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The next item of business is a statement by Stephen Flynn on Alexander Dennis Ltd. Questions will be taken at the end of the statement, so there should be no interventions or interruptions.
17:44
I welcome this opportunity to update the chamber on developments in relation to Alexander Dennis and the ways in which the Scottish Government is working with the company to ensure that it remains a key part of our industrial base.
In June 2025, the then Deputy First Minister, Kate Forbes, came to the Parliament to update members on the news that Alexander Dennis, a subsidiary of the Canadian NFI Group, had commenced consultation on a new strategy for its United Kingdom manufacturing operations. The strategy proposed to consolidate all UK bus body manufacturing operations into a single Alexander Dennis site at Scarborough in England, closing the Falkirk site and suspending production at Larbert. That devastating news meant that up to 400 roles were placed at risk of redundancy, which affected nearly one quarter of the company’s workforce.
At that time, our priority was to support the skilled manufacturing workers of Alexander Dennis. Their interests and the interests of their families, the local communities of Falkirk and Larbert and the broader supply chain have always been paramount. Our determination to support those workers has not changed.
Over the past 15 months, that determination has seen ministers engage closely and regularly with the leadership of Alexander Dennis and the unions that represent its workforce. Only last month, the First Minister met the chair and the chief executive of NFI Group alongside the chief executive of Alexander Dennis to discuss the outlook for the business, support for bus decarbonisation and any potential further support. I believe that we share a determination to ensure that Alexander Dennis is a successful business that delivers the products that customers demand and trust and offers high-quality job opportunities now and into the future.
The trade unions—Unite the Union and GMB Scotland—have also been invaluable in amplifying the voice of the workforce and engaging constructively to find a solution to Alexander Dennis’s decision to consolidate manufacturing operations in Scarborough. Both the Government and the unions have consistently and actively sought alternatives to redundancy. I am clear that, in the case of the Scottish Government, we have done everything in our collective power to protect skilled employment in this case.
We have a long and proud history of supporting Alexander Dennis to innovate in the face of intense international competition, support bus travel and help bus operators to make the switch to electric vehicles. Alexander Dennis is Scotland’s only bus manufacturer and is key to our country’s advanced manufacturing base. The company’s expertise and industrial capability are important to Scotland’s ability to participate in and benefit from the transition to net zero transport.
For those reasons, we have invested heavily in Alexander Dennis over many years to support technology development, skills and cultural transformation. Over the past decade, Scottish Enterprise has awarded £30.5 million in research and development support to Alexander Dennis to spur the development of ultra-low-emission and zero-emission technologies. In 2016, a grant of £7.3 million was provided to support the development of innovative low-carbon buses. In 2020, an additional £10 million was provided to develop zero and ultra-low-emission buses. In 2023, a further £13.2 million was awarded for the development of zero-emission technology to support the creation of new battery electric and hydrogen powertrains.
In addition to those research and development grants, the Scottish Government also offered subsidy to support the company’s furlough scheme. Last September, following a thorough review of options and in consideration of the economic value that Alexander Dennis brings to Scotland, the Scottish ministers agreed to award a grant to Alexander Dennis in support of its company furlough scheme, in line with the Subsidy Control Act 2022. It should be noted that the UK Labour Government made no such offer.
Funding of up to £4.1 million was offered to support the company’s furlough scheme for up to 26 weeks. It was applicable only to shop-floor workers based in Scotland whose roles were linked directly to bus production. The grant that was offered was a time-limited, proportionate and targeted intervention that was designed to preserve zero-emission bus production in Scotland, while limiting the burden on taxpayers.
Our aim was to retain a valuable skills base during a period of market uncertainty and to prevent the loss of capabilities that would be difficult, costly and time consuming to recreate. This was a truly innovative and exceptional intervention—the first and only time that the Scottish Government has offered subsidy to support a company-administered furlough scheme. As we made clear to Parliament at that time, if all the conditions of the furlough grant were met, including evidence of head count retention and contracted orders for buses to be built in Scotland, Alexander Dennis would be entitled to recover from the Scottish Government up to 80 per cent of the basic wage costs of its manufacturing staff in Scotland, up to a maximum claim of £2,500 per employee per month.
The terms and conditions of the grant were developed and negotiated jointly with the business, with a view to making our shared objective of sustaining the workforce through a temporary gap in orders. Alexander Dennis accepted those terms and conditions, including those on the evidencing of contracts and continued bus building in Scotland before any payment from the Scottish Government could be made.
