Chamber and committees

That is obviously a significant factor in the performance of the economy, as my opening remarks make clear. The size of the economy, the way in which the economy develops and grows and its impact on people are all relevant to the circumstances and the wellbeing of individuals. One of the key issues that I will come to—Mr Johnson will not be surprised—is population growth, which is a significant factor in the development of any national economy. I think that Scotland is significantly inhibited in that regard, as the Scottish Fiscal Commission report this morning indicates. I will come on to say a great deal more about that particular point.

Those latter comments about the chasing of headlines could aptly sum up Mr Marra’s contribution to every debate.

Can I just ask Mr Marra for his explanation of why Labour opposed the Government’s budget, which included progressive tax changes, when it came to Parliament in February? I am confused by this great exposition of consistent principle from Mr Marra, who argues for progressivity but, when it is right in front of him, votes against it.

Will the member give way?

I take no issue with that; it is very welcome, indeed. That is about ensuring—our universities are critical to the whole endeavour—that we create economic opportunities through research collaborations. Recently, I visited the University of Glasgow and the magnificent Mazumdar-Shaw advanced research centre, which has been developed with the incredible generosity of Kiran Mazumdar-Shaw and the late John Shaw. It is providing a focal point for investment in advanced research that will create the type of employment opportunities that Liz Smith highlighted. It is also very significant in relation to other sectors, including the financial services sector.

That is an important objective, but we should also recognise that people will want to move to other jurisdictions for wider experience and economic opportunity. However, we must be able to ensure that we can welcome others into our society. That is where Scotland’s opportunities have been constrained by the folly of Brexit.

In relation to the situation on Arran, the Minister for Transport and I are very conscious of the disruption that has been experienced because of the maintenance programme on the MV Caledonian Isles. We hope that that issue will be resolved very shortly, to enable the two-vessel service between Ardrossan and Brodick to return. We have, of course, enhanced the volume of sailings on the Lochranza route, in addition to the MV Isle of Arran continuing the single-vessel sailings on its route.

Mr Greene asked me where the ferry investment programme is at. In my response to Mr Bibby, I just set out the fact that we have commissioned two vessels, which, I accept, have taken longer than they should have taken. We have also procured four further vessels, which will be coming into the network over the course of the next three years. The earliest of those will come in 2024. Therefore, there are new vessels coming in to supplement the additional investment that we made in vessels such as the MV Loch Seaforth and the MV Loch Frisa and the other investments that the Government has made.

There is a lot of merit in what Mr Coffey has put to me. I would add one additional element to that, which is the necessary pragmatism to look at the emerging evidence during the implementation of a programme and to adapt and revise that programme, should the circumstances and evidence merit that.

A lot of what Mr Coffey has put on the record is valuable project management expertise, but there is also a need for pragmatism to respond to the evidence that is presented.

Today’s statement maintains the commitment that was given by the Cabinet Secretary for Finance and the Economy some time ago to update Parliament on progress in the building of the MV Glen Sannox—801—and hull 802 at Ferguson Marine and to do so openly and transparently. I am providing this update in place of the cabinet secretary.

First, I will address the Audit Scotland section 22 report that was published on Tuesday. I welcome the report and acknowledge the legitimate issues that it raises. My statement will provide much of the update that the Auditor General for Scotland has requested.

The report criticises the bonuses to senior staff at the yard in the financial year 2021-22 and the process by which they were arrived at. It rightly criticises the “poor governance” that was involved in the process. I agree with that criticism and assure Parliament that new arrangements have been put in place, at my request, to ensure that such an eventuality does not arise in the future.

The Scottish Government stands by its commitment to the shipbuilding communities in Inverclyde and to our island communities that will rely on the vessels that are currently being built at Ferguson Marine. I deeply regret that there have been delays to the delivery of the vessels and significantly higher costs than were predicted at the time of the tender award.

Given the concerns over costs, it is only right and proper that the Scottish Government conducts a robust assessment of the use of its public funds, and that the request that was received from the chief executive of Ferguson Marine on 28 September with updated costs to complete both vessels is also subject to an intense level of robust scrutiny. Those estimates indicated that £21 million of additional funding would be required in the current financial year to sustain work on the vessels.

Our full assessment and due diligence on the chief executive’s cost estimates is due to be completed in current weeks. On 15 December, I updated Parliament on the need for in-year funding of £15 million to Ferguson Marine to ensure that it can continue to progress the build of both vessels, subject to completion of that work.

Today, I confirm that I am satisfied that it is appropriate and necessary to allocate a further £6 million, as set out in the spring budget revision that was published on 2 February, which will take the additional total capital funding for Ferguson Marine in the 2022-23 financial year to the £21 million that was requested by the chief executive in September.

While the due diligence work has been on-going, Ferguson Marine has continued to progress with the build. The chief executive of Ferguson Marine has confirmed to me that the MV Glen Sannox successfully completed the dry-docking period at the start of this month and, after her return to Port Glasgow, the yard achieved a major milestone in running the first main engine. That dry-dock period has allowed the team at Ferguson’s to make a detailed assessment of progress to date and of what will be required to ensure a high degree of confidence in the robustness of the ship when it is entered into service later this year.

