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Government rejects assertion ministers ‘knew about lack of ferry guarantee’

The contract for the Glen Sannox and as-yet-unnamed hull 802 was signed in 2015 (Jane Barlow/PA)
The contract for the Glen Sannox and as-yet-unnamed hull 802 was signed in 2015 (Jane Barlow/PA)

The Scottish Government appears to be at odds with one of its own MSPs over a key financial safeguard in a contract for two over-budget and late ferries.

Ferguson Marine was nationalised in 2019, when problems were made public in the building of the Glen Sannox and the as-yet-unnamed hull 802.

In the ensuing years, the price has risen to an estimate of around £250 million, more than two-and-a-half times the original £97 million valuation – and the vessels are due to be in service next year – five years later than planned.

After Ferguson Marine was selected as the preferred bidder, the Scottish Government claims it was made aware that a full refund guarantee – which would serve to protect public money in the event of issues with the construction of the ferries – could not be offered.

But Jim McColl, who owned the yard through his company Clyde Blowers Capital before it was brought into public hands, told Holyrood’s Public Audit Committee on Thursday that then transport minister Derek Mackay and the government’s ferry procurement arm knew before the company was chosen as the preferred bidder it was not able to offer such a guarantee.

Mr McColl said he had been working with the Scottish Government and with Cmal in developing the bid and they knew a guarantee – which would protect public money in case there were issues with the building of the vessels – would not be possible.

According to Mr McColl, he told Inverclyde MSP Stuart McMillan – whose constituency includes the yard – they could not bid for the contract because of their inability to offer the guarantee – which was mandatory as part of the tendering process.

Mr McColl asserts Mr McMillan “took it up with the Scottish Government”, and Mr Mackay said the yard did not have to offer the guarantee and an alternative could be put in place.

“That was done well before we submitted the tender, because we weren’t going to have to put all the work in if we were going to have to put up a cash refund guarantee,” he said.

Nicola Sturgeon and Jim McColl among workers at Ferguson Marine
Mr McColl appeared before a Holyrood committee on Thursday (Andrew Milligan/PA)

“We had made it quite clear all along, and we had confirmation in the terms of that email (from Derek Mackay) that an alternative would be acceptable.

“We were working with Cmal all the way through the bidding process, so they knew all the way through the bidding process.”

An email from Mr Mackay – dated February 5 2015, almost seven months before the yard was announced as the preferred bidder – states: “While Cmal’s board, in line with standard industry practice, has a preference for refund guarantees it has on occasion taken alternative approaches to ensure that ship yards, including Ferguson under its previous owners, were not excluded from bidding for these government contracts.”

It later adds: “Fmel, and Jim McColl personally, have publicly stated their ambition with regard to these order, and I am sure they will be seeking to put this ambition into effect.

“I hope this reassures you that, in line with the 2012 Ferries Plan, the Scottish Government is continuing in its commitment to vessel replacement and providing potential work for the shipbuilding industry in Scotland.”

It is not clear what Mr McMillan said in his initial email, which appears to have been sent to then Finance Secretary John Swinney in the first instance.

In a statement to the PA news agency, Mr McMillan said he did send an email to the Scottish Government following a meeting with yard management, although he did not explain what the correspondence said.

His statement did not deny the claims of the former yard owner – that he had known of the inability to provide a guarantee and had told Mr Mackay.

He added: “As the local MSP I was clearly active in campaigning to secure the future of the yard.

“After meeting with senior yard management, I wrote to the Scottish Government and received a reply, which is already in the public domain.

“I will never apologise for advocating to save jobs in my constituency.”

Stuart McMillan MSP
The SNP MSP did not deny he was aware the yard could not offer the guarantee (Andrew Cowan/Scottish Parliament/PA)

But a further statement from the Scottish Government on Thursday appeared to stick to previous assertions that they were only made aware after the announcement of the Port Glasgow yard as preferred bidder was made.

A spokeswoman for the Scottish Government said: “(Ferguson Marine Engineering Limited) was fully aware of Cmal’s requirement for a full builder’s refund guarantee, as set out in its procurement documents.

“As Audit Scotland set out in its report, it was open to bidders in their response to Cmal’s Invitation to Tender to make comments or amendments to the draft contract for consideration by Cmal.  Fmel failed to do so.

“Ministers only became aware of the issue around the Builder’s Refund Guarantee after they had approved the appointment by Cmal of Fmel as the preferred bidder on August 21 2015.”