Official Report 1039KB pdf
The next item of business is a debate on motion S6M-20036, in the name of Richard Leonard, on behalf of the Public Audit Committee, on its report, “The 2023/24 audit of Ferguson Marine (Port Glasgow) Holdings Limited”.
15:11
I remind members of my voluntary register of trade union interests.
I present this unanimous report to Parliament on behalf of the Public Audit Committee, and I thank all those who have contributed to it, not least the committee clerks and other parliamentary staff for the work that they have put into it.
It has been a great privilege to serve as the convener of the committee for the past four and a half years. Whoever takes over after the elections in May, in the next session of Parliament, can look forward to continuing much of the work that has begun in this session of Parliament, not least the continuing scrutiny of Ferguson Marine (Port Glasgow); the final delivery of the Glen Rosa; a performance audit on completion of that order, which has already been promised to Parliament by the Auditor General; and the results of the forensic audit that is now being undertaken by Grant Thornton, which will be the subject of additional assurance by the Auditor General, ensuring that it will also come before this Parliament.
A forensic examination of the historical accounting records of Ferguson Marine is an audit that the committee strongly recommended be undertaken, because we believe that it is a matter of significant public interest that we properly understand—literally in forensic detail—how public money was spent when the yard was in private ownership between September 2014 and December 2019.
The committee report that we are debating this afternoon has its roots in a section 22 report that was laid before Parliament almost a year ago to the day. As part of our inquiry, we took evidence from old and new accountable officers, from the strategic commercial assets division of the Scottish Government, and from the trade union shop stewards in the shipyard itself. We did not just sit in Parliament—we went to Port Glasgow and spoke to the workers as well as to the managers.
Let me make clear at the outset why we produced our own report, conducted our own investigation and called for this debate in Parliament today. It is because we do not want this yard to fail. It is precisely because, above all else, we want this yard to succeed. So, when the Auditor General warns in his report to this Parliament that he is concerned that Ferguson Marine (Port Glasgow) may not be “a going concern”, the committee has responded by concluding that, without “urgent investment”, and so without new orders, the yard may not survive.
So, this report is about securing the yard’s future—we make no apology for that. It is about productivity and investment. It is about jobs and a strategic industry. It is about the last commercial shipyard on the Clyde.
That is why, when the Deputy First Minister told the committee just a few weeks ago, in early October, that, of the £14.2 million that has been set aside for capital investment in the yard, only £570,000 has been spent—that is less than 5 per cent—the committee was alarmed.
In paragraphs 49 to 52 of this report, which we should remember was first published in early July, we make it plain—again unanimously—that the Scottish Government needs to act with urgency and that the Scottish Government and FMPG—the ministers and the board—must publish FMPG’s strategy and revised business plan as soon as possible. We are still waiting.
The yard simply cannot modernise on the basis of a perpetually pending plan. The director general for economy told the committee way back in February:
“We need to align the nuts and bolts of what is required for the investment with the strategy and the business plan.”
We are still waiting.
But our concern is not solely with the Government. When we quizzed the then chair of the FMPG board, Andrew Miller, about the strategic plan for the yard, he answered in both a confused and a confusing way. He told us:
“We have been trying to pull that narrative into the future, with substantiated data to articulate the dialogue of what the business needs to do”.—[Official Report, Public Audit Committee, 5 February 2025; c 45, 41]
What chance have you got?
Mind you, this is the board chair who told us in June 2023 that he did not, in his words,
“understand the narrative around the term ‘bonus’.”—[Official Report, Public Audit Committee, 1 June 2023; c 17.]
Management bonuses were not bonuses; they were “retention payments”, he claimed.
He also told us
“We would definitely like to deliver some good news in the next six months.”—[Official Report, Public Audit Committee, 5 February 2025; c 46.]
That was 10 months ago. We are still waiting.
In carrying out our parliamentary scrutiny and taking evidence on activities like the extraordinary secondment arrangements or the eye-watering exit payments, the committee has had to make tough recommendations. We cannot ignore what went on.
Take the secondment. Here we had an employee—seconded from another public sector organisation, Caledonian Maritime Assets Ltd—who decided to form their own limited company in which they were the sole shareholder, in which they were the sole director and into the bank account of which their FMPG salary was paid. Between February 2023 and March 2024, that added up to over £144,000. Neither the board nor even the remuneration committee had approved this arrangement. A substantial sum of unpaid income tax and national insurance contributions had to be reimbursed to His Majesty’s Revenue and Customs.
In the lexicon of the Auditor General, this represented a weakness in governance and transparency, and the committee agreed, but it is hard to conclude anything other than that this was, in my lexicon, a secretive, tax-avoidance con trick. We should remember that this is in an organisation that is 100 per cent owned by the Scottish Government and so 100 per cent owned by us, and which exists in the first place only because of all of us paying all our taxes.
Then there were the exit packages. Three employees left with pay-outs above £95,000—which not only is a considerable amount of public money, but is above the threshold that requires advance Government approval—but this happened with only one out of the three exit payments, so where were the controls, internal and external? Where was the accountability? Where was the governance? Where was the Scottish Government’s sponsor division?
Let me offer another personal insight. In my almost five years of chairing the Public Audit Committee, it has never been those toilers, those lowest-paid workers or those creators of the wealth who break the rules. It is always—always—the highest paid and the most powerful people in an organisation who break the rules. It is as though some people believe that there is one set of rules if you are at the top and another set of rules for the rest of us.
Incredibly, we also discovered that, while the organisation operated with an audit and risk committee for three years post-nationalisation, it did not have a dedicated internal audit function until the financial year 2023-24. So, our report is clear—given the scale of historical weaknesses and the number of high-risk areas demanding close attention, the Scottish Government needs to closely monitor the internal audit plan.
Let me end, Presiding Officer, where I started. The Public Audit Committee of this Parliament wants modernisation in the yard. All we want is for the workers to be given a fighting chance to compete for future work. We think that the workforce should be at the centre of decision making, not at the margins of it, and that, if they had been—instead of a reliance on retired naval commodores and rear admirals, international management consultants and highly paid turnaround directors—there would not have been some of these multiple and repeated failings, and our island communities would have been served by these two ferries quite some time ago.
This is a state-owned yard and the Scottish Government is the sole shareholder. There is no shortage of shipbuilding orders out there and no shortage of potential work. So, the cross-party parliamentary Public Audit Committee is unanimously calling on this Government to act decisively, because, if it does, this yard, which has a distinctive and proud history, can have a distinctive, proud and positive future.
Let me finish with something that Alex Logan, the GMB convener, candidly said to me when we visited the yard back in June. I hope that all parties will pay attention to this. He said:
“We don’t want to be just another sub-contractor to BAE Systems. If that’s the case, we may as well just get taken over by BAE and become a defence sub-contractor. But that’s not who we are, or have been for a hundred years.”
That is what we need to fight for and that is what this is about. On behalf of the Public Audit Committee, I move the motion in my name,
That the Parliament notes the conclusions and recommendations contained in the Public Audit Committee’s 3rd Report, 2025 (Session 6), The 2023/24 audit of Ferguson Marine (Port Glasgow) Holdings Limited (SP Paper 846).
I call Daniel Johnson to speak to and move amendment S6M-20036.1.
15:20
The report by Audit Scotland and the subsequent report by the Public Audit Committee are stark and emphatic, and Richard Leonard’s words emphasised that. We already know about the Government’s incompetence, which has led to years of suffering for island communities and to a £400 million bill being picked up by the taxpayer. That is why we have taken the unusual step of seeking to amend the motion. That is not something that would normally happen, but it is important, because the issues raised by the committee’s report are substantial.
I urge members to read page 11 of the report, which lists the committee’s first four conclusions. The first conclusion is that the committee has “significant concerns” about the long-term financial sustainability of the yard. The second conclusion is that part of the problem is the “significant reputational damage” that has been caused by the process of overseeing the two vessels. Although the third conclusion is that the committee “notes” the Scottish Government’s financial support, the fourth conclusion is that “urgent investment” is required to secure the yard’s future.
