Public Audit Committee

Meeting date: Thursday, September 21, 2023

Official Report 695KB pdf

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“New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Agenda item 2 is consideration of the Scottish Government’s response to the report that the committee produced in spring of this year, “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”.

I welcome to the meeting Fiona Hyslop, Minister for Transport, who is joined by Colin Cook, director for economic development, Scottish Government and, from Transport Scotland, Alison Irvine, interim chief executive, and Chris Wilcock, head of ferries unit.

We have a number of questions to ask, minister, but first I invite you to make a short opening statement.

Good morning. I thank the committee for its invitation to address further its report on arrangements to deliver new vessels 801 and 802 and the Scottish Government’s response to it, which was sent to the committee in May 2023.

As the committee will be aware, I was appointed as Minister for Transport in June 2023. I am aware that the committee felt that the Scottish Government did not respond as fully to the report as had been expected, and I want to address that issue in my opening remarks.

First, as confirmed in the then minister’s response, the Scottish Government fully welcomed the committee’s report, which built on work already undertaken by Audit Scotland and the earlier report by the Rural Economy and Connectivity Committee. The report contained a number of observations and recommendations throughout. Although the Government’s response was not a point-by-point one to all of the committee’s stated views, observations and conclusions, it nevertheless extracted for the Government the key recommendations that could be identified in the report and responded to those. The approach taken was to group those recommendations where we felt that there was a common theme.

On recommendations for other parties, such as the Auditor General, the Government did not comment in detail, but it noted that we could engage fully with any further audit work that was identified. As the response came from the previous transport minister, I am keen to identify—either today or in writing, if that would be helpful—which specific areas the committee considers warrant a further response to that already given.

I recently reread the report in great detail and, in scrutinising what had been requested of the Government, I identified two areas that were not fully responded to, both of which relate to wider cross-Government areas and process improvements. I will ensure that the committee receives a response to those. Having spent two years up to June as deputy convener of the Net Zero, Energy and Transport Committee and as member of the Economy and Fair Work Committee, I take the work of all parliamentary committees very seriously, and I am committed to making sure that the committee has what it needs to conclude its work on this important matter.

I would also highlight that my colleague Neil Gray has given evidence to the Net Zero, Energy and Transport Committee on the current issues, as did I earlier this week. The committee might also be aware that a further update on delivery progress from the chief executive officer of the shipyard is due to be given to the Net Zero, Energy and Transport Committee at the end of the month. Ministers will continue to work with the Net Zero, Energy and Transport Committee in its scrutiny of that element.

Thank you very much indeed. We of course note the point that your appointment came after the report had been published and the response from the Government received, but it is fair to say that our sense was that, of the 13 overall conclusions that we produced, six were responded to, one was partly responded to and six were not responded to at all. We were keen to have this session to explore a bit more those areas where we felt as though the response had been insufficient, given the weightiness of the conclusions that we had reached.

I will begin my questioning by highlighting a fairly fundamental point, which is the conclusion that we reached that island communities, taxpayers and the workforce have been badly let down. First of all, do you want to take the opportunity this morning to comment on that? Secondly, where do you consider that responsibility lies for the procurement of these two vessels having a six-year delay and being three times—and counting—over budget?

Obviously, those were the committee’s conclusions, and it is for the committee to come up with its own opinions, views and conclusions. It is self-evident that islands have been let down—I understand that. As the new transport minister, I have spent the summer meeting a number of island communities and their ferry communities.

Resilience in the fleet is really important. There are other issues in relation to ferries that are more to do with operational management issues, which are not the core function of this committee and which the Net Zero, Energy and Transport Committee has been dealing with, but I say again that resilience in the fleet is really important. That is why having the six ferries delivered before 2026 will make a big difference. Because resilience is what underpins all of this, those replacements are essential.

Clearly we know of the current delays. We will hear more about that, which is why I referred to the chief executive officer’s regular updates to the Net Zero, Energy and Transport Committee in relation to where they are with progress on 801 and 802, now known as Glen Sannox and Glen Rosa. Another four ferries are being built in Cemre, Turkey, and are progressing well.

Going back to the first question, I acknowledge the point—it is self-evident. A number of ministers have apologised for what has happened, particularly to island communities. That is self-evident, too. I should say that no recommendation came from the committee’s conclusion in that sense, but what I have said will give the committee reassurance that we take this seriously and continue to take it seriously. As the new transport minister, ferries are definitely one of my main focuses.