Following that assessment, the chief executive of Ferguson Marine has today written to the Net Zero, Energy and Transport Committee with an update on overall progress in preparing a dual-fuel vessel to be handed over. He has concluded that, as a result of persistent

“design gaps and build errors”,

progress on the 801 vessel has been slower than planned.

The chief executive has therefore revised the handover dates for both vessels, with the MV Glen Sannox now scheduled for autumn 2023, rather than the end of May 2023 as was previously estimated, with a contract backstop of no later than the end of December 2023. He has also indicated that 802 will be handed over in the autumn of 2024, in comparison with the previous timescale of the end of March 2024, with a contract backstop of no later than the end of December 2024.

It is a matter of great disappointment that a further revision to the timescale for delivery has been necessary. I welcome the chief executive’s assurances that Ferguson Marine will continue its best endeavours to deliver both vessels sooner than those dates. The chief executive has also set out plans for the MV Glen Sannox to have a sustained testing and sea-trials period to help ensure a smooth entry into service later this year.

I am conscious that delays to the delivery of any project can lead to an overall increase in costs. That is why the Scottish Government will work with both Ferguson Marine and our technical advisers, Caledonian Marine Assets Ltd, to assess any financial impact on the delivery of both vessels. I have therefore written to the chief executive to notify him that we will review his proposals and confirm our position on that in due course.

Ferguson Marine, while it acknowledges the potential for an increase in the total delivery cost due to the delay, states that it is looking to “offset” any potential increase through income generated from commercial work. One of our aims has always been to look beyond 801 and 802 and to ensure a sustainable future for commercial shipbuilding on the Clyde, which is one of the issues that the Auditor General raised in his report. We know that the Ferguson Marine team continues to pursue a range of opportunities in order to achieve that shared ambition.

I am pleased to report that the business has been successful in securing new commercial work and has recently entered into a contract with BAE Systems to support the delivery of its type 26 frigate programme. That has involved the secondment of some Ferguson Marine workers to BAE Govan since January this year. Ferguson Marine has been clear to us that those workers are not currently required on 801 and 802, and their secondment is not diverting resources away from completion of the ferries. Moreover, such diversification helps to support the knowledge transfer and upskilling of the workforce across the industry. That is an important factor to ensure that those skills support the shipyard to be competitive in aspiring to future contracts.

The Scottish ministers remain committed to do all that we can—as a shareholder and Government—to help achieve a prosperous future for the shipyard. In support of the BAE contract, I therefore confirm that the Scottish Government has agreed to provide a working capital loan of up to £25,000, with interest, to support cash flow during the contract period. That short-term measure is standard practice for working capital requests from a public body and is in line with the terms of the Scottish public finance manual. That work is a positive sign for Ferguson Marine, which I am sure that members will, rightly, support, as the business looks to build an order book for the future.

No further delay in the delivery of these vessels is welcome, and I fully share what I expect will be members’ disappointment at the announcement. However, the challenges and legacy issues that are faced by the team at Ferguson’s should not be underestimated and, after the appointment last February of the new chief executive, substantial progress has been made in facing those issues.

I understand and appreciate why it is so vital that new vessels are introduced into the ferry network, but we must ensure that any vessel that is introduced is able to provide our island communities with the confidence that it will perform in service and improve the network.

I have discussed that with the chief executive and made very clear my disappointment at the delay. He fully appreciates the critical need for the vessels to enter service as soon as possible to support our island communities—a belief that all members share. We stand firm in our commitment that the vessels will be completed.

I put on record my appreciation of the workforce at Ferguson Marine and I am sure that Parliament will join me in supporting the continued efforts of the workforce, who are determined to ensure the successful delivery of these two lifeline ferries.

As I have set out, Parliament will be updated further when the financial due diligence work is completed in the coming weeks. The work is critical to strengthen our ferry network, which has been further enhanced by the procurement of four further vessels for the fleet.

The Government recognises its duty to ensure sustainable ferry services for our island communities, and we are determined to fulfil that duty.

If I am the master of defence, Willie Rennie is the master of overstatement. I have just set out to Parliament the timescale for the delivery of the vessels, so it is not appropriate for Mr Rennie to say that I do not have an answer because I have just given an answer to Parliament. I have also just given an answer about money. I have done it openly and transparently on the floor of Parliament. I am not sure how much more transparent I can be about that.

In relation to the question of the bonuses, the Government became aware of the bonuses out of the audit process. The Government was not made aware of the bonuses; I have made it abundantly clear how much I deprecate the bonuses—the Government has obviously set out that position.

In relation to future developments, I hope that there is no need for any further statements to be made about timescale, but of one thing I am absolutely certain: I will not be delivering them.

Probably the best mechanism for that is the quarterly reports that are made available by the chief executive of Ferguson Marine to the Net Zero, Energy and Transport Committee, which provide full information. Obviously, committees of Parliament and members of Parliament are entitled to make inquiries through the usual routes of parliamentary questions and other devices to find out further information, if appropriate.