However, since the furlough grant was offered, the company has changed its plans and is now pursuing a different option, based on all bus production taking place at Scarborough and chassis production work being brought in house at Larbert. As a result, the grant conditions are not met and the Scottish Government is not able to make payment to Alexander Dennis. Although extremely disappointing, that is consistent with the arrangement that we agreed with the company. However, as I said earlier, we continue to work closely with the company to secure continuity of employment for the highly skilled workers at Alexander Dennis and the future of manufacturing in Scotland.
I emphasise that the Government has taken the actions needed to promote the best outcomes for the workers at Alexander Dennis. Since the company’s announcement in June last year, ministers have worked intensively with Alexander Dennis and trade unions to pursue every possible initiative to retain the jobs in Scotland. We have always sought to understand the core issues and explore all available avenues of support. That is why we agreed a unique furlough support grant worth up to £4 million, based on a set of conditions that included securing a minimum number of orders and safeguarding a minimum number of bus manufacturing jobs in Scotland.
The fact that those conditions have not been met is deeply disappointing. We are encouraged, however, that the company has invested in chassis manufacturing at Larbert to retain skills and keep open options to return future bus building to Scotland. The Scottish Government and Scottish Enterprise are continuing constructive discussions with the company as part of our engagement to protect jobs and keep skilled manufacturing in Scotland.
I will be happy to answer members’ questions, and I commit to returning to the chamber when further updates are available.
I will allow around 20 minutes for the cabinet secretary to answer questions on the issues raised. Members who wish to ask a question should press their request-to-speak buttons now.
I thank the cabinet secretary for the advance sight of his statement, which merely reaffirms the Government’s position that Stephen Flynn has already outlined this week.
Stephen Flynn described the mooted furlough scheme that was announced by Kate Forbes as
“a truly innovative and exceptional intervention”.
It would have been had it happened, but it did not. Had the reopened Scottish zero emission bus fund—ScotZEB2—process, which he did not mention, delivered the expected volume of buses in the timescale expected, the terms of the furlough scheme would have been met. It was the Scottish Government shifting the goalposts on ScotZEB2 that forced Alexander Dennis to pursue a different outcome for Larbert. Alexander Dennis feels that it has been hung out to dry by the Government. It expected at least some of the furlough money but instead has had to heavily invest in turning Larbert into a chassis-making centre. All the while, taxpayers’ money is being used to buy buses from China.
Here is an idea that I would like the cabinet secretary to consider. Could the £4.1 million that was allocated for furlough be repurposed as part of a wider package of financial support from the Scottish Government and Scottish Enterprise to help to pay for some of the infrastructure investment at Larbert and/or to support the company’s new product development? However we have arrived at this point—it kind of does not matter—that would be a constructive and positive outcome for Alexander Dennis and its workforce, as well as for the Scottish Government.
I am not entirely sure from Mr Simpson’s remarks whether he believes that we took the right course of action on the furlough. I will be explicit to him, as I was yesterday to his party colleague: the conditions of the furlough were not met. It would not be correct, nor would it be right, for the Scottish Government to make payment given that those conditions were not met. I hope that Mr Simpson would agree with that principle, given that we are talking about public money.
I assure Mr Simpson and members that our engagement with Alexander Dennis will continue on a constructive basis. Scottish Enterprise is fully engaged with the company to ensure that it has a successful future in Scotland. We have a shared ambition in that regard, and I am keen to ensure that it happens.
I, too, thank the cabinet secretary for advance sight of his statement. There is a key question about timelines. The furlough window closed at the end of March, and I understand that Alexander Dennis sought to draw down at that time. My understanding is that all the facts that are being relied on by the cabinet secretary were known at that time. Therefore, why has it taken until now for those facts to be brought forward by the Government? Why did the Government not set those facts out to the Parliament before the summer? Did the delay create any impediment to the management and the trade unions that have worked so hard to preserve jobs? It would be a matter of public concern if there were any delays that caused issues.
In response to a question on the same theme this morning from Mr Rennie at the Transport Committee, I outlined my written response to a question—I believe from Mr Stephen Kerr, whom I spot at the back of the chamber—in which I was explicit about the non-payment of the furlough because the conditions had not been met. I am here, in the chamber, now, to answer questions from members on why that was the case. I have been explicit to the Parliament that conditions were not met. Given that is the case, it is right and proper that the Scottish Government does not pay out.
I am grateful to the cabinet secretary for his statement this afternoon on an important manufacturing business that is based in my constituency. The cabinet secretary will recognise that the workforce and my constituents are concerned that Alexander Dennis failed to meet the agreed conditions of the furlough scheme, which were put in place last year. The company should set out clearly why it failed in that regard. What ongoing work is the Scottish Government undertaking to support bus manufacturing? I asked that question earlier this afternoon, but I would like to hear the answer this time, because there was a certain amount of hilarity when I first asked it. There should never be hilarity when we are talking about people’s jobs. Will the cabinet secretary also assure me that the Scottish Government continues to press the UK Government to make the necessary legislative changes to the Subsidy Control Act 2022?