I keep having to say this, but I was deputy convener of the Net Zero, Energy and Transport Committee, which spent well over a year taking evidence on ferries and then produced a report. I should make it clear that I was not a member of that committee when the report was finally concluded. Clearly, as minister, I will need to deliver on the cabinet secretary’s response. Perhaps that will give the committee an indication of one of the reasons for my being in this post—to focus on that, if that reassures the committee.

On the point about responsibility, the problems that occurred, particularly in the initial stages of the design process, have been comprehensively set out. As this committee and others have identified, there were relationship issues between the two contracting parties that also led to challenges and difficulties. I refer back to the RECC report, which set those out comprehensively. It made uncomfortable reading for a lot of people, but it really set those issues out, and this committee’s report also reflects what the issues and problem areas were in that respect.

I know from its report that the committee has visited the yard—I, too, have had the opportunity to visit on one occasion—and anybody who has done so will have seen the disconnect between the design and the build. The retrofitting that had to take place was not very helpful.

There were other issues along the way. Sometimes it is easier to reflect on things separately. David Tydeman’s response, which this committee will be interested in with regard to spend, identified what he saw as the difficult areas. Latterly, the pandemic was an element that stopped progress, but that was not fundamental to the initial issues. Later in his remarks, Mr Tydeman talks through what he sees as the key areas; a lot of them were design-build issues that arose right at the beginning, with things not being done properly at that stage. That is well documented.

The issue, then, is that we know that improvements are made. That is where your committee’s recommendations and—perhaps more important—some of the commentary in the report come in, along with, quite clearly, the recommendations from RECC in relation to what happens with milestones and so on. I think that this committee’s purpose is to make sure that the improvements have been made and will be made. I reassure the committee that improvements have been made. Some were made even in advance of this committee’s report, and they have certainly been made after it.

Some of what we want to do, particularly in relation to lessons learned, is to pull all that together and identify things. Some of those changes have been made, for example, with regard to the Scottish public finance manual, and we need to make sure that you can identify where some of those issues are. Some of them are for Caledonian Maritime Assets Ltd and some are for Transport Scotland.

That was a wide response but I hope that it gives you some reassurance.

As I have mentioned the workforce, I refer members to my entry in the register of members’ interests and my membership of the GMB union.

Do you have any reflections on the role of the workforce and the extent to which it has been involved or, conversely, sidelined in some decisions? Our sense has been, certainly when we visited the yard, that it was absolutely underlined that the workforce had a clear view of how the construction project should have been undertaken, in relation to the configuration and reconfiguration of the yard, but that was ignored. Do you now have a view on the weight that should be attached to that voice?

Again, that was in your report, not as a recommendation to Government but as a conclusion and view of the committee. You are asking for reflections rather than an official response to what we will do as a result of that.

I suppose that we should delineate the responsibilities clearly from the point of view of Transport Scotland and Scottish ministers. The Minister for Transport’s responsibilities are for procurement, including of the four new ferries in Turkey and realising the six that will be delivered by 2026.

As for the running of the company and the organisation post-nationalisation, you are talking about Ferguson Marine Port Glasgow, and that responsibility currently lies with the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy. Pre-nationalisation, there were issues with the private company Ferguson Marine Engineering Ltd. There are issues involving two separate companies at different times.

If you are asking for my reflections on the role of the workforce, I certainly think that the strength of any organisation lies in how it can involve its workforce in decision making and advice, because the people who are doing the work are the experts in that. At different times, that has been specifically requested and delivered by the board. In the nationalised Ferguson Marine Port Glasgow, it is all to do with the role of the board and impressing on the board the importance of regularly involving the workforce and, particularly, trade union representatives. My understanding is that that does happen.

Your question is whether the workforce should have been listened to earlier and sooner, and I think that you are going back to the 2015 to 2017 period. I cannot really comment because, first, I was not there and, secondly, it was a private company at that time.

You are asking about the principle of that and whether a lesson has been learned about the active participation of the workforce in key deliverables and operational matters, and that is part of the fair work approach that the Government is committed to. You needed to reflect on that and you did. You have taken evidence from the workforce on where that has happened in the past. Under the new First Minister, there is a focus on that, and you have clearly seen that in the approach of the cabinet secretary, Neil Gray, too. That is my view.

For the record, there were serious concerns about the performance of the turnaround director, who was a part of the post-nationalisation project.

Again, my understanding of the demarcation here is that Neil Gray is the cabinet secretary who is responsible for the yard.

Yes.

Let me move on, because time is running away with us already. What is the Scottish Government’s response—because we did not get this from the previous Minister for Transport—to our conclusion that

“There has been a significant lack of transparency and accountability throughout the project”?

