Greater transparency needed in public spending after BiFab collapse

MSPs have called for greater transparency on the use of public money following concerns about a lack of accountability on investment in BiFab.

The Scottish Government has invested almost £40m in Burntisland Fabrications since concerns about its future in 2017.

Despite this, the company went into administration in December after failure to secure new contracts.

The Economy, Energy and Fair Work Committee said the loss to the public purse “demonstrates that greater accountability and transparency is needed.”

In a new report, the committee said there had been a “lack of information” from both government and BiFab owners DF Barnes which had made scrutiny “challenging”.

In particular, the committee criticised the failure of either to release the pre-acquisition business plan, despite this being cited as evidence of corroboration.

MSPs also said they were “extremely concerned” BiFab had been put into administration, adding it was a “concerning reflection of the ability of the Scottish supply chain to benefit from the growth of offshore wind.”

Committee convener Gordon Lindhurst said: “The committee is extremely concerned by the lack of transparency on the part of both DF Barnes and the Scottish Government over their decision making and use of public funds. Both cited the pre-acquisition business plan as corroboration of their position, but despite repeated requests neither shared this business plan with the inquiry.

“The evidence to our inquiry indicated that, for a number of reasons including financial viability and state aid rules, neither DF Barnes nor the Scottish Government felt able to provide the finance required to secure the vital contracts BiFab needed to avoid administration.

“The financial loss to the public purse of BiFab failing as a company demonstrates the need for greater accountability and transparency, and for the government to set out its overarching policy on strategic investment in failing companies.”

The committee’s inquiry also considered the wider offshore wind sector and expressed concern about the suggestion BiFab had been “disadvantaged” by EU state aid rules which benefit state-owned or subsidised firms elsewhere in Europe.

It recommended that any subsidy regime put in place now the UK has left the EU must ensure UK firms are able to compete with low-wage economies.

The state aid rules also meant the Scottish Government previously felt unable to insist on the use of Scottish content in the supply chain, but the committee urged it to clarify whether it now had the legal power to do so.

The UK Government has also been encouraged to consider putting further requirements in place when awarding contracts for difference, including the use of local supply chains, fair work policies and environmental factors.