralling costs and delays in the delivery of two lifeline ferries.
Auditor General Stephen Boyle branded the payouts “unacceptable”.
In a letter to Holyrood’s Net Zero, Energy and Transport Committee on Thursday by deputy first minister Shona Robison, it was confirmed that further payments have been made so far this year for performance in 2022-23 with more set to come in June.
The total paid in bonuses for last year is unclear.
The letter stated: “While this progress is welcome, due to those legacy contractual commitments made in November 2022 by (Ferguson Marine Port Glasgow), without the prior knowledge of the Scottish Government, further bonuses are legally required to be made for the year 2022-23.
“The first of two instalments of £23,609 each has already been processed.
“This first payment was made in FMPG’s April 2023 payroll with the second payment of £23,609 due in June, subject to ongoing discussions involving the chair.
“I know that the committee will share my disappointment, particularly at a time when the delivery of vessels MV Glen Sannox 801 and Hull 802 remain long overdue; that despite every effort being made to ensure that no bonuses were paid in 2022/23, the payment of bonuses for 2022/23 is contractually unavoidable.”
First Minister Yousaf was challenged about the payments during First Minister’s Questions in Holyrood on Thursday.
Douglas Ross, leader of the Scottish Tories, said: “The two ferries are not fit to sail, the costs continue to spiral out of control, and islanders continue to be left without vital, lifeline services – so First Minister, what on earth could these bonuses be for?”
Responding, Yousaf said: “I won’t disagree with Douglas Ross or the Auditor General… the former deputy first minister (John Swinney) made clear his anger, we share that anger, I share that anger at the fact that bonuses have been paid.
“The bonuses that have been paid relate to a decision made by the remuneration committee of Ferguson Marine without consultation with the government in November 2022.
“Those bonuses, I have asked if they can not be paid and the advice coming back is that they are a contractual obligation.
“For any future discussion or consideration of bonuses, I have made it clear there should not be bonuses paid in relation to vessels 801 and 802.”
The First Minister confirmed it was “his expectation” that bonuses should not be paid for the 2023-24 financial year.
It came hours after the Auditor General told Holyrood’s Public Audit Committee he was unsure if it was possible to recover the money.
SNP MSP Willie Coffey said it “beggars belief” that bonuses could be paid at the yard.
When asked if the money could be recovered Boyle said: “I don’t know if those amounts are recoverable, that would have to be a judgment made by others in terms of the specifics of it, in terms of conditions that existed for those senior managers, what their contracts said.
“We draw attention to these amounts because the amounts were paid without effective
In a report published by Audit Scotland last month, the initial recommendation that £87,000 should be paid to the six managers was made by former turnaround director Tim Hair.
Mr Hair was installed at the yard to reverse its fortunes.
He ultimately failed to create reform but pocketed a total of £1.8m in wages and expenses during his less than three year tenure at the business.
The company’s remuneration committee ultimately approved the decision to award the bonuses based on the 2021-22 year.
Yousaf was also questioned on the ultimate cost of the Glen Sannox and as-yet-unnamed hull 802, which are set to be delayed by five and six years respectively if they meet deadlines for completion of the end of this year and the end of 2024.
Yousaf ultimately could not say how much the vessels would cost, under questioning from the Scottish Tory leader, after the Auditor General said it was “folly” to view an estimate of £300m as “reliable”.
The First Minister said it was “unacceptable” there had been cost overruns and delays and apologised to islanders for the disruption caused by the issues in building the ferries.
The First Minister added that the Scottish Government is currently reviewing cost projections.
Probe into Barlinnie replacement spending
In a separate round of questioning, Yousaf pledged an investigation into an estimated £300m overspend to replace HMP Barlinnie prison.
The construction of HMP Glasgow, set to replace Barlinnie, was initially predicted to cost taxpayers £100m.
Yet, the Scottish Government’s infrastructure plan up to 2025/26 has said the new £400 million cost will be “updated following full business case and procurement”.
The construction is set to take three years with work set to commence in September and an operational opening date earmarked for September 2026.
During FMQs, Scottish Labour leader Anas Sarwar urged Yousaf to commit to an audit into the capital programme as a new prison in the Highlands is also expected to cost around £140m – an increase from its projected £52m in 2011.
He said the Scottish Government’s “failure in managing the public’s finances” was a result of “failed interventions, waste and incompetence”.
Yousaf committed to investigating the expected overspend, with a view to bring the costs down.
However, he said increased construction costs were not unexpected due to the volatile market.
He said: “We are looking at the cost overruns, we are seeing what can be done to mitigate those cost overruns.
“I think we all agree in relation to the fact that our Barlinnie is not in the conditions that any of us would like it to be.”
He added: “Of course construction costs have increased for a whole number of reasons, partly to do with the UK Government’s complete mismanagement of the economy, but also to do with some global factors as well.
“We know the war against Ukraine, the illegal invasion by Russia, has also affected construction costs.
“But to give him a direct answer to this question, those costs overruns are being interrogated and we’ll do everything we can to bring them down.”
Sarwar dismissed Yousaf’s explanation and said: “This is a 300% increase in costs. Inflation is running at 10%.
“Even an SNP treasurer can tell you those figures don’t add up.
“Because Scotland’s prison estate is in a dire condition.”
“In fact, I all five major capital programmes in the criminal justice system, all are running over budget,” he added.
“If the First Minister truly believes in transparency, will he commit opening up the books and would he welcome an Audit Scotland review into these projects so we can understand why costs are running out of control?”
Yousaf told Sarwar: “You can bet your bottom dollar that they will be interrogated because of course, we are absolutely in really challenging financial circumstances.”
It is understood Barlinnie’s replacement will include a reduction in the size of the housing blocks from 30 to 20, and will see football pitches and en suite cells introduced.