We drew attention in particular to the fact that

“FMEL was not open about its inability to provide a full builder’s refund guarantee”.

We also think that, for example, it was “inappropriate”, during the course of a live procurement process, for the then transport minister to respond to a regional list MSP—that is a correction that we need to make to the report—that there had been occasions previously when a full builders refund guarantee had not been necessary. That was then taken as the green light by Jim McColl and the FMEL leadership to continue with their bid in the tendering process.

09:15  

You are reflecting not on the transparency of the Government—although I am sure that you will do that at some point—but on the transparency of a private company: Ferguson Marine Engineering Ltd. You are also asking about whether the exchange of those letters was material to the company’s decision. You quite rightly say in your conclusions that that would not, in and of itself, have been the green light, and nor should it have been, because neither of the two individuals concerned were party to the contract. The private company, FMEL, would have wanted to abide by the procurement requirements of the contracting party, CMAL, which set out what was required for procurement.

You will be aware that the former First Minister, in her evidence, referred to Transport Scotland’s provision of the exchange of letters. The understanding is that she knew of that correspondence and its contents, but that the formatting meant that a paragraph was missing. Also, that correspondence was sent to the committee during a week when you were about to finalise your report. Officials would not have known that, which was remiss and has been recognised, but that would not necessarily have had an impact on your report, because the correspondence was made available. Regarding whether it should have been taken as approval, no one who deals with contracts and legal authority would have taken that as an indication of Government approval.

What the correspondence did say, which was reasonable, was that there had been instances, including involving previous work at Ferguson’s on hybrid vessels, when there was a different operating method.

The committee’s criticism of how a private company gave evidence was a fair one, but you are asking me to comment on something that I was not party to.

We have a particular question on that. Before I bring in the deputy convener to go down that line of questioning, I note that you have mentioned the fact that your CV includes deputy convenership of the Net Zero, Energy and Transport Committee and membership of the Economy and Fair Work Committee. However, it also includes Cabinet-level ministerial responsibility between 2009 and 2020, which covers a large part of the time span that we have looked at in our evidence collection. As someone who was a member of the Cabinet during that time, can you tell us which issues around Ferguson Marine Port Glasgow and which issues around Ferguson Marine as it is now constituted came to the Cabinet?

I think that it is a bit unfair to expect me to have on tap knowledge about the different times when that was discussed in Cabinet during a period that was both extensive and some time ago. I am not really in a position to answer. I do not have recall of that.

The issue will have come up at different times and progress will have been reported to Cabinet. Those issues were not part of my lead responsibility at that time, but the decisions that had to be taken would have been taken. A lot of that would have come to Parliament in the form of ministerial statements by the relevant cabinet secretaries at different times, as happens now, but I cannot give you instant recall of what happened during that 11-year period. With respect, I am not sure that that is something that you can ask me about now, in my capacity as Minister for Transport, when I am meant to be responding to a report that was published only recently.

You mentioned the former First Minister’s evidence to us. She told us that

“no formal decisions were taken by Cabinet on these matters.”

Was the decision to nationalise the yard, for example, not a Cabinet-level decision?

There are different issues. I think that the committee has had the evidence on the roles and responsibilities of ministers and cabinet secretaries—including what needs to come to Cabinet and what does not—but I would need to check that. The committee’s report went into quite a bit of detail on the authorisation for the approval of the award of tender and at what level the decision should have been made—whether it was appropriate for a minister to make that decision or whether it should have been a Cabinet-level decision. The committee went through that in the report. Certain decisions will be made at certain times.

I honestly do not want to mislead the committee by saying something that is not true. I do not have instant recall as to when those decisions were made. I am focusing in my evidence today on what I was asked to do, which was not even to give evidence on what happened leading up to your report; it was to respond to your request for a response following the Scottish Government’s existing response, which was given in May 2023.

It is a question of transparency and openness about how the Government dealt with this. I think that it is a legitimate question. For example, we were told by the now director general for net zero, Mr Brannen, that decisions of the “gravity and size”—that was his expression—of ScotRail being nationalised would go to Cabinet. I am just trying to understand whether the decision to nationalise the yard at Port Glasgow would have been a Cabinet-level decision.

I do not know whether whichever of the officials is most familiar with that can recall.

As far as I understand it, that was not a Cabinet decision. It may have been a ministerial decision at the time.

Okay. That is fine.

I do not think that that is new information. I think that it was in your report as well.

Okay. I will bring in the deputy convener now.

