Ferry delay: Taxpayers ‘badly let down’ by ‘significant failings’ of government

Taxpayers and island communities have been “badly let down” by the “significant failings” in the building of two new lifeline ferries, MSPs have concluded.

Parliament’s Public Audit Committee also said there had been a “significant lack of transparency and accountability” throughout the duration of the project, criticising the shipyard owners, Scottish ministers and Transport Scotland.

The damning report follows a year-long inquiry by the committee, after Audit Scotland concluded “multiple failings” led to the delays and cost overruns.

The two vessels were commissioned in 2015, with an expected delivery date of 2018 at the cost of £97m.

But problems with design and cashflow means neither of the vessels, destined for the Clyde and Hebrides routes, have yet sailed and the price tag is now expected to be at least £293m.

The latest update from Ferguson Marine Port Glasgow (the government-owned group which took over the yard in December 2019) suggests the ferries will now be delivered in 2023 and 2024.

Committee convener Richard Leonard said that despite MSPs’ “best efforts, some questions remain unanswered” about what went wrong.

He said: “There have been collective failures at government and agency level from the start. It has been dogged by a lack of transparency; by ineffective governance arrangements; by poor record keeping within the government; and by baffling communication failures.”

A major element of the rising cost of the vessels is due to the lack of a full builder’s refund guarantee. This was one of the requirements set out in the procurement stages, but ministers awarded the contract to the shipyard despite not having one.

The committee said Ferguson Marine has not been “open about its inability to provide” such a guarantee, but also that it was “wholly inappropriate” for then transport minister Derek Mackay to tell constituency MSP Stuart McMillan that one was not needed.

MSPs have urged the Auditor General to further investigate allegations made about the fairness of the procurement procedure, as well as how money paid to the shipyard before it was taken into public ownership was spent.

The committee also agreed by majority (the two SNP members dissented from this conclusion) that it was inappropriate for First Minister Nicola Sturgeon to publicly announce Ferguson Marine as the preferred bidder before negotiations had been completed.

“Further explanation should have been sought by ministers before the final decision was taken. Indeed, uncertainty remains over which minister had the final sign-off on the contract,” the report says.

Keith Brown – former cabinet secretary for infrastructure – is criticised in the report for failing to cooperate with the committee. As are some civil service officials.

Transport Scotland’s programme steering group, which had oversight of the project, is also judged to be “weak and toothless”.

“It consistently failed to accurately and timeously reflect CMAL’s significant concerns to Scottish ministers. Given the extent of the concerns raise by CMAL regarding the financial risks associated with the contract, Transport Scotland should have sought written authority from Scottish ministers before any further progress was made with the project,” the report says.

Leonard added: “It is vital that lessons are learned. That means much needed reform of governance arrangements for future vessel projects.

“But it also means a change in the way the government and its agencies conduct themselves and are accountable to parliament and the people. That is a challenge for the permanent secretary and the new first minister.”

The Scottish Conservatives have said the committee’s report is a “scathing” verdict of the situation.

Transport spokesperson Graham Simpson said: “This bombshell report shows up a series of failures on an unprecedented scale.

“Worse, it suggests the SNP Government has learnt nothing from them, and is still trying to dodge the consequences.”

A Scottish Government spokesperson said: “The Scottish Government welcomes the report from the Public Audit Committee (PAC). We will study its findings carefully before issuing a full response to the committee.

“Changes have already been put in place to address many of the issues raised. This includes working with the shipyard’s senior management team to improve governance and accountability and revising processes for vessel procurement.

“The Scottish Government is committed to transparency and has proactively published more than 200 documents on its website. We have co-operated at every stage of the PAC inquiry, as well as those previously undertaken by the Rural Economy and Connectivity Committee and Audit Scotland.

“Ministers have apologised for the delay to the ferries and the distress and difficulty caused. We are committed to their completion, securing a sustainable future for the yard and supporting our island communities that rely on this type of vessel on a daily basis.”