I point members back to the second conclusion, on the reputational damage to the yard. Why did that reputational damage come about? It came about because the Scottish National Party Government used the yard as a political football for a political stunt. That politicisation is the exact reason for the reputational damage.
Will the member take an intervention?
I will do in a moment.
There is not just a financial story to be told—the Government and, indeed, all of us have a moral responsibility to ensure that the investment goes in, so that the yard can have the future that we all know that it deserves.
With regard to reputational damage, would Daniel Johnson also acknowledge the fact that the yard went into liquidation in 2014? Clearly, the reputation of the yard was already damaged.
What has happened since then? A £400 million bill is being picked up by the taxpayer—that is on the Scottish Government.
We all know that, beyond the Glen Rosa, the key to the long-term sustainability of Ferguson’s yard is simple—it needs orders. It is welcome that Ferguson’s has secured work through BAE Systems to build the next generation of Royal Navy warships. That is proof that the United Kingdom Labour Government’s investment in defence is supporting skilled jobs in Scotland.
However, the subcontracted fabrication work on HMS Birmingham is not, on its own, enough to sustain the yard and its workforce; Ferguson’s needs a steady supply of whole-ship orders. As we have heard, the Government promised to invest £14.2 million in modernisation, but, 18 months later, only £500,000 of that has been forthcoming. That is not good enough.
During that time, the Scottish Government has issued a contract for seven small electric Caledonian MacBrayne ferries—but to a Polish firm. A Scottish yard that employs Scottish workers and that is owned by the Scottish Government is losing vital contracts to foreign yards, while the Government prevaricates on its investment promise to make the yard competitive. This is a party whose mantra is, apparently, “Stronger for Scotland”. That is almost as big a joke as using two ferries as a punchline. It is laughable, but that is the catch-22 situation that the Scottish Government has created: it will not provide the money until orders are forthcoming, but the yard cannot secure those orders without the investment that it needs.
To use his word, the member talked about the “politicisation” of the award—I assume that he means back in 2015. He now wants us to break subsidy control and procurement law by making a direct award for the small vessel replacement programme. Can I just get the story straight?
The Subsidy Control Act 2022 is clear—this has not changed since 2014—that there are several criteria that can be used, including local context and social value, and a direct award is certainly possible. If the Scottish Government wants to prevent the issue from being a political football, it should provide the yard with the investment that it needs in order to operate.
That brings me to my second point. We know that CMAL did not take account of the immense social value that the small ferries contract would have brought to Scotland and to Inverclyde. Despite scoring strongly on the technical aspect of the bid, Ferguson Marine lost out on price to a yard that has no obligation to meet the same high standard of labour laws that we have in this country. The Government needs to develop, at pace, a model of public procurement that takes account of social value. Procurement law has not changed since 2014—
Will the member take an intervention?
If it is brief.
I am sure that my friend would also note that, unlike in Scotland, the Polish Government offers generous patient finance to Polish shipbuilders through its state investment bank.
That is a point worth noting.
The United Kingdom Labour Government has committed to reviewing UK procurement legislation to boost domestic supply chains and support British businesses and local jobs. I ask the Scottish Government to work with the UK Government to explore how the legislation can be changed. The issue is not just with shipbuilding; we also have the example of Alexander Dennis, to which the Government gave millions of pounds in grants only for buses to be built in Egypt and China.
The skilled and dedicated workers at Ferguson Marine have been failed time and time again by SNP chaos and incompetence. The fear now is that even changes to procurement legislation will not come quickly enough to secure the future of the yard. That is why the Government needs to act quickly to ensure the yard’s future.
We call on the cabinet secretary to commit to bringing forward the full £14.2 million, as was promised; to level the playing field for Scottish manufacturers by reforming its approach to public procurement; and to issue a direct award for the MV Lord of the Isles. Anything less risks losing another vital piece of our critical industrial capacity.
I move amendment S6M-20036.1, to insert at end:
“, and calls on the Scottish Government to fulfil its commitment to invest all of the £14.2 million promised to modernise the yard to enable Ferguson Marine (Port Glasgow) to secure orders.”
15:28
I welcome the opportunity to open this debate for the Government and to respond to the Public Audit Committee’s report on the 2023-24 audit of Ferguson Marine. I am grateful to the committee and to Audit Scotland for their continued scrutiny and the constructive challenge that they bring to the operations of an important Government-owned business.
Ferguson Marine is the Clyde’s last commercial shipbuilder. It plays an essential role in providing lifeline ferries for our island communities, and it remains—as, I am sure, my colleague Stuart McMillan, the local MSP, will make clear—a cornerstone of the local economy.
By taking Ferguson Marine into public ownership in 2019, we protected more than 300 skilled jobs and ensured that the Glen Sannox and Glen Rosa would be completed in Scotland. Our three core objectives remain unchanged: to complete the ferries that are required by our island communities; to support a highly skilled and dedicated workforce; and to secure a sustainable future for a shipyard that is of national industrial importance.
We share the committee’s ambition for a competitive, resilient and well-managed shipyard. In particular, I noted Richard Leonard’s point that the committee wants the yard to succeed. That is a good point of consensus as we start the debate.
Will the Deputy First Minister give way?
I ask Craig Hoy to allow me to make a bit more progress, and then I will be more than happy to take his intervention.
We want Ferguson Marine to be capable of supporting Scotland’s long-term maritime and economic interests. We also recognise the frustrations that are felt by Parliament, which the two previous speakers expressed, as well as those that are felt by island communities and, indeed, by the workforce due to the delays and cost pressures in the MV Glen Sannox and MV Glen Rosa projects.
The delivery challenges and governance issues at Ferguson’s have been significant, and it is right that we address them openly. I will always apologise to our islanders, many of whom are my constituents, for the disruptions that they have faced in the ferry network as a result of delays at the yard.
With our support, the board of Ferguson Marine has, over the past year, taken sustained action to recruit fresh leadership, strengthen governance standards and improve oversight. A new chief executive, Graeme Thomson, who brings extensive shipbuilding and engineering experience, was appointed in May. He is tasked with driving completion of the MV Glen Rosa and developing a long-term commercial strategy for the yard.
Board governance has been strengthened, too. The Ferguson Marine board has introduced clearer segregation of duties and more structured agenda planning, and it has enhanced its programme of board and committee meetings. Four new non-executive directors with strong commercial and shipbuilding expertise have been appointed, and the board will continue to review its governance arrangements over the next 12 months to ensure that they remain robust.
Internal audit capability has also improved substantially. External expertise from BDO Global has enabled Ferguson Marine to address all high-risk and most medium-risk audit recommendations, with strengthened reporting to the audit and risk committee and improved corporate and project risk registers.
Nevertheless, I recognise the Public Audit Committee’s concerns regarding earlier governance failings. I am very clear that the handling of certain matters during the financial year 2023-24—especially matters that were concealed from the board and from ministers—did not meet the standards that are expected of a publicly funded body. When they were uncovered, the board alerted ministers and Audit Scotland and took appropriate steps to address them, including through the removal of the former chief executive.
The improvements that are now embedded across leadership, assurance, financial controls and governance represent a meaningful shift in capability and discipline at the yard.
Will the Deputy First Minister take an intervention?
Will the Deputy First Minister give way?
I do not know whether Craig Hoy wants to come in at this point.
The minister is painting a rosy picture of the situation now that borders on recklessness and complacency. Is it not the truth that this has been a fiasco in procurement, a fiasco in governance and a fiasco in providing a strategic direction to the yard? Why, throughout all this, has no SNP minister resigned?
Craig Hoy was not listening if he thinks that I was painting a rosy picture in my comments a few minutes ago.
Let me turn to the delivery of the MV Glen Rosa. A joint project group now brings together Ferguson Marine, CMAL and Government officials to monitor progress and assess risks in real time.
[Made a request to intervene.]
I ask the member to let me get through my points and, if I have some time, I will bring him in.
Lessons from the MV Glen Sannox are being applied to the MV Glen Rosa’s build and commissioning stages.