For members who were not here earlier in the afternoon, the hilarity that Mr Bouse refers to was laughter from the Reform benches with respect to this issue, which was deeply regrettable in my view—and clearly in Mr Bouse’s view, too.
Over the course of recent years, the Scottish Government has, through the ScotZEB scheme and its predecessors, been able to provide significant sums of money to companies in order to allow them to procure buses from Alexander Dennis, which has helped to sustain the company. Over the course of the past year or so, we have engaged proactively and constructively with Alexander Dennis on the furlough. Unfortunately, the conditions have not been met. On top of that, some £30 million-worth of R and D funding has been provided to Alexander Dennis to allow the company to innovate and compete in a robust international market. That was done in good faith.
We will continue to act in good faith with the company, because we want to do everything that we can to support the workforce that Mr Bouse represents.
I call Gillian Mackay, who is participating remotely.
The cabinet secretary has laid out a number of measures that have been taken to help to support Alexander Dennis, but those measures will not be helping the workers, who will be concerned for their livelihoods, given what is now unfolding at the business.
Other schemes have been put in place for people who have lost their jobs around the Falkirk area, including at Ineos in Grangemouth. Is any such work being undertaken in the event that that is the way that jobs go at Alexander Dennis? What other support can the Scottish Government provide in the light of the ongoing issues?
As I outlined in my statement, the company has committed to chassis manufacturing at Larbert, which I think is a positive step. If the opportunity arises for the company to return bus manufacturing to Scotland, I would be very supportive of that.
The workforce deserves our continued support, and we will certainly continue to provide that on behalf of the current and future generations.
It is no wonder that Gillian Mackay’s son was crying.
Thank goodness I asked a written question, because if a written question had not been asked, we would never have had a statement. I say to the cabinet secretary that, frankly, it is a disgrace that he would not have volunteered the information to the Parliament unless I had asked that written question. I think that that is appalling. The First Minister, by the way, was busy claiming that the jobs in question had been saved. At election time, SNP candidates were busy parading around all over the place with leaflets that said, “We’ve saved these jobs.” It was an election con. That is how it comes across.
We need a question, Mr Kerr. A lot of members want to ask questions.
I understand that.
Why did it take three months from the point at which the company requested that a portion of the grant be paid for the Government to get back to it and tell it that it was not going to get a penny? Why did that take three months? Was it because of the election? Why has Stephen Flynn not spoken to a UK minister about the biggest issue in connection with this whole saga—the imported Chinese buses? Why has he never had a single contact with the UK Government about that? Why has he not spoken to the company even now? That needs explained. What is he going to do to secure manufacturing jobs at Larbert? Will he answer the question that Graham Simpson asked about other support that might be better for the company?
The member seems very interested in my diary arrangements, but let me be very clear with him. There is no higher office in this land—[Interruption.]
Mr Kerr, if you ask a question, please wait for the answer.
Presiding Officer, I will deal with him, if you are happy for me to do so.
There is no higher office in this land than the office of First Minister. If Stephen Kerr had listened to my statement, he would have heard that the First Minister met NFI and Alexander Dennis on 31 August. We are keen to ensure that there is constructive and continued dialogue with the company, to help ensure that it is able to maintain operations in Scotland. We have a shared interest in that regard, and we will continue to work to that end.
It looks as though we have to guess what the cabinet secretary is hiding before he is prepared to tell us.
The cabinet secretary now has £4.1 million that he was not expecting to have in his budget. As we have a joint determination for the company to succeed, is he now trying to find a different avenue for getting that funding to the company, so that we can have more Scottish buses on Scottish streets?
As I outlined earlier, Scottish Enterprise and the Scottish Government remain in continued dialogue with Alexander Dennis to discuss its plans at present and, indeed, its plans for the future. I assure the chamber that, if there are any further updates to be provided in that regard, I will provide them.
Thank you. Every party has had a member ask a question, and we are already 12 minutes in. I am afraid to say that not everyone is going to be able to ask a question, given the length of questions.
I share the cabinet secretary’s concern that Alexander Dennis did not meet the agreed conditions and welcome the continued efforts of the Scottish Government to support skilled workforces and preserve manufacturing bases here in Scotland. It is vital that, across Scotland’s industries, we continue to support Scotland’s supply chains and manufacturing capabilities. Can the cabinet secretary say any more about the Scottish Government’s work to that end?
