Ferries scandal Scotland: SNP ministers and Nicola Sturgeon heavily criticised in damning Holyrood report

Nicola Sturgeon weakened Scotland’s ferry procurement body’s ability to negotiate the contract for two embattled ferries, while ministers demonstrated “poor judgement” and “obstructed” scrutiny of the deal, a damning Holyrood report has found.

The report, by the Scottish Parliament’s public audit committee, states the Scottish Government has “badly let down” the public throughout the ferries fiasco, criticising it for fundamental failures of transparency, governance, and accountability.

The document also demonstrates how SNP members of the committee sought to remove criticism of Government ministers at every possible opportunity, leading to 14 separate votes on whether to include critical paragraphs within the report.

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Critics labelled the report “scathing”, with the document published on the same day as the final First Minister’s Questions for Ms Sturgeon as she prepares to leave office, potentially presenting an awkward challenge for her political swansong.

Ferguson Marine shipyard, where two ferries for the Clyde and Hebrides network are being built.Ferguson Marine shipyard, where two ferries for the Clyde and Hebrides network are being built.
Ferguson Marine shipyard, where two ferries for the Clyde and Hebrides network are being built.

Committee convenor, Labour MSP Richard Leonard, said the report showed how there has been “collective failures at government and agency level from the start”, which require “a change in the way the Government and its agencies conduct themselves and are accountable to Parliament and the people”.

The report follows the publication of Audit Scotland’s damning report into the ferries scandal last year in which it concluded “multiple failings” had led to delays and cost overruns in the construction of the Glen Sannox and the as-yet unnamed Hull 802.

The construction at Ferguson Marine shipyard in Port Glasgow, Inverclyde, of the two vessels – intended for use on the Clyde and Hebrides ferry network for CalMac – is running more than £300 million overbudget with delivery more than six years late.

A further delay to the delivery of the two ferries for a further six months until late-2023 and mid-2024 for the Glen Sannox and hull 802 respectively was announced by Deputy First Minister John Swinney in Holyrood last week.

Ms Sturgeon faces serious criticism of her role in the public announcement of Ferguson Marine Engineering Limited (FMEL) as preferred bidder for the contract in late August 2015.

The report states the decision to have her as First Minister make a public announcement “almost certainly weakened CMAL’s negotiating position with FMEL, particularly as important details of the contract were still being worked out”.

It adds: “It also remains unclear why the First Minister led on the preferred bidder announcement and why the First Minister’s press release and associated social media communications did not reflect that there were significant negotiations to be concluded.”

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The report is also heavily critical of two government ministers, most notably the disgraced former transport minister, Derek Mackay, and his direct boss, the current justice secretary and the-then investment, infrastructure and cities secretary Keith Brown.

Mr Mackay, who returned to the Scottish Parliament for the first time since he was forced to resign over messages he sent to a teenage boy to give evidence to the inquiry, is said to have demonstrated “poor judgement”.

He is accused of having “compromised the integrity of the procurement process” by responding to a letter from SNP MSP for Greenock and Inverclyde, Stuart McMillan.

In this letter, Mr Mackay said ferry procurement body CMAL had sometimes not required a full builder’s refund guarantee, a mandatory requirement of the contract for hull 801 and 802, something the then-Jim McColl owned FMEL is said to have taken as a “green light” to proceed without that requirement.

The lack of this condition resulted in a significant transfer of risk for the contract from FMEL to the Scottish taxpayer and has been criticised by the Auditor General.

Mr Brown is also criticised for a “lack of co-operation” during the parliamentary inquiry and is accused of having “obstructed our scrutiny work” in the final version of the report. This followed three requests for information to the justice secretary, responses which were criticised for their evasiveness and brevity during the inquiry.

He is also criticised for having made the decision to approve FMEL as preferred bidder within 24 hours, with the committee stating he had up to a week to do. The report states taking more time to consider the decision “may have led to a better outcome”.

MSPs also concluded FMEL “deliberately constructed” parts of the two ships out of sequence or not according to specification to trigger payments to the business from the taxpayer, with ministers also criticised for not being more aware or receptive to concerns and issues as they were raised, instead often choosing to take a passive approach.

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The report also recommends a “forensic analysis” of the £128m paid to FMEL by the Government to be undertaken by the Auditor General by examining financial records held by the state-owned entity, which runs the shipyard today, Ferguson Marine Port Glasgow.

Two other recommendations from the report urge the Government to publish details of when a company wholly owned by the taxpayer requests shareholder authorisation for a decision, and to publish all occurrences of so-called “written authority” when civil servants require a ministerial direction to proceed with a decision.

Much of the criticism of Government ministers was agreed to by division after the SNP members pushed no less than 14 times to have critical paragraphs amended or deleted entirely. Due to the public audit committee having an opposition majority, these attempts to dilute the report’s findings failed in every case.

Mr Leonard said the public had been “badly let down” by the fiasco. “There have been collective failures at Government and agency level from the start,” he said. “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.

“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.”

Graham Simpson, the Scottish Conservative transport spokesperson, said it “beggars belief” that it is still not clear who had final responsibility for the contract, adding the report “shows up a series of failures on an unprecedented scale”.

He said: “Worse, it suggests the SNP Government has learnt nothing from them, and is still trying to dodge the consequences. The committee highlights ‘a significant lack of transparency and accountability’ and says that ‘serious allegations about the procurement process’ must be fully investigated.

“But it is clear that a lack of transparency and a rush to make announcements for political purposes compromised the integrity of the procurement process. And that SNP members were still trying to conceal information right up until publication. This sorry business is one of the most disastrous and shameful legacies of Nicola Sturgeon’s period as First Minister.”

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Willie Rennie, the Scottish Liberal Democrat economy spokesperson, said: “Islanders, shipyard workers and taxpayers have been badly let down by the Scottish Government’s mishandling of ferries.

“The Scottish Government is still trying to skirt the consequences of their actions. Despite the protests of SNP members, there is sharp criticism of the First Minister, former economy secretary Keith Brown and disgraced former transport minister Derek Mackay.

“From shoddy record keeping to a lack of transparency over who made the final decision to sign the deal against advice, this has been a sorry saga from beginning to end. What’s worse is that it risks damaging the reputation of Scottish shipbuilding going forward. It is an insult to islanders, taxpayers and the workers that no SNP minister has ever taken responsibility and resigned.”

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.”

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