New payments for Ferguson Marine management brings secret bonus bill to £134k

Ministers are unable to stop a “contractually unavoidable” additional £47,000 in bonuses being paid to senior management at its embattled taxpayer-owned shipyard, the finance minister admitted.

First Minister Humza Yousaf during First Minister's Questions (FMQs) in the main chamber of the Scottish Parliament in Edinburgh.

The additional payment brings the total cost of the bonuses to £134,218 and is intended to be the last before a replacement to the bonus system in place at Ferguson Marine is confirmed.

Humza Yousaf was also pressured to provide a final figure for the cost of two ferries being built at the yard after it was suggested it would be “folly” to assume the £300m estimate for the ships will be the final amount paid.

The Scottish Government, who plan on selling the shipyard once it is competitive, were also told there was “no merit” in keeping a key review’s recommendations as to how to improve the yard’s productivity secret.

Stephen Boyle, the Auditor General, said transparency was required due to the high level of financial commitment likely needed to get the yard to a competitive position.

It comes after The Scotsman revealed Ferguson Marine signed a non-disclosure agreement with a consultancy firm without the knowledge of ministers, keeping the report secret.

Deputy first minister Shona Robison wrote in a letter to Holyrood’s Net Zero, Energy and Transport Committee that further payments to senior management have been made so far this year in 2022/23 with a second payment due in June.

She wrote: “While this progress is welcome, due to those legacy contractual commitments made in November 2022 by (Ferguson Marine Port Glasgow), without the prior knowledge of the Scottish Government, further bonuses are legally required to be made for the year 2022-23.

“The first of two instalments of £23,609 each has already been processed. This first payment was made in FMPG’s April 2023 payroll with the second payment of £23,609 due in June, subject to ongoing discussions involving the chair.

“I know that the committee will share my disappointment, particularly at a time when the delivery of vessels MV Glen Sannox 801 and Hull 802 remain long overdue; that despite every effort being made to ensure that no bonuses were paid in 2022/23, the payment of bonuses for 2022/23 is contractually unavoidable.”

A spokesperson for Ferguson Marine confirmed the bonuses were shared between eight people, not including the CEO, and were “assessed robustly” against performance and details were shared with the Scottish Government.

They added: “Each bonus payment was assessed robustly by our remuneration committee against KPIs and details shared with Scottish Government.”

As the letter from Ms Robison was released, the First Minster, Humza Yousaf, was being challenged about the bonus system at Ferguson Marine in the Holyrood chamber.

Scottish Tory leader Douglas Ross said: “The two ferries are not fit to sail, the costs continue to spiral out of control, and islanders continue to be left without vital, lifeline services – so First Minister, what on earth could these bonuses be for?”

Mr Yousaf said: “I won’t disagree with Douglas Ross or the Auditor General… the former deputy first minister (John Swinney) made clear his anger, we share that anger, I share that anger at the fact that bonuses have been paid.

“The bonuses that have been paid relate to a decision made by the remuneration committee of Ferguson Marine without consultation with the government in November 2022.

“Those bonuses, I have asked if they can not be paid and the advice coming back is that they are a contractual obligation.

“For any future discussion or consideration of bonuses, I have made it clear there should not be bonuses paid in relation to vessels 801 and 802.”

The First Minister went on to say it was “his expectation” that bonuses should not be paid for the 2023/24 financial year.

Mr Ross however repeated the Auditor General’s statement that it would be “folly” to assume £300m would be the final bill for the two ships.

He added: “Only a party that bought a campervan for £100,000 could think paying hundreds of millions for two massively delayed ferries is a good deal. We all know from the scandal engulfing their party, that the SNP really struggle with finances – but this is ridiculous.

“Humza Yousaf needs to stop the secrecy, be honest for a change, and tell us how much higher the real cost to taxpayers for these ferries is going to be.”

The opposition party leader faced criticism for his approach which included holding up a picture of Mr Yousaf visiting the yard in 2016 in his then role as transport minister.

Alex Logan, who has worked at Ferguson's for over 40 years and is the GMB union’s convener at the yard, called on Mr Ross to outline his plans for the future of the yard and demanded MSPs stop using the yard as a political football.

He said: "The continuing point-scoring of politicians does not create or protect a single job in Scotland or help build a single ship. Politicians of all parties should be outlining their plans for the future of Ferguson’s and the jobs there.

"We have new contracts from BAE for work on the Royal Navy’s Type 26 frigates. If they have confidence in the workforce to deliver why can’t our MSPs.”

The row over bonuses came after the Auditor General appeared in front of Holyrood’s Public Audit Committee where he called for more transparency around the future investment in the yard.

Ministers are likely to invest significant taxpayer cash into the shipyard to ensure it can operate competitively in the global market before moving to sell it back into the private sphere.

Part of the work undertaken to discern what is required includes a report from expert consultants, First Marine International, but the report will stay secret after Ferguson Marine agreed a gagging clause with the firm.

Ministers were unaware of the non-disclosure agreement between FMPG and FMI until it was reported in The Scotsman yesterday. The gagging clause covers “anything before or after signing of the NDA”, the shipyard said.

Mr Boyle told MSPs there was “no merit” in keeping secret a the government commissioned independent review into future options for the Ferguson Marine shipyard and anything that covers potential “financial implications” must be made public.

"That needs to be transparent, quite clearly,” he said. “There is no merit for that report to sit and be internal only.

"It has to be clear publicly what the government's intention is, not just for the workforce but there are very clear financial implications, commitments, as Joanne [Brown] mentioned about the change in scale from the delivery of 801 and 802 to future provision, but how all those reviews work together is a matter really for the government and FMPG.

"From our perspective though it has to be clear publicly what the intent is at the completion of them."

The Scottish Government has so far failed to clarify whether the First Marine International report is the same as the “wide review” of future options for the yard referred to by the Auditor General.

The non-disclosure agreement around the FMI report does not see the government unable to report to parliament on the future requirements of the yard if they believe the details does not breach commercial sensitivity concerns.

Mr Yousaf had earlier committed to publishing the due diligence report in the coming weeks.

Richard Leonard, convener of the Public Audit committee, said it would invite representatives from Ferguson Marine and the Scottish Government to give evidence on the ongoing governance of the yard.

He said: “A lack of transparency and clarity also appears to compromise how FMPG is able to run its business, given it is both a non-departmental public body and a company limited by guarantee and the subsequent tension that this can cause.

“These outstanding issues require further scrutiny which is why we have invited both FMPG and the Scottish Government to provide oral evidence at a future meeting of the Committee.”