Chamber and committees

Just as I have a duty to be open and transparent, I think that the committee probably has a duty not to indulge in shorthand such as that, which has not been evidenced.

At the time that the yard went into administration, I was not First Minister. My predecessor was—rightly, I should say—doing everything that he could to see whether we could find a buyer for the yard. I understand, and would have understood at the time—I cannot give you precise dates for that—that Jim McColl was somebody he was speaking to about that.

I was not directly involved in that at the time, but I am not telling you that I did not have an awareness of it.

I had a professional relationship with him. Jim McColl had been on the Council of Economic Advisers, and I think that he had done other pieces of work for and around the Government. I cannot remember the exact timing of this, but he made a contribution to the skills policy of the Scottish Government. I would have come across him in what I would describe as a more political context, but I would not say that I had, or have had at any time, what I would describe as a personal relationship with him. It is a professional relationship.

Jim McColl is a businessman of renown and standing in Scotland—he is a public figure, in that sense. As regards his relationship to my party, to the best of my knowledge, he is not a member of my party and has never been a financial contributor to my party. I am not even sure that it would be correct to describe him as a full-throated supporter of independence. He has certainly made comments about constitutional politics.

When I became First Minister, my relationship with Jim McColl was principally through his continued membership of the Council of Economic Advisers.

That was the point at which—if my memory serves me correctly—we commissioned the independent QC to look at the matter. At that point, we were all trying to see whether there was a way through.

CMAL’s concern at that point, in addition to its concern about the lack of progress on the vessels, was that the surety bond was due to expire, so things were obviously coming to a head for CMAL in that sense. The discussions from that led to the commissioning of the independent QC, and the view there was that there was no legal basis in the contract for CMAL to make those payments. The process, which ultimately concluded with nationalisation, continued after that.

I am trying to be honest—I do not, as I sit here right now, know the answer to that question.

By definition, preferred bidder status—versus final contract award—means that the final contract award decision has not been taken and negotiations are still on-going. I would have known that in general terms, but I have reviewed the briefing that I got for that event and it rightly says—which I would have assumed anyway—that there were still significant negotiations to be concluded before the final contract award. Although it is not flagged up in that briefing as a particular issue of concern, there is a very clear reference to the on-going negotiations, including issues and complexities around the level of guarantee that FMEL would provide. So, yes, before I made the announcement of the preferred bidder on 31 August, of course I knew that it was not a concluded negotiation, because it was still at the preferred bidder stage of the process.

I understand and have seen many of the submissions to ministers in the published documents. Forgive me if I sound as if I am explaining some basic things here, but there is a provision on Cabinet agendas called SCANCE—Scottish Cabinet analysis of news and current events—which I think was there for previous Administrations as well and through which ministers can report things to Cabinet without full papers that require decisions. Issues around those will usually be reported to Cabinet after the event, as decisions taken.

Procurement decisions are not made by Cabinet. We decide the policy and budget, but the Cabinet would not decide on the actual award of a contract—the Queensferry crossing is an example of that. There will not have been full papers and Cabinet decisions on all of the matters that you raise. The decisions will have been taken—

Again, there are different aspects to the issue. In relation to the original decision on how many milestones there should be and what percentage of the contract price should be attached to each of them, that was a negotiation between CMAL and FMEL. I think that Kevin Hobbs made the point to you when he was here that that is standard. There is nothing untoward or unusual about that. In fact, he made the point that there is often flexibility around that.

It has been commented that there would usually be five milestones. There were more in this contract, but as Kevin Hobbs said, projects that he has been involved in have had a range of different numbers of milestones. There was nothing untoward in that and, as I understand it, it is standard in how such contracts are structured.

That then puts an obligation on the contractor—in this case, it was CMAL—to make payments when particular milestones are reached. That would be what the legal advice was about. When it got to the point where steel was being cut, that triggered a milestone payment, which CMAL had no option but to pay. As I understand it, that is not peculiar to the contract. It is a standard part of shipbuilding contracts of the type that was used.

I think that there is an issue—although, again, as I understand it, it is not unique to the contract—in relation to the substance that needs to be evidenced about the progress on the contract before payments are made. That is one of the lessons on which we need to reflect. Should it be enough that the steel has been cut? Should it not be that that has led to progress on construction of the vessel? We need to reflect on that aspect—although, if changes to that took the approach that CMAL would use out of what is standard in shipbuilding generally, it would have implications for contracts, so that would have to be considered as well. However, that part of the matter is one of the lessons that we, and CMAL as part of that, need to reflect on.

The significant issue that ministers were involved in considering, not least because we had to give CMAL the budgetary approval to do it, was about changing the final milestone payment from 25 per cent to 10 per cent to allow, in effect, the acceleration of some of the contract price. From previous evidence and other published documentation, you will be familiar with the fact that CMAL attached particular conditions to that but Government gave the approval because we had to make funding available on a different schedule and in a different financial year from what was originally anticipated.

That is a really important point. Believe me, I have agonised over it. Perhaps I might need to put it more clearly, but I think that I did answer you on that point.

If, at the time—on 8 October 2015—we had known probably a fraction of what we know now, clearly, we would wish that we had taken a different decision. However, we did not know that at the time, so all that I can do is assess the information that we did have then and come to a view on whether the minister took a reasonable decision based on what was before them. Every decision involves a balancing of risk. The risk was clearly set out but so, too, were the mitigations. Also, taking another approach would not necessarily have avoided all the problems. Based on what was known at the time, I think that it was a reasonable decision. However, based on what we know now, of course I wish that I could turn the clock back and take a different decision.

I would have taken a decision—I do not know what it would have been, but it would have been one that did not lead to delays on the vessels. However, your asking me that question demonstrates the inherent weakness in trying to take decisions with the benefit of hindsight. We can only take decisions on the basis of what is before us at the time, and that is what I have looked at very closely. I am trying to be as frank with you as I possibly can be. Every day, we take decisions on all sorts of matters based on what we know at the time. There will be times when things happen in a way that makes us wish that we could take a different decision, but that is not how life works.