Looking ahead, the future of Ferguson Marine must be built on strong leadership, improved productivity and a sustained pipeline of work. Incidentally, I think that most members across the chamber are agreed on that point.
The Government remains firmly committed to supporting the yard to compete for and win new contracts, and to secure its long-term sustainability. As part of that commitment, up to £14.2 million has been allocated over two years to support yard modernisation, subject to due diligence and commercial tests. That commitment has not changed, and, in that spirit, I am more than delighted to support Daniel Johnson’s amendment.
To date, we have received 11 capital expenditure requests from Ferguson’s, all of which have been scrutinised rigorously and approved. That targeted investment supports essential repairs, health and safety improvements, and equipment upgrades. It is intended to assist with the delivery of the MV Glen Rosa and to build capacity for the yard to deliver future work more efficiently.
Access to the remainder of the modernisation funding requires a clear, board-approved long-term strategy, which will be evidenced through the revised business plan that is currently being finalised. I cannot remember whether it was Richard Leonard or Daniel Johnson who talked about that. However, it is important to note that that is the board’s business plan, which will then be submitted to ministers.
The yard is actively pursuing commercial contracts, and it has been clear about the importance that it places on securing future public sector work. As Parliament knows—this is so important—shipbuilding is a competitive global market and any public contract award must fully comply with procurement and subsidy control rules. If it does not, we will have the worst of both worlds—no work for Ferguson Marine and ships not being built.
In conclusion, there is still much to do at Ferguson Marine, but strengthened leadership, firmer governance, targeted investment and clearer strategic planning provide a more stable foundation for the yard’s future.
Presiding Officer, I will close there, considering the look that you are giving me.
I call Edward Mountain. You have around five minutes, Mr Mountain.
15:35
Thank you very much, Presiding Officer. I will try to stick to my time, as the other speakers have.
I congratulate the Public Audit Committee on its detailed report. I do not recognise all the things that the convener said in his speech from the report, but the majority of them are there. I am delighted to see the forensic approach that has been taken by the committee, including my ex-colleague Jamie Greene, who was with me on the Rural Economy and Connectivity Committee and has spent as much time as I have looking at the ferries. He and I, as well as this Parliament, have survived four chief executive officers, four chairs, seven cabinet secretaries and 10 ministers—quite a number, in other words.
Where are we now? As the Public Audit Committee has reported, we are with a yard with no orders; a yard that, going by the evidence that we have been given on the way that it is structured, is going to need 25 to 30 per cent more money to produce a ferry than any other yard in the world; and a yard that needs about £14.2 million invested—I will come back to that last point, because at one stage we heard that it would be £25 million, so there seems to have been a bit of a reduction.
How have we got here? It is quite clear that there has been Government incompetence and management incompetence, and there is now no confidence from people who want to order ferries.
The Government incompetence goes back many years. First, who would award a contract to a company with no proven management experience in shipbuilding? I acknowledge that there might have been great experience among the workers, but the management of the yard would never have built a ship in their lives. Secondly, the Government allowed two ferries to be built at a yard that could not house two ferries, despite the fact that, as part of the contract, they had to be built at the same time. If that is not incompetence, I do not know what it is.
Then we got the arrangement of 15 staged payments for each of the ferries. What a great idea. Most yards across the world ask for five, but because the Government was keen to ensure that the person running the yard got as much support as possible, it agreed to 15 staged payments, and then managed to pay £82.5 million of the £97 million contract value when less than one ferry was built. That is incompetence.
What did we do then? When we got the yard into private ownership, we appointed Tim Hare to be the turnaround director. I know for a fact that, if you are a good turnaround director, you are never out of work. Well, Tim was the only one who was available. I also know that, if you are the turnaround director and you are six months into your job, you are no longer the solution to the problem—you are the problem. That was proved by the fact that, when he left, he had taken a huge amount of money from the Government and had not done much to turn the yard around.
We then got to the situation with the chair—I was amused by the convener’s comments about this. The Government appointed a chair to run Ferguson Marine who had never built a boat in his life. He had pretty incompetently run Prestwick airport, and he gave speeches to the committee, which I heard a number of times and which I did not understand. They seemed to be a series of jargon-speak joined together into paragraphs that did not make any sense. Perhaps it was a code that the Government understood, but, as a human being, I could not understand it, so I am with the convener on that.
Where are we now? We have a yard with no orders. Western Ferries has taken its order and given it to Cammell Laird, and even the Government has turned the yard down, taking its orders to Turkey and Poland.
What we do not know at this stage, and what the Government has never come clean about, which I find quite bizarre, is what the unrecoverable costs of running the yard are. How much does it cost to keep the lights on, to pay the rates and to run the electricity in the yard? We do not know, but no more money is going to be paid for the ferries. We have been told that the yard has had all the money that it is going to get, apart from some contingency funds. So, apparently, the money that the yard has—although I do not see it in any bank account—is mythically going to multiply to cover its running costs until it gets a new order. I hope that the Government will tell us about that.
The Labour Party is calling for another £14.2 million to be invested in the yard.
It is not extra.
It is an extra £14.2 million, because, as Mr Johnson will remember, we gave the yard £30 million—well, Derek Mackay did, without telling the Parliament or the minister who had ordered the ferries. The Labour Party is calling for another £14.2 million to be invested. The question is, who would invest £14.2 million—
[Made a request to intervene.]
I cannot take an intervention from Mr Johnson unless the Presiding Officer will let me. I am coming to a conclusion.
The people of Scotland are being asked to invest that money when there are no orders in the order book and in the hope that an order will come along. To me, that is pretty dangerous and is a bit of a gamble. I hope that the Labour Party is going to explain that but, at the moment, I cannot support the amendment.
15:41
I like Kate Forbes—I hope that my saying that does not damage the rest of her time in Parliament. When she was appointed Deputy First Minister, she was given a number of challenges—we could call them poisoned chalices—and Ferguson Marine was certainly one of them. Today, she tried her best. She tried to make a virtue of admitting the failings in 2023-24, although not all the other failings in 2014, 2015 and 2016, and she tried to make a virtue of admitting that there were board and management failures.
How many times do we have to listen to ministers telling us that it is nothing to do with them? They were the ones who appointed the board and brought in all those numerous directors to run the yard but, somehow, it is nothing to do with them. Well, the fact is that it is everything to do with the SNP, because it was the SNP that brought in its favourite businessperson to run and own the yard. When that failed, the SNP took over the yard, and that failed, with work that was over budget and over time, with painted-on windows and numerous other failures such as chains that were not long enough. There were all sorts of difficulties and problems, all because of the SNP and the decisions that it took in politicising the process.
Who was it that suffered? The workers. They have a tremendous reputation for doing a good job, but they were led by very poor management, appointed by the SNP. Taxpayers are hundreds of millions of pounds out of pocket when people are struggling to put the lights on and keep their homes warm, and we are told that it is nothing to do with the SNP. Of course, there are the islanders who cannot even get a ferry on time to go to work, get a hospital appointment or visit friends and family. All of that was on the SNP’s watch.
The SNP needs to accept responsibility—Edward Mountain is right that no one has accepted responsibility enough to resign. We have been through numerous ministers, and they all run for the hills as soon as they can, but they are ultimately responsible, and somebody should pay the price, even if it is Kate Forbes.
Shipbuilding has its challenges, and it is difficult. I understand that it requires co-ordination and investment and that a drumbeat of work is needed to maintain the skills and good management, and to have security of investment and maintenance in the yard. We know that that is how it works. We know that we need a pipeline of work to give confidence to all those people that there will be work for the future—and there is a host of work. We are surrounded by seas, which are bustling with potential activity in relation to offshore wind, the remainder of the oil and gas sector and the Border Force. There is also BAE Systems just up the road, which is providing investment as a result of the UK Government investment in defence work.
A host of work is out there. What is the point of the Scottish Government owning a yard if it will not give it a future? At least plan for the future. Give the workers a chance to get some of that work, so that the yard can have a future.
