Missing ferry documents ‘inconsistent’ with rules on public spending

The failure to properly document the decision-making process relating to the two delayed and over-budget CalMac ferries is “inconsistent” with the guidance on the handling of public funds, Scotland’s auditor general has said.

Speaking to Holyrood’s Public Audit Committee on Thursday morning, Stephen Boyle recommended the civil service reflect on how decisions are documented on the whole, given the failure to find a paper trail for the ferries.

The Scottish Government has committed to a review after the vessels are completed.

An Audit Scotland report last month revealed “multiple failings” relating to the contract, with the two ferries now expected to be five years late and more than £150m over budget.

One of the biggest issues with the contract was the failure to mitigate the risks to CMAL, the ferry procurement body, when it became clear the Ferguson Marine shipyard could not provide a full refund guarantee.

The report said: “There is no documented evidence to confirm why Scottish ministers were willing to accept the risks of awarding the contract to [Ferguson Marine], despite CMAL’s concerns. We consider that there should have been a proper record of this important decision.”

Questioned by MSPs on the committee, Audit Scotland officials confirmed that when auditors requested documents regarding advice given to ministers about the risks and how to mitigate them, “none was forthcoming”.

Convener Richard Leonard asked whether these documents were “hidden, missing, or did not exist”.

Boyle said: “Our judgement is not that evidence is being withheld from us during the course of our audit work, but rather than an important piece of documentary evidence wasn’t prepared.”

Leonard also referred to other documents which suggests it “does look very much as though there was written authorisation, that there was ministerial direction, but it doesn’t appear to have been recorded as required” by law.

Boyle replied this was a “fair assessment” and that application of the Scottish Public Finance Manual – the official guidance on the proper handling and reporting of public funds – had been “inconsistent”.

A Scottish Government spokesperson said: "A thorough search has been conducted and the paperwork/documentation cannot be located.

"As outlined in the Audit Scotland report, we have committed to a formal review following the completion of the vessels project."

The auditor general told it was important that such a review took place, adding: "'Lessons learned' feels too glib to describe the circumstances before us.”

Speaking after the sesson, Leonard said: "Given the significance of the issues and volume of detail in the Audit Scotland report, the Committee has decided to take further evidence next week with the Auditor General.

"Following the completion of this evidence gathering, we will decide our next steps."