A majority of the committee concluded that the former Minister for Transport and Islands showed poor judgment in responding to an MSP about alternatives to builders refund guarantees during a live procurement process. Are there any lessons for the Scottish Government to learn from that?

Clearly, there are lots of lessons to be learned from the process and from the conclusions of not just your committee’s report, but the Auditor General’s report and the REC Committee’s report.

I think that, reading that exchange now, it is quite clear that the then minister for transport was reflecting factually on what had happened before. There had been instances at the yard, which FMEL would have known about, where things had developed without a builders refund guarantee. That was a reflection. It was not advice as to what would happen in another procurement; instead, it was reflecting on the past.

Do you think that it was appropriate for him to communicate at all, considering that he was the minister?

So many things are judgment calls. With hindsight, there might be a lot of things that people would not want to do or that they would want to rethink.

I try to avoid communicating during live procurements, although I have not had many in recent times. There is the “safety first” thing, but there are also MSPs who demand responses to their letters, and if they do not get them they will stand up in Parliament and ask why a minister has not responded to their letter. That is the call that we have to make. We want transparency and openness—that is what the committee is asking for—but it is a judgment call. He made that judgment. Looking back on that, knowing what he does now, would he have done the same thing? I do not know.

The content was a factual reflection on what had happened, as opposed to an opinion on a procurement, and he probably saw it in that way. I do not want to second guess how somebody decided on things or judged them, but that is my reflection. I think that the committee is looking for some reflections on your conclusions, as opposed to asking us to respond on what we are being asked to do as a Government now.

Is it fair to say that we have not learned lessons, then? If such a question is asked in Parliament, the response will normally be that there is a live case or a live procurement exercise so the Government cannot comment. From your answer, I guess that no instruction has been given to any minister that they cannot comment on anything like that.

Normally, the advice is not to do anything that would cause an issue with the procurement. That is what you would normally get when the letter comes in.

Colin Cook might want to comment, as he has dealt with this on the economy side of things.

I reaffirm what the minister said. For obvious reasons, we would not typically issue any public statements in the middle of a procurement exercise. I do not think that it was a case of us having to reaffirm that guidance to anybody, but I can look into that.

Would you reaffirm the guidance to Scottish Government officials or to ministers?

I can talk from an official’s point of view. We would not typically make any public statements about a procurement when it is live, because it is important that the process is followed appropriately.

As the minister, I will get advice from officials saying, “This MSP has written in, but we’re in a live situation.” For example, there are a number of public service obligations—not in the area that we are discussing, but for air services—about which MSPs have wanted to speak or write to me. We are not party to some of those issues. They are other parties’ responsibilities, and we do not want to interfere in procurements that are for other parties. It is not just about the Government.

Normally, ministers will accept the advice that is given to them in terms of the drafting of the letter.

A majority of the committee also concluded that it was unclear why the former minister told us that he had no knowledge of the preferred bidder before going on annual leave when evidence from the former Cabinet Secretary for Infrastructure, Investment and Cities stated that he was aware. Correspondence from Transport Scotland that was issued after the committee’s report was agreed appears to support the former cabinet secretary’s position. Is the Scottish Government any clearer about whether the former minister was aware of who the preferred bidder was before he went on annual leave?

I will need to reflect on the chain of events and the evidence that you have on that. It was not a recommendation to me, as the current Minister for Transport, for action. I do not know whether officials have better recall of it.

The only thing that I would say in response is that you have heard from the former minister about his position, Ms Dowey. You have the evidence that was put in front of you about that exchange. It is not for us to make a judgment on what you have been told.

Why was the correspondence received late? It took a freedom of information request before the committee saw it.

I will ask my officials to comment, but I will provide an answer based on my understanding. As a minister, I expect my officials—in whatever portfolio, and certainly in this one—to respect Parliament and committees’ requests for information. I think that what happened related to the approval of a press line for the minister. The request was identified through an FOI request that came from another route and, as soon as it was identified, the correspondence was given to your committee. There was no intent not to provide it. The issue was that it came in at the same time as you were concluding your report. Because officials would have no idea when you were concluding your report, they would not know that it was late.

I hope that that makes sense. I know that you have taken a long time over the matter. That is my understanding of the explanation. I do not think that it was acceptable. We need to try to identify improvements in record keeping. That has happened as part of the Government’s response and it has tried to locate things. However, Transport Scotland provided a huge amount of information not just for your committee but for the REC Committee.

Is my recollection of that process correct?

I think so, minister. I echo the point that it is regrettable that we did not find the material the first time round. We provided significant bundles of information to the committee, particularly following the First Minister’s appearance. That related to one of the questions that you asked, Ms Dowey.