The overall image is of a Government that we have transformed from cavalier—it was smashing champagne bottles and painting windows on the sides of boats—to one that is too scared to even come out from under its shell. We need a proper Government that has proper plans for the future to give those workers a chance.
We move to the open debate.
15:45
I thank my fellow Public Audit Committee members, the committee clerks and parliamentary staff for their work in producing the report, as well as those who gave evidence. The report is important not only to hold the Government and the management at Ferguson Marine to account but for the skilled workers at Ferguson Marine and the island communities whose lifeline services depend on having a modern ferry service.
Ferguson Marine has, in several different iterations, featured far too often in the Public Audit Committee’s work over a number of years. I welcome the Scottish Government’s on-going commitment to Ferguson Marine (Port Glasgow) and its long-term financial sustainability. The yard remains strategically important to Scotland’s shipbuilding capability because it provides high-skilled jobs and supports our industrial base. The cost overruns and delays to the MV Glen Sannox have created reputational damage that will be difficult to overcome. The setbacks have impacted on confidence in the yard’s ability to deliver on time and to budget, and island communities have felt the consequences most directly.
The report draws attention to a critical issue: there was no pipeline of future work beyond completion of the MV Glen Rosa, which is expected in Q2 2026. However, since the report, Ferguson Marine has signed a contract with BAE Systems to build three sections of a Royal Navy warship. The news is welcome, but it is important that the yard secures orders to build ships, not only fabrication work, as it is doing for BAE Systems. Without clarity on future contracts, the yard faces uncertainty that could affect employment and the value of the public investment that has already been made.
It is therefore disappointing that FMPG was unsuccessful in securing phase 1 of the small vessels replacement programme. It underlines the urgency of developing a revised business plan that is realistic, competitive and capable of securing future orders. The committee also found that urgent targeted investment at the yard is required if it is to compete effectively after decades of underinvestment. We must acknowledge the significant sums that have already been committed, but those must now be matched with robust monitoring to ensure value for money and measurable improvement.
Financial monitoring, in particular, must be strengthened if future investment is to genuinely support long-term sustainability rather than simply manage short-term pressures. The report is clear: FMPG needs stronger oversight and tighter governance. The increased cost forecast of the MV Glen Rosa exposes serious weaknesses in project management and financial planning, which cannot continue. We need non-negotiable accountability at every level of the organisation, so I welcome the commitment from both Ferguson Marine and the Scottish Government to improve internal controls. Since our inquiries began, we have seen early signs of progress: engagement between the strategic commercial assets division, board and senior management has strengthened since the new chief executive came into post.
Governance has tightened around non-standard staffing arrangements, settlement agreements and exit packages. Importantly, the new chief executive now meets regularly with trade unions, which gives the workforce a direct and influential role in shaping decisions. I am pleased that the Scottish Government will ask the board to consider the committee’s recommendation for greater union participation in governance structures. Those changes are welcome, but they will ultimately be judged on whether Ferguson Marine delivers vessels, restores confidence and secures new work.
Although mistakes have been made, the report provides a route to improvement. I am pleased with the committee’s work and believe that our recommendations will significantly strengthen governance at the yard and improve its ability to secure future contracts. The Scottish Government must be held to account for its stewardship since the yard came into public ownership. That is right and proper, but I remain convinced that public ownership was the right decision. Without it, Ferguson Marine would have likely closed, taking skilled jobs, shipbuilding capacity and decades of expertise with it.
You need to conclude.
We must now ensure that Ferguson Marine becomes a modern and competitive shipyard that delivers for island communities and supports skilled employment.
15:49
The Public Audit Committee’s unanimous report on Ferguson Marine is a damning indictment of SNP incompetence and failures in ministerial accountability. The SNP’s nationalisation of Ferguson Marine has resulted in islanders having to wait for delayed ferries and taxpayers having to foot the bill for the ballooning costs of new vessels. Since the yard was nationalised in 2019, the Scottish Government has poured more than £500 million of taxpayers’ money into this fiasco. What do we have to show for it? Two ferries—not quite two, remember—that are years late, are massively over budget and have still not been delivered.
The latest figures are staggering: £47.9 million has been allocated for 2025-26, including £38 million for the MV Glen Rosa and £9 million for yard improvements; an additional £14.2 million has been allocated for modernisation; and the forecast cost of the MV Glen Rosa now sits at £185 million, up from £150 million last year. That is not just mismanagement; it is a scandal.
The SNP promised island communities lifeline ferries back in 2018. Instead, the MV Glen Sannox entered service six years late, and the MV Glen Rosa will not be delivered until quarter 2 of 2026—which is getting closer and closer, by the way—a full decade after the original contract. Meanwhile, businesses on Arran and the Western Isles suffer, and confidence in the Government collapses.
The Public Audit Committee’s report exposes systemic failures: internal audit was so weak that assurance on governance could not be provided; exit packages exceeding £95,000 were paid without ministerial approval; and contractor arrangements bypassed board oversight, leaving the yard liable for £48,000 to HMRC.
What has been the SNP’s response? More money, more excuses and still no ferries. Douglas Ross said it best when he said:
“This is the SNP’s ferry fiasco—an embarrassment that has cost taxpayers hundreds of millions while islanders are left stranded. Ministers must stop hiding behind excuses and start taking responsibility.”
As I have said previously, it should be a given that a nationalised shipyard wins a Scottish Government contract, but ferries that should be being built on the west coast of Scotland are instead being made in eastern Europe.
Beyond the numbers lies the human cost. Ena Burke, from Arran, told reporters:
“When you live on an island the ferry rules your life. It puts huge pressure on us. You find yourself sitting there crying, thinking I can’t go through this anymore.”
Local business owner Morag Kinniburgh said:
“People are saying they won’t be back until the ferries are fixed because they can’t risk being stranded. My takings are down 20 per cent—tourists have heard the horror stories and stayed away.”
Barb Toab, from the Arran ferry action group, summed it all up by saying:
“We’ve gone beyond frustrated. We feel like we’ve been abused and ignored by the very people supposed to have our best interests at heart.”
The committee is clear on what must happen next. First, Ferguson Marine and the Scottish Government must immediately publish a revised business plan and strategy to set out how the yard will secure sustainable work beyond that on the MV Glen Rosa. Secondly, all future investment must be subject to transparent governance and rigorous value-for-money checks, with clear monitoring of outcomes. Thirdly, the Government must implement stronger oversight and accountability to prevent further cost overruns, including by providing a detailed plan to deliver the MV Glen Rosa without any further delay.
This fiasco is not about shipbuilding. It is about trust. It is about a Government that cannot deliver its most basic promises. The SNP’s failures have left islanders isolated, taxpayers fleeced and Scotland’s reputation for shipbuilding in tatters. The Scottish Conservatives demand clear ministerial accountability for every penny that is spent and every broken promise. A revolving door of transport ministers, chief executive officers and chairmen, along with the lack of a coherent business plan, means that the future of Ferguson Marine is uncertain, and the blame lies with the SNP Government. Enough is enough. The time for excuses is over—it is time for answers.
15:54
I was a member of the Public Audit Committee during its inquiry, and I fully support the recommendations that are set out in the report. I thank the convener for his flexibility in allowing me time to ask questions during the sessions.
The Scottish Government has invested in Ferguson’s to protect jobs, finish the vessels and, ultimately, save the yard. The yard would not be in the position that it is in today if regular investment had been made during the decades before it went into liquidation, in 2014. We need to remember the fact that the number of overseas workers who are employed in naval construction yards has attracted criticism recently, with people arguing that it is being done at the expense of Scottish or UK workers and that it demonstrates the impact of a lack of investment in people. Willie Rennie talked about the pipeline and the drumbeat of investment and orders, and he is absolutely right about that.
To go back to the report that is before us today, thankfully there have been some personnel changes at the yard. For example, Duncan Anderson is the new acting chair of the board, and I wish Duncan well, while I hope that a permanent appointment to the position is found soon. The current chief executive officer, Graeme Thomson, also took up his post in May, joining the yard towards the end of the committee’s work. He can therefore be absolved of any of the legacy issues.
Will the member take an intervention?
