Ferries: auditor general warns of further cost increases

Scotland’s auditor general has warned the costs of the two delayed ferries could rise further still.

Speaking to Holyrood’s public audit committee, Stephen Boyle said it would be “folly” to suggest the current estimates are “reliable” given the risks that remain in the project.

The two ferries are currently being built at the Ferguson Marine shipyard but have been subject to significant delays and cost overruns.

Originally commissioned in 2015 for delivery in 2017, neither vessel is yet operational.

The originally £97m price tag has ballooned to almost £300m according to the latest estimates, while the first of the two ferries is set to be delivered by the end of this year and the second next year.

Boyle said the government and shipyard should be building more contingencies into its estimates.

“That seems pretty sensible given what we’ve seen already of this project that’s continued to cost more and take longer than had been expected,” he told MSPs.

He added: “It would be folly to suggest that that’s a reliable final number that will be spent to deliver the vessels at this stage. It needs close, careful management and going back to that really regular engagement with FMPG [Ferguson Marine Port Glasgow] and the Scottish Government, together with approval requests at the right point to parliament.”

The auditor general also highlighted that the payment of bonuses is still possible under the current contracts for senior officials.

He recently criticised the shipyard – which was taken into public ownership in 2019 – for paying out bonuses to chief executives without proper frameworks in place.

No bonus was paid to official in 2021-22.

Boyle said salaries and bonus arrangement were “quite at odds” with public sector pay and rates that would be paid elsewhere.

He said part of the reason for this was because it continues to operate as a commercial company, despite being nearly wholly funded by the public purse.

Committee convener Richard Leonard replied: “For us as a Public Audit Committee, the question is not just that these things happened but they were allowed to happen. Where is the sponsorship team and where is the government oversight of this seems to me to be quite a fundamental, important question here.”

On the long-term viability of the yard after the completion of the two vessels, the auditor general also urged the government to be clearer about workforce planning.

He said: “As part of the overall assessment of the viability of the yard we have to be absolutely clear where the skilled labour is coming from.

“We would assume and expect when the government completes its viability assessment it would have a clearer understanding of what labour provision will be available, not just in the immediate term but in the years to come and how it will plug that gap if it doesn’t exist.”