The Scottish Ferries Farrago
The recent report by Audit Scotland into issues surrounding the awarding of contracts to build two new ferries has created a political storm for Nicola Sturgeon’s government, with it and a very public slanging match between ministers and one of Scotland’s richest businessmen giving the SNP-Green coalition’s political opponents in parliament ample material to attack the government with.
In their report about the issues surrounding the delay to the building of Caledonian MacBrayne (CalMac) vessels 801 and 802, Audit Scotland rebuked the government over “multiple failings”, leading to delays, cost overruns and knock-on effects for ferry services for island communities.
Stephen Boyle, the Auditor General for Scotland, said: “The failure to deliver these two ferries, on time and on budget, exposes a multitude of failings. A lack of transparent decision-making, a lack of project oversight, and no clear understanding of what significant sums of public money have achieved. And crucially, communities still don’t have the lifeline ferries they were promised years ago.
“The focus now must be on overcoming significant challenges at the shipyard and completing the vessels as quickly as possible. Thoughts must then turn to learning lessons to prevent a repeat of problems on future new vessel projects and other public sector infrastructure projects.”
So how did a deal that was hailed as a lifesaver for the struggling Scottish ship-building industry turn so sour?
The story begins with the administration of Ferguson Shipbuilders in 2014.
As the last operating shipyard on the lower Clyde, its closure would have particular resonance beyond the obvious economic implications of increased unemployment in an area of deprivation.
Glasgow once prided itself as the “second city” of the British Empire given its role as the “shipbuilder to the world.”
To lose the last operating Clyde shipyard months before the Scottish independence referendum posed a problem to then First Minister Alex Salmond; while the SNP would argue that this was a consequence of being part of the UK, its opponents would say that the uncertainty surrounding Scotland’s place in the union was driving business away from the once mighty Clyde.
Thus, when it was announced a week before the referendum that Salmond had “personally intervened” by persuading billionaire Jim McColl to save the yard, this seemed a ringing endorsement of Scotland’s ability to attract investment whether it was in the union or not.
Scotland ultimately voted against independence in the referendum.
Nevertheless, within a year, McColl’s backing of the new Ferguson Marine Engineering Ltd (FMEL) company had led to a modernising of the yard, a quadrupling of the workforce (from around 70 to 350), and most significantly, a £97million order by CalMac to build two new dual-fuel ships at the yard.
However, it would be this order that would lead to the problems that continue to beset the Scottish government today.
Within a few years, problems began to become apparent with the deal, with the vessels that were due to be completed in July 2018 running into delays amid accusations by FMEL of the ships’ specifications being changed and FMEL being unable to provide a full refund guarantee to CMAL (the government agency that oversees ownership and procurement of ships for CalMac), which would provide full repayment guarantees to CMAL if the ships were late, didn’t meet specifications, or FMEL went bust.
When FMEL ran into financial difficulties in 2019, the Scottish government loaned it £45million.
Despite this, FMEL fell into administration, ultimately leading to the yard being nationalised, which would require further hundreds of millions of pounds of public money to turn around.
The Audit Scotland report highlights the government awarding the contract to FMEL despite the concerns being raised by CMAL (who suggested that the procurement process should be re-started) as one of the major issues saying: “There is insufficient documentary evidence to explain why Scottish ministers accepted the risks and were content to approve the contract award in October 2015.”
It is this detail that has led to a public slanging match between Jim McColl and the Finance Minister Kate Forbes. McColl had previously suggested that the SNP had rushed through the announcement of the deal to save the Ferguson shipyard for “political purposes.”
McColl would also accuse the SNP government of conducting a “fabulous propaganda exercise” in an attempt to shift the blame for the problems facing the Ferguson yard.
However, the Finance Minister Kate Forbes hit back at McColl, saying in parliament that he “is a man with a clear interest in shifting the blame on others when the root cause ultimately to the delays of these important vessels was the construction under FMEL.”
Due to parliamentary privilege, MSPs cannot be sued for defamation, a fact that McColl brought up when informed of Forbes’ comments.
Of course, a billionaire’s ego being bruised by any sort of criticism is not surprising; men like McColl, Tom Hunter, and David Murray (to name a few) are accustomed to fawning, obsequious coverage from the Scottish media, so being publicly criticised in parliament is bound to rub them up the wrong way.
Frankly, a billionaire’s bruised ego isn’t likely to garner much sympathy from a general public more worried with the soaring cost of living.
However, the involvement of disgraced ex-MSP Derek MacKay, who was the transport minister at the time the deal was signed, would likely concern Scottish voters more, given he resigned in disgrace after it was revealed he had messaged a 16-year old schoolboy on social media.
This has led ted to suggestions by “friends of MacKay” that he is being used as a convenient scapegoat by the First Minister to distract from her own handling of the affair.
All in all, it paints an unedifying picture of the kind of grubby political culture that the SNP likes to differentiate itself from, the kind of which they would characterise as more at home in Westminster.
It also raises questions about transparency and the Scottish government’s ability to oversee major infrastructure projects – if things are so badly handled by the SNP in government, what would things be like if Scotland were independent?
It also raises doubts about the contention that Scotland’s political culture is as different from its southern neighbour as some independence supporters often claim.
Naturally, opposition parties in Holyrood have been keen to capitalise on the SNP’s woes.
The Scottish Conservatives Transport spokesman Graham Simpson said: “Ministers have presided over an embarrassing fiasco year after year, and it is our island communities who have been left abandoned.
"They have faced endless delays on the arrival of new ferries and seen costs spiral out of control, with one expert saying this week the cost of the two new ferries could now hit £400m."
Scottish Labour’s Neil Bibby said: “Their (the SNP’s) relentless incompetence has left island communities waiting years for new lifeline ferries, taxpayers picking up an ever-growing bill, and Scottish shipyard workers fixing problems they didn't create."