I am sorry, but I only have four minutes.
The Audit Scotland report was mixed, as was the committee’s report, as the convener touched on earlier. Ultimately, the yard does need orders and, as section 18 of the report indicates
“there is no shortage of potential work.”
Section 19 outlines the key steps to enable the yard to attract that, including four bullet points: rebuilding its competitiveness; sustained investment; effective management; and learning lessons from the recent tender bids.
It was foolish in the extreme for the yard management to decide to include the small vessel replacement programme 1 direct award order in the previous business plan. I know that I am not alone in thinking that. The subsequent wage bill was bloated, so its bids were always going to be exorbitant.
Notwithstanding the social value clause, which I am sure that Paul Sweeney will touch on in a minute and that has been touched upon many times in this chamber, the 65 per cent to 35 per cent ratio of quality and cost respectively gave the yard’s board and management a prime opportunity to win the work. However, they did not just fail—they failed spectacularly, letting down the workers, the local community and the taxpayer.
The committee and anybody who will listen will have heard about the revolving door of highly paid senior personnel coming and going within months, costing a small fortune. That has not been a good use of taxpayers’ money, and it certainly has not helped morale on the shop floor.
Will the member take an intervention?
No, I am sorry—I have only four minutes.
Sections 37 to 41 cover the then chair’s frustration at the bidding process and the claim that UK yards cannot compete on a level playing field, despite section 38 suggesting that UK yards can win. As the convener touched on earlier, the then chair is quoted in section 41 as saying:
“There is work—a possible contract which involves a private individual. There are two or three other things in the pipeline that we are very enthusiastic about. We would definitely like to deliver some good news in the next six months.”
There has been one bit of good news. That chair has gone from the yard, and I welcome that, because the yard management at that time lost orders and the workforce deserves better.
The yard needs investment and, notwithstanding some of the hyperbole that Daniel Johnson came up with earlier, I support that £14.2 million and want it to go into the yard, because it is crucial for the yard’s future. The key to boosting the yard’s efficiency and putting it in a position to secure some of that work that is mentioned in section 17 is for the board and the management to work effectively and efficiently and to turn our yard—because it is our yard—into a yard that we can all be proud of, and to support our workers.
15:58
I commend the committee on its excellent work on Ferguson Marine and echo the sentiments of the convener in saying that the whole Parliament wants it to succeed. When we boil it down, the question is whether this country has the will to have a commercial shipbuilding industry. If we do, we need to be clear about what we need to do to achieve that objective national mission. Perhaps that was the Government’s original aim when it saved Ferguson Marine from liquidation in 2014.
I visited the yard a year later as an account manager for Scottish Enterprise. To the best of my knowledge, I am the only member of the Parliament with any direct industrial experience of shipbuilding, so I speak with some direct insight. I visited the yard when it was largely under demolition and Ferguson’s was constructing new facilities while simultaneously constructing a ship. Alarm bells immediately began ringing for me regarding the inherent risk of disruption to production during that process, challenges indeed emerged with hull 801 and hull 802, and the rest is history—as has been well rehearsed.
The question is where we go from here. We need to address some fundamental considerations. First Marine International, an excellent benchmarking organisation, has done a thorough analysis of Ferguson Marine’s facilities from end to end—from steel coming into the yard to the ships coming out, outfitted, at the other end. It has set out a series of recommendations, which I understand are commercially confidential, so neither the Government nor Ferguson has disclosed that information in the detail that I would perhaps like to see. Clearly, however, there is a prescription for investments, which will allow the yard to achieve upper-quartile performance, as FMI would describe it—as I know, having worked with it before in world shipbuilding. That will involve elements such as a panel line, overhead cranes, welding equipment, outfitting facilities and cranage.
There are a number of obvious issues with the shipyard’s layout. I walked the yard in great detail with David Tydeman, the former director, and we looked at some of the obvious issues. For example, in the module hall, the overhead cranes that were installed in the original upgrade in 2015 do not have a third hook, so it is not possible to lift and turn units of ships. Normally when you build a ship, you put the ceiling on the floor, you lay out the ventilation, the cabling and the complex pipework downhand, and you then turn the unit shipwise and stack it on the berth. It is not possible to do that in the module hall, because the cranes there were not specified properly. That is basic stuff—it is basic incompetence—which has cast a long shadow on the efficiency of the shipyard.
There are issues about the infrastructure that urgently need to be addressed. The £14 million or so of investment is so important for that reason, but I imagine that there is a lot more that needs to be done besides. The yard needs a comprehensive, end-to-end renovation to allow it to perform at an upper-quartile level. There are also wider considerations. It is basically not viable to build ships commercially in Scotland right now, because we do not address some of the fundamental issues.
Other countries have patient finance products offered through their national investment banks, which are standard across Europe. In Spain—where the Northern Lighthouse Board’s most recent vessel has just been completed—there is a tax leasing arrangement, whereby you can effectively stagger your VAT returns over a long period, so that, in effect, you get a 20 per cent reduction on the up-front price of the ship. Poland offers patient loan finance to 100 per cent of the value of the ship through its state investment bank. That means not having to chase milestone payments to cover the overhead of the shipyard, which is exactly the mess that Ferguson’s got itself into: chasing milestone payments while knowing that the design was not ready. It got itself into a right old guddle with that, which is why it is such a problem right now. If we had that patient financing, things could be carried out much more patiently and collaboratively.
There is also the issue of the demand signal. We are not converting state demand into domestic orders and domestic production, because of the laissez-faire procurement rules. We need to get that minimum 10 per cent social value baked into our future procurement cycles, which would create more of a demand signal to be converted into Scottish orders. If we can get some of those fundamentals correct, as well as specific investments in the yard, we have a good chance of making a success of commercial shipbuilding in Scotland.
16:02
I join others in welcoming the efforts and diligence of the Public Audit Committee. More than 10 years ago, two ferries were ordered from Ferguson’s yard. The Glen Sannox has only recently entered service, and the Glen Rosa still has not been delivered. It is now six years since the SNP took Ferguson’s into public ownership but, rather than a steady course being set for the yard, there has been a shameful tale of mismanagement from right at the very top of Government—yet not a single SNP minister has lost their job or resigned in the past 10 years of failure.
Meanwhile, islanders and other communities who are dependent on reliable ferry links have suffered from the SNP ferries scandal. I intend to speak to their interests today. The enormous cost to the taxpayer impacts us all, but it is in the communities for which the Glen Rosa and the Glen Sannox have been built, and all the other communities that are dealing with outdated or absent ferries, where there is real anger. That is anger not just at the delays but at the impact on those communities and frustration at the insensitivity and lack of focus from too many politicians here, in Edinburgh, who see islanders’ concerns as peripheral at best and impertinent at worst.
The scale of the problem is already challenging, and it is only getting worse. The capital expenditure that is required to meet the cost of ageing ferries across Scotland is considerable. It is not only the west coast routes that are affected; the northern isles vessels are now more than 20 years old, and it has been estimated that replacing the Orkney inter-island ferry fleet alone will cost near enough £1 billion. Shetland is in the same boat—if members will excuse the pun—and the most recent Conservative UK Government had to step in to fund the new Fair Isle ferry.
It is not just the islands that are affected. Only last week, I raised local concerns over the future of the Corran Narrows crossing, which is one of Scotland’s busiest routes, yet one for which the back-up vessel is now on the historic ships register.
A comprehensive long-term strategy—one that island and ferry-dependent communities can have confidence in—is long overdue. It should take an honest view of timescales and costs; recognise the impact of the neglect that has got us to where we are now; and put the needs of communities ahead of procurement, greening the fleet and other incidental considerations that might be the priority of SNP ministers but are far from being the priority of islanders. It should look to new approaches but also ask fundamental questions about where the Government has been getting things so badly and disastrously wrong. It should look at the cost implications of privately chartering vessels, such as the MV Alfred, which has had its charter extended so many times to plug gaps in the west coast service that the bill to taxpayers is now more than the cost to build that ferry in the first place. It should look at whether the Government has considered fixed links seriously enough, where they are possible.
