Delayed Scottish Government ferry fails 'value for money' test

Two delayed ferries will be finished at nationalised shipyard Ferguson Marine - but one has failed the "value for money" test, ministers say.

In a statement to parliament, wellbeing economy secretary Neil Gray said the Scottish Government is committed to delivering both vessels because axing work on over-budget ferry 802 would create too long a wait for island communities.

Re-procurement would set the project back at least two and a half years, MSPs heard.

Gray said: "While I accept the pure value for money assessment on vessel 802 is challenging, this narrow calculation does not take into account the added delays, the wider benefits of continuing the vessel's build at Ferguson Marine or the full cost of not doing so."

The Scottish Government nationalised Inverclyde boat builder Ferguson Marine in 2019 in a decision designed to protect shipbuilding jobs on the River Clyde and deliver the two vessels to serve the islands.

The first of these will offer value for money, MSPs heard, and moving 802 work elsewhere could mean delaying that boat's deployment until May 2027 "at the earliest". 

The news follows the completion of due diligence assessments and comes after former deputy first minister John Swinney announced millions of pounds in additional funding the project as a result of cost overruns.

As much as £61.1m has been allocated for Ferguson Marine in 2022-23. Gray called the increase in costs "extremely disappointing".

But he said: "I do not consider that it is acceptable to ask our island communities to wait this further period. Also, the due diligence assessment cannot take into account the impact of withholding investment on the Inverclyde and wider Scottish economies.

"While the impact on our island communities and on our economy are not covered by the value for money assessment, they have guided the decisions I have taken, which recognise the broader social and economic benefits of completing both ferries and ensuring the yard continues to have a strong platform upon which to progress and prosper."

Conservative MSP Graham Simpson called Gray's statement "embarrassing", adding: "The building of ferries 801 and 802 has been a shambles from start to finish. In fact, shambles is not a strong enough word. It's been a scandal - six years late, three times over-budget, now standing at 300 million pound plus.

"In March the Auditor General said the final cost of 801 and 802 remains unclear and after today's statement that remains the case. So can ask the cabinet secretary what the final bill the final bill will be for 801 and he's told us today finishing 802 Ferguson's is not value for money, though it may be quicker. So how much cheaper would it be to buy a new ferry elsewhere compared to finishing it here?"

Gray responded: "This is typical of the Conservatives who know the cost of everything but the value of nothing. Of course I have got to consider the narrow value for money considerations here. But I have a duty to ensure I consider the wider implications of my decision making which is why I am ensuring that we're delivering on the commitments that we have made to our island communities to deliver these ferries as quickly as possible and ensure that we are continuing to deliver for our shipbuilding communities as well.

"Without this ministerial direction that would not be possible and I won't take any lectures on ministerial directions from the Conservatives."