We have spent a significant amount of money—and rightly so—on ensuring that we decarbonise our bus fleet across Scotland. Alexander Dennis is one of many companies that have been able to receive that support. I think that around 40 per cent—37 per cent, if I remember correctly—of ScotZEB money has been linked directly to Alexander Dennis.
That builds on the wider investment that we are making across Scotland in our bus network, whether it be the direct financial support through the network support grant to ensure that our buses can run—the £6.5 million due to recurring costs—the £55 million bus infrastructure fund that I announced this summer or the considerable concessionary card payments that we make to companies to ensure that people right across Scotland can benefit from bus travel. That package is intended to deliver for the people of Scotland, and we are very proud of it.
The First Minister has met the company, but the cabinet secretary has not done so since being appointed on 20 May 2026. Does he now plan to meet the company?
As I made clear to the Economy, Energy and Tourism Committee just yesterday, I was unable to attend the meeting with the First Minister on 31 August.
Where were you?
Where was I, Mr Hoy? I was at a funeral.
Excuse me—speak through the chair, please.
I was at a funeral for a good friend of mine, who had sadly passed away. I am sorry that I was not able to meet the company on that day, but I will endeavour to engage with it proactively and constructively moving forward.
I understand that Transport Scotland has been working with the UK bus manufacturing expert panel to develop a demand pipeline for zero-emission buses. Can the cabinet secretary provide an update on that work, which could have huge potential for domestic manufacturing?
The UK Department for Transport published on 16 March 2026 its 10-year zero-emission bus order pipeline, which brings together data on anticipated zero-emission bus orders from local authorities and bus operators for the period from 2026 to 2035. That welcome, though much-delayed, development shows the size of the prize that is available. The challenge for UK ministers now is to ensure that their subsidy and procurement rules do not impede domestic manufacturers from claiming that prize.
This is a deeply worrying development for my constituents in the Falkirk area, and my thoughts are very much with the workforce and trade unions based at Alexander Dennis.
I want to press the cabinet secretary on a question that he has avoided answering a couple of times now. The Government knew in March that Alexander Dennis was moving to chassis manufacturing and that, as a result, the conditions had not been met. Why did it take three months to inform the company of that, and why has it taken six months for this to be dragged out of the Government by the Opposition?
Members on the Labour benches seem very vexed at my being in the chamber today to give a statement on this particular issue, but not a single one of them has yet mentioned that not a single finger was lifted by the UK Government to offer any sort of financial support to Alexander Dennis. Perhaps they should have conversations with their colleagues in London on why they did not seek to provide further support, whereas we did.
Can the cabinet secretary provide details of the Scottish Government’s latest engagement with employees and trade union representatives to ensure that their voices inform the Scottish Government’s next steps?
Dawn Black’s question gives me an opportunity to reiterate my thanks to the unions for their constructive dialogue over many months on this deeply challenging situation. I met them shortly after coming into office and I had a discussion with them earlier this afternoon. They should be incredibly proud of their determination to do the best by their workforce. I assure them and the chamber that I will work with the unions to try to do our level best to support people in the local area.
When a once locally owned business can be bought by a foreign owner, leaving local jobs at the mercy of remote decision makers, that is surely a reminder that the private sector cannot be relied on to deliver the investment that we need in a just transition. What we need is a Government with an active industrial strategy so that skilled workers are not at the mercy of corporations.
If Mr Harvie has any suggestions that he would like to propose to me that are fully costed and deliverable, I am more than happy to engage with him on that basis.
The cabinet secretary outlined that there were two conditions for the furlough scheme: head count retention and the retention of bus manufacturing orders in Scotland. Did the company keep the head count? How many jobs are at risk? The cabinet secretary said that the company wants to keep open the option to return to bus manufacturing in Scotland. How realistic is that?
That will very much be determined by the number of orders that the company can secure from the market across the UK. As I alluded to earlier, it is important that the UK Government reflects on its procurement and subsidy rules in that regard.
With regard to the workforce numbers, the company did not meet the expectations that were agreed between the Government and the company, which is why the furlough grant was not paid.
Given that the UK Government has explicitly confirmed that shifting to a direct state procurement model would allow Scottish contracting authorities to use the Procurement Act 2023 to legally disregard bids from non-treaty state suppliers such as China and embed domestic social value, will the cabinet secretary commit to scrapping the failed ScotZEB model in favour of a state-backed purchase and leasing scheme in order to legally ensure the return of full bus manufacturing in Scotland?
Labour members have finally found their voice with that suggestion—perhaps they could have used their voice more acutely when the company required support. Of course, only the Scottish Government chose to step forward at that point.
That concludes the ministerial statement on Alexander Dennis Limited.
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