Ferguson’s can be part of that strategy, but ministers must appreciate that, given its track record, the idea of further vessel contracts being awarded to the firm concerns the island communities that I represent. Those of us in Orkney with long memories remember that, in the early 2000s, Ferguson’s won but then binned the contract for the MV Hamnavoe. The committee puts it bluntly. Although it recognises the work that has been done, it notes that
“the scale of historic failings highlights the need for continued vigilance.”
I wish Ferguson’s every success, but an enormous amount of work remains to be done to build public confidence in the company and to demonstrate its long-term viability. Ministers must never be allowed to forget that, although Ferguson’s might employ hundreds of workers in Inverclyde, the company’s failure, and that of successive SNP ministers, to deliver the promised ferries on time and on budget have impacted hundreds of thousands of islanders, island businesses and ferry users in communities right across Scotland. Their needs are non-negotiable, and any future strategy for shipbuilding cannot put what is good for Ferguson’s ahead of what is good for the Highlands and Islands communities that I represent.
16:06
I commend Richard Leonard, as convener of the Public Audit Committee, for insisting that the Parliament should debate the conclusions and recommendations that are contained in the committee’s report, “The 2023/24 audit of Ferguson Marine (Port Glasgow) Holdings Limited”. Although I was not a member of the Public Audit Committee at the time, I acknowledge the hard work of the committee clerks and my colleagues on the committee, both past and present. I am also grateful to the Auditor General for Scotland for his thorough and detailed report.
I will highlight the response from the Scottish Government to the Public Audit Committee dated 27 August 2025, in which the Deputy First Minister welcomed the committee’s scrutiny and constructive recommendations. She acknowledged the frustration of the workforce, of the communities that will benefit from the ferries being built at the yard and of the Parliament, while sharing the committee’s ambition for a competitive, sustainable and well-managed shipyard. She also recognised key aspects of the report that, rightly, highlight concerns around standards and governance. Those aspects include leadership, board governance, Scottish Government engagement and support, internal audit capacity, oversight of staffing and contracts, and staff engagement.
Governance, internal controls and contractor oversight in the early years clearly did not meet the standards that are expected of a publicly funded body. I therefore welcome the significant improvements that have since been made through close collaboration between the Scottish Government’s strategic commercial assets division and Ferguson Marine’s board of senior management. Ferguson Marine’s leadership has been strengthened, robust governance processes are now in place and, crucially, transparency and accountability have improved. The Parliament has already heard that a new chief executive was appointed in May 2025, helping to drive the delivery of the MV Glen Rosa while learning lessons from the MV Glen Sannox project.
Other key aspects of the report focus on project delivery and financial controls, the future of the yard and reputation and performance.
Although it is crucial that lessons are learned and swift action is taken in the areas highlighted in the report and by colleagues from across parties, it must now be everyone’s focus to ensure a successful future for Ferguson Marine.
I accept that there have been difficulties. However, let us not forget the key fact that the SNP Scottish Government stepped in and saved the yard to save jobs. We will never apologise for that. Had it not been for the actions of the Scottish Government, there was a real risk that Ferguson Marine would have ceased trading on the Clyde and lots of jobs would have been lost.
I urge members to compare the SNP Scottish Government’s response to Ferguson Marine to the UK Labour Government’s response to Grangemouth. The Labour Government at Westminster has failed to fulfil its election promises to bring forward the necessary investment and action to save Grangemouth. Anas Sarwar pledged on national TV to
“step in to save the jobs at the refinery”.
His London bosses have, of course, found money to nationalise British Steel; they have found money for petrochemicals in Belgium; and they have found money to back the Ineos chairman’s development of Old Trafford. However, they have repeatedly failed to invest in the workers and industrial future of Grangemouth.
Again, I thank the Public Audit Committee and the Auditor General for Scotland for their reports. I am confident that, with the Scottish Government’s support, Ferguson Marine will once more be competitive on the open market.
We move to the closing speeches.
16:11
I join other members in thanking the Public Audit Committee’s convener, Richard Leonard, and its members for bringing this important debate to the chamber. The figures that were laid bare in the Auditor General’s 2024 report, and the conclusions in the report that the committee published subsequently, are stark.
The reports highlight multiple and repeated failings, including instability around changing leadership, inadequate internal auditing processes and serious weaknesses in oversight at the Ferguson Marine yard. Decisions were made on matters such as £95,000 exit packages without the required ministerial approval, which demonstrated a lack of oversight and scrutiny of a yard that is under public ownership. Concerns were raised about that—
I thank Neil Bibby for highlighting those issues. Does he agree that the appointment of Tim Hair and, subsequently, of Andrew Millar caused further problems for the yard, which it could have well done without?
Clearly, turnaround directors were appointed who did not turn around the yard, and significant payments were made to individuals from public cash. I heard the Deputy First Minister say that appropriate action was taken on those exit payments. If that is so, I wonder whether she will confirm how much of that money the taxpayer has received back.
There has been, of course, the well-publicised controversy over the delay to the vessels MV Glen Sannox and MV Glen Rosa, failing not only islanders but taxpayers. Compared with the original contract price, the combined cost to taxpayers now stands at an estimated £460 million for the yard’s completion costs alone. The Glen Rosa, which was originally due in 2019, has been delayed again; its delivery date has been pushed into late 2026.
Clearly, there is a lot of blame to go round for the ferries fiasco. That applies to agencies, management and a merry-go-round of ministers. However, I want to be clear that the one group of people who have been blameless throughout are the workers, who are highly skilled and remain deeply committed.
As Paul Sweeney said, the question is where we go from here. The workers and their union, the GMB, have shown the leadership that has been lacking from others, and have been working to turn around the yard. That is why, alongside Inverclyde Council and a cross-party group of MSPs, the GMB has called for urgent investment in the yard to improve efficiencies and help to win future work. Paul Sweeney set out in detail the reasons why that is required.
The Public Audit Committee was clearly in agreement, stating in its report that
“urgent investment in the yard is essential if it is to become competitive and stand a realistic chance of securing new work. The yard’s inability to compete effectively is, in part, the result of decades of under investment. Without addressing this, its long-term viability remains at risk.”
However, in the months following those calls by the union and the committee, the pace of delivery of that investment has been glacial. Daniel Johnson pointed to the fact that only 5 per cent of the promised funding has materialised. Scottish Labour has repeatedly called for action and for that capital investment. It must be delivered as promised by the Scottish Government, to modernise the yard and provide it with a secure future.
Although the contract work with BAE Systems to build three sections of a Royal Navy warship is welcome, it does not secure the shipbuilding future that the yard and its workers urgently need. There is no doubt that those contracts and the significant investment in shipbuilding and defence from the UK Labour Government—I note that Joe FitzPatrick wants to concentrate on what the UK Labour Government is doing—demonstrate that we can help to secure the future of shipbuilding in the west of Scotland where there is the will to do so. The work from BAE has been a sign of confidence in the yard. However, we now need the Scottish Government to show a sign of confidence in the yard, too, not only with the capital investment, but with future Scottish Government work being awarded to the yard. The GMB has called for the yard to be awarded work from the small vessels replacement programme, specifically the replacement Lord of the Isles ferry, the original ferry having been successfully built at Ferguson’s.
Ferguson Marine deserves an opportunity to begin to restore its reputation, which has been damaged by the ferries fiasco, with robust oversight and checks being in place. The Scottish Government should not be sending ferry contracts to Poland and Turkey for smaller, simpler vessels when Ferguson Marine has a proud track record of building such vessels on time and on budget.
The people of Scotland deserve better than yet another report, this time from the Public Audit Committee, highlighting the consequences of more inaction by the Scottish Government. It is ultimately responsible for the ferries fiasco that has unfolded at the Scottish Government-owned yard, and it is for the Scottish Government to fix the mess of its making. Willie Rennie is absolutely right: the Scottish Government is scared to do the right thing now. To do that, it needs to listen to the skilled and dedicated workers at Ferguson Marine and their union, the GMB.
It is time for the SNP Government to move beyond the warm words and the letters of comfort that it continually sends to the committee along with vague commitments. It must invest in the yard and deliver the promised £14.2 million without delay to help it to win a long-term commercial pipeline and make it again a competitive bidder for domestic and international work. It must also show confidence in the yard—
Mr Bibby, you need to conclude.
—by awarding it future Scottish Government ferry work to safeguard Scotland’s iconic shipbuilding industry. If the Scottish Government does not provide certainty—
Thank you, Mr Bibby.
—and show confidence in the yard, why should anyone else?
16:16
I thank Richard Leonard and the Public Audit Committee for bringing this important debate to Parliament and for their dogged work to make sure that we continue to expose what I think is one of the greatest scandals in the history of this Parliament.
It was a scandal of the SNP’s making, because many of the problems that we see in the yard today stem from the initial corruption—I use the word in its broadest context—of the procurement process. As we have heard, those on-going problems include the real concerns about governance and financial management that have been identified by the Auditor General for Scotland, who has rightly taken more than a keen interest in the yard. I commend him for the dogged way in which he has independently ensured that he has kept abreast of developments at the yard. Not only has he probed the procurement of the Glen Sannox and the Glen Rosa, but he has continued to probe the on-going management of FMPG and the wider issues at the yard, because public money is at their core. It is taxpayers’ money, and all taxpayers should be concerned about the revolving door of highly paid senior managers who have sailed through the yard, seemingly incapable of turning it around.
When I visited the yard with the convener and the Public Audit Committee in 2022, one worker described the situation as a gravy train—or a gravy boat—that had sapped the morale of the workers, who felt as though they had been used and abused for political purposes. On bringing party politics into the matter, I say to Joe FitzPatrick that he is naive if he thinks that the SNP Government is not to blame. It is the SNP Government’s inaction and its inability to remain on top of the matter that have led to two ferries costing millions and millions and millions of pounds of taxpayers’ money and, all the while, have deprived islanders of their lifeline ferries.
The exit payments—the golden goodbyes—should be a matter of very real concern to ministers because, since the yard’s nationalisation, ministers are meant to have been in constant contact with managers at the yard to ensure that such issues do not occur. It provides the minister with no cover to say, “We weren’t aware—we didnae know.” At the end of the day, ministers should have known. They should have had the governance and accountability processes in place to ensure that they knew.
I clarify that, as soon as ministers became aware, action was taken.
The ministers appointed the directors and the boards that allowed those things to happen. If ministers had been more engaged from the outset—in fact, if ministers had abided by the procurement processes that should have been in place, rather than simply giving the contract to their pal—the rot that set in at the beginning would not have continued all the way through.
The way that Mr Hoy is speaking at the moment makes it sound as though he thinks that Government ministers should be micromanaging these contracts, which surely in itself would be very wrong?
I think that what Mr Stewart showed as a minister is that he could not manage anything, micro or otherwise.
On this Government’s record, the problem is that, even after all that money has been spent and after the employees, particularly those at the yard whom we met, have poured their heart and soul into keeping the yard alive, it is quite clear that, because of the SNP’s incompetence, there is a question whether the yard has a future.
As Mr Mountain said, we have a yard with no order book. I recognise the intention of the Labour Party, but to put a further £14 million into a yard that is, at present, failing would be naive.
What should happen? If there is a failure to invest, does the member think that the yard should close?
I think that it is quite clear—get the present vessel finished to a satisfactory standard, get it out the door, get the order book and then seek to invest in order to be able to build the capacity to deliver on that. That would be the logical thing to do, because at present it looks as though we are throwing good money after bad.
At the end of the day, we all want to see Scottish industry thrive, but I asked Nicola Sturgeon the same question that I asked the Deputy First Minister. In November 2022, I asked her:
“How can it be that painters, welders and cleaners might lose their jobs as a result of the fiasco, but you keep yours?”—[Official Report, 4 November 2022; c 28.]
I appeal to the Deputy First Minister again. If she is to look the islanders and workers in the eye, can she not now say that a minister—any minister—should have paid the price for this? Perhaps the Deputy First Minister may be the leader that the SNP never had—the First Minister that they never had. Perhaps she could look those islanders in the eye and say, had she been First Minister and the leader of her party, whether she would have sacked the ministers responsible for this.
I welcome the committee’s view that on-going scrutiny is essential to ensure that public funds are managed appropriately in the future. However, the onus of that should not just fall on the Public Audit Committee or on the Auditor General, because it is SNP ministers who have got taxpayers into this position. It is for SNP ministers to now act decisively to end the waste; to finally get a grip of this yard; and to ensure that the governance and accountability arrangements are in place, that the yard is on firm foundations, that it is fit for purpose and that there is an order book to invest in. Otherwise, it will be hard-working Scots and islanders whom the SNP has taken for fools who will continue to pay the price for the SNP’s incompetence.
I call the Deputy First Minister, Kate Forbes, to close on behalf of the Scottish Government. You have up to seven minutes, minister.
16:23
I will start where Craig Hoy left off by talking about looking islanders in the eye. I want to link that with what Willie Rennie said about ownership and responsibility. To be clear, I look islanders in the eye regularly. In fact, I have represented those very same islanders for almost 10 years.
I will say unequivocally in my closing speech what I said in opening speech—I apologise and the Government apologises for all the ways in which islanders have struggled with the lack of resilience in the ferry network, as linked with some of the delays at the yard.
In terms of assuming responsibility, it is crystal clear—all the debates and the scrutiny that has happened over the Ferguson marine yard and the number of times that I have responded to questions will leave the public in absolutely no doubt—that we take ownership of and responsibility for what has happened at the yard.
I was going to respond to every point that has been made. Unfortunately, however, all my scribbles basically demonstrate that the same four themes came through from all the speakers. I will therefore reflect on those four themes, which are future investment at the yard; direct award or order book; reputation of the yard; and leadership.
On the point about investment, we have—as I set out previously to Parliament—committed up to £14.2 million over two years to modernise Ferguson Marine. That is subject to full legal and commercial diligence. Edward Mountain put his finger on it when he talked about the importance of investment with contracts. It is clear, given the responsibilities that we have to abide by, that that investment needs to go hand in hand with the prospect of future income in and around contracts.
Does the Deputy First Minister recognise that there is a chicken-and-egg question there—
Yes—yes, I do.
Perhaps she can respond to that point.
Funnily enough, I use the phrase “chicken and egg” quite regularly in relation to investment. That is why we have taken a proactive approach in being very open with Ferguson Marine where there is investment that we can make now.
Paul Sweeney referred to some other forms of investment, such as investment in equipment—he talked about panel lines, for example—and we are very open to discussions about that. However, it is the board’s business plan. It has been revised recently, as Daniel Johnson might be aware, and it is very important that the funding is aligned with the prospect of future income in a very sensitive market, in particular with regard to subsidy control limits.
That funding of £14.2 million is still available—there has been no change in the Government’s appetite to invest—but it has to be invested in line with subsidy control rules and in line with the business case. All those who have spoken in Parliament this afternoon have talked about the need for a future order book, and, if our focus is on the order book, that investment needs to follow the prospect of future orders.
That programme is partly under way. I appreciate what Richard Leonard said about the funding.
I suppose that one of the outstanding things is the length of time that it has taken. The quotation that I gave from the director general for economy, who reports directly to the Deputy First Minister, was from February this year. We are now nearly towards the middle of December. Why has it taken so long to get the business plan and to get action for the yard?
It is for three reasons. First, it is because of the revisions to the business case directly from the board. We engage constructively with the board, but it is the board’s business case—that is important. We have had a new chief executive in the course of those months, and it is important that he is able to own plans for the yard. He brings a very commercial approach to it all.
Secondly, some of it is dependent on new work. We have been open to these discussions. The member will know, because it was covered in evidence to his committee and it is in the public domain, that the yard essentially tested the market on questions around pricing and interest. There was talk about it going up into procurement, and that was about testing the market. That work has been under way.
Thirdly and lastly, it is about future orders. The yard is in constant dialogue about potential future contracts. We will come in and support where we can and where it is appropriate to do so under the governance arrangements. Those are the three things that have to happen, and which are happening, in order to release that funding, but there is certainly no delay on our part. The funding is available—it is about drawing down that funding. There is no challenge in respect of that funding not being available.
Deputy Presiding Officer, I realise that I am getting short on time. Can I talk about the direct award? In the debate this afternoon, we have heard from members of all parties about the direct award. Shipbuilding is a competitive global market and any direct award of public contract must comply with applicable procurement and subsidy control rules, and must be capable of withstanding legal challenge. With regard to the small vessel replacement programme—as I have said previously in the chamber—we must avoid having the worst of both worlds, in which there are legal challenges because of the process, and islanders do not end up with ships while, simultaneously, the yard does not have work.
We will consider vessel contracts case by case; that includes for MV Lord of the Isles. I hear what the Labour Party has said and what islanders are currently saying. It must be an appropriate and lawful route to market, and Transport Scotland is currently considering the business case and next steps in relation to the replacement for MV Lord of the Isles.
Deputy Presiding Officer, I am assuming that I am out of time to talk more generally about reputation—
You have 50 seconds.
Wonderful. In general, with regard to reputation, this is critical. We recognise the reputational challenges that have been caused by past delays. There are clear signs that Ferguson Marine’s standing has improved. The yard’s technical bid for the first phase of the small vessel replacement programme was rated as very strong; cost was the only factor in the final decision. That should encourage us all to recognise not only the talent in the yard, but its potential to secure work as it nears the completion of the Glen Rosa—
[Made a request to intervene.]
The Deputy First Minister is concluding.
Leadership will help enormously, and I have talked about the real progress that the yard has made.
I call Jamie Greene to close the debate on behalf of the Public Audit Committee.
16:30
I thank all members for their contributions today; it has been a good committee debate.
As someone who was born and raised in Inverclyde, I always relish the chance to talk about Ferguson Marine. However, I do so in today’s debate without any pleasure, because I am as disappointed as I am sad to have had to co-author the report that we are debating.
The report unearthed a catalogue of issues with regard to this publicly owned, apparently strategic asset that has been the source of so much attention over the past decade. Our report brought to light many issues: poor governance and leadership; the uncertainty of the future of the yard; the secondment arrangements, which inexplicably lacked any financial transparency; the lack of adequate internal audit functions in the yard; and the highly valuable exit packages that were discussed. They were way above Scottish public finance manual thresholds and seemed only to serve as reward for failure culture in the yard’s management.
Of course, there was that repeat offender, as Mr Leonard will know, in Public Audit Committee reports—a complete and severe lack of oversight on behalf of the Scottish Government’s sponsorship department, the Scottish Government being the sole shareholder of that business.
It became clear to us that the yard’s interests have not always aligned with the interests of the protagonists involved in this lengthy saga.
I will not repeat the convener’s comments, but I will pick up from where he left off and talk about the future of the yard. When the committee went to Port Glasgow, it was clear that there is bags of potential for Ferguson Marine. We saw opportunities for small vessel shipbuilding, work on offshore wind tri-floaters, steel work and defence work. We saw a yard that was clearly willing to rise—and capable of rising—to the challenge to take on new projects and grasp new opportunities, but those opportunities have continued to pass it by. The small vessel replacement programme was a contract that the committee, the yard’s board and even the Auditor General for Scotland acknowledged would be the key win to underpin the success of its business plan, but that business plan now lies defunct.
It became clear to everyone concerned that Ferguson Marine could never compete against yards in Turkey or Poland—not on price, anyway, because we rightly pay our shipbuilders well in this country and we have high standards of working equality. However, the chair of the board of Ferguson Marine sat in the Public Audit Committee and told us:
“We are not playing on an even field. No shipyard in the UK ... can hit the prices of overseas shipyards. It is impossible.”—[Official Report, Public Audit Committee, 5 February 2025; c 42.]
However, the benefits of building ships in our own backyard and the immense social value that that brings have been consistently overlooked.
Will the member take an intervention?
I do not have time at the moment—I will make some progress first.
That surely is the very ethos of another Government bill, the Community Wealth Building (Scotland) Bill, which this Parliament has been asked to consider. It makes no sense to observers that CMAL, which is a state-owned public body, has set its bid-scoring criteria in such a way that it clearly excludes yards such as Ferguson Marine—a state-owned shipyard—from winning contracts. Ferguson can absolutely win on quality, but never on price.
We urge the Government to revisit that weighting so that Scottish shipbuilding is on an even footing with that of the rest of the world. If the issue is not addressed, the outcome will be fatal for the yard.
Will the member take an intervention?
If I can have my time back, I will happily take interventions.
There is no additional time, so it is up to the member.
Okay—if it is quick.
What Jamie Greene has just said is very different from the fact that Cammell Laird won the order from Western Ferries, which Ferguson, as we know, was bidding for but did not get, because Cammell Laird was far more competitive.
I will come on to how the yard can be competitive, because the committee looked at that.
There are opportunities now with MV Lord of the Isles and the second stage of the small vessel replacement project, as well as many other contracts, which will undoubtedly go abroad if the yard is not fit for purpose.
The Deputy First Minister seems to agree that the yard needs new work, but she failed to acknowledge in her comments that the primary source of such new work is the front benches on which she currently sits. The committee called for the yard to get sufficient investment to be upgraded, which it must do to stand any realistic chance of securing new work. We went as far as to say that we have
“significant concerns about the ongoing uncertainty”
regarding the yard’s long-term financial sustainability once the Glen Rosa has set sail.
That point is where I will address the Labour amendment. It raises a fair point. Of course, of the £14 million that was promised by the Government, less than around £500,000 has actually been delivered to the yard. However, it is clear from the correspondence that I received from the yard that that is because it failed to request the true value that is available to it.
That leaves a worrying end result: we could be in a use-it-or-lose-it scenario because that money cannot be rolled over to the next financial year. Therefore, the yard must spend what is available to it to upgrade the business. We must also see an upgraded and revised business plan, but one that, this time, is realistic and accounts for the loss of the contract that was not awarded to it—a contract on which the previous business plan was heavily predicated.
Money is not all that the yard needs. Of course, it needs new orders, but the restoration of the yard’s reputation is paramount as well. The past few years have been painful for the yard—I think that we all accept that. The cost overruns and delays to the Glen Sannox and the Glen Rosa are significant, and they come at a huge price not just to the public purse but to the islands that those vessels are meant to serve. No one now truly believes that the Government will ever say no to further asks for money to finish the job of building the Glen Rosa, because the whole project is simply too far down the line to stop bankrolling it at this late stage.
The reality is that the yard’s reputation can be rebuilt only through the demonstrable and successful delivery of future projects—projects that are built on time and on budget. However, that means being awarded or, indeed, winning contracts in the first place. If the Government is as confident in the yard’s abilities as many of us are, it must prove it.
The committee had no view on the issue of direct award—others do—but it begs the question: what is the point of having a publicly funded state-owned asset such as a shipbuilding yard and then consistently overlooking it when issuing contracts? It is an injustice to the talented workforce at the yard that there is no medium or long-term forecast or future for the yard that listens to the workers themselves.
The Ferguson Marine shipyard has a future. Its failure is not inevitable, but neither is its success. Although the Public Audit Committee was critical about the yard’s current position, we were also clear in our recommendations about what needs to change for it to succeed. A bright future is possible: a yard that bustles with a long line of orders, makes money and pays for itself, invests back into its workforce, creates good local jobs, invests in the Inverclyde economy and gives a big boost to the Scottish national economy. It can be a yard that puts us back on the world map as a proud shipbuilding nation.
We were unanimous in our conclusions and recommendations and, equally, we were unanimous in our criticisms of all parties. If the yard fails and if it closes its doors for ever, that will not be an embarrassment for the Government; it will be a national shame. We cannot let that happen.
That concludes the debate on the Public Audit Committee’s report, “The 2023/24 audit of Ferguson Marine (Port Glasgow) Holdings Limited”.
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