As you would expect, there is a huge volume of material on the matter, a lot of which has been published. It was only when we had a separate FOI request that this piece was identified. As soon as it was identified, I asked the team to send it on to the committee. Regrettably, that was, as we now know, at a point when you had concluded your report.

I have another question that concerns accountability. There was a verbal briefing from Transport Scotland. Our paper says:

“the former Minister had received a verbal briefing before he went on annual leave”.

We will ask more questions about record keeping later, but have you improved your procedures? Are all verbal briefings now recorded somewhere so that there is accountability and we know who said what to whom and when?

09:30  

I can usefully comment on that, having come back into Government after two years. On verbal briefings, there will be a note that says, “I’ve met such and such and we’ve briefed on such and such.” It is evident that there is more record keeping and an improved record-keeping process. Again, we say that in the response to the committee. The new permanent secretary has made it clear that, not just in this area but across Government, there needs to be improved record keeping on everything. I spend a lot of time clearing minutes of meetings—I assure you of that.

I might come back in later with some more questions on record keeping.

Given Mr Cook’s response, I note that the evidence that we took from Mr Mackay was that the letter that he signed to Mr McMillan had been prepared by his officials.

Given Mr Wilcock’s point, I note that the request for that information from Transport Scotland was made by the committee in November 2022. It finally saw the light of day in March 2023 following an FOI trawl, not because the department had been sufficiently adept at finding it for us when we first asked for it back in November. That was not a one-off. There was a pattern, which Mr Beattie will speak about shortly.

Draft press lines are not necessarily the same as meetings or decisions. I can see how that might have happened, but I think that records were kept of everything significant. That is the point. It is about what is significant in terms of decision making and who knew what and when, et cetera. There is far more acute awareness of that now than there would have been previously.

These things we shall return to. Graham Simpson has some questions.

Good morning. I will briefly follow up on Sharon Dowey’s line of questioning on the builders refund guarantee and Kevin Stewart’s response. At the time that he wrote the response in May, the UK Government was planning to introduce a home shipbuilding credit guarantee scheme, and Mr Stewart said in his letter to the committee that he awaited the final details and that he would

“work with industry to establish how best to utilise the scheme and maximise its potential”.

The scheme was launched two months after he wrote the letter, so my question is this: has the Scottish Government engaged with the UK Government on its shipbuilding credit guarantee scheme?

I might refer to officials on what sort of official engagement there has been. You mention Mr Stewart’s letter of 23 May and say that we should have engaged with the UK Government in the past few weeks on the shipbuilding guarantee. I have not, but I expect that my officials either will do that very promptly or will have already done that. It is quite a helpful intervention, depending on how it is used. I think that those issues will tie in.

Colin Beattie and you will be aware from your time on the economy committee that subsidy control issues have developed in relation to what can and cannot happen, particularly post-Brexit, and how we can have support for procurement and support for domestic entities. It is therefore a welcome intervention, but it will have taken some time to develop. We need to work out what we should do on the operation and the underpinning, because it is an underwriting issue, so a lot of that will depend on where we have capacity as a Government to do underwriting and what the source of the funding is.

We have had improvement in borrowing for revenue purposes. Some of those issues might relate to capital spending, which has different challenges for us than for the UK Government. That is the sort of thing that we need to explore.

I will ask the officials to say whether they have had those discussions or intend to have those discussions with the UK Government.

I am sorry; it would not be my part of Transport Scotland that would do that. I suspect that the yard or economy colleagues may have had those discussions.

Those issues would relate to future procurement, depending on who had that. Therefore, you would be looking at the people who are bidding for the work having that underpinning and guarantee, in which case it would relate to a yard.

The scheme was launched in July, so the Government had a bit of time to engage with its UK counterparts, at least to find out the details and how it could help in the future.

That is why I thought that that was a good recommendation. We want the Government to respond to it. In my detailed examination of your report, as I went through what the conclusions and recommendations were and what we have to act on, that is something that, in my new position—obviously, at the time that you produced the report, prior to my being in post, I would not have looked at it in that level of detail—I feel is a good and useful recommendation, and my officials will act on it.

Okay. That is good to know. Now that I have alerted them to the scheme being in existence, we can make contact.

I want to move on—

That is really for the shipyards to know, as I said.

I am sure that you watched, as I did, the BBC “Disclosure” programme on the issue, which I think was broadcast a year and a day ago. In that programme, the allegation was that the whole procurement process was “rigged”. That is the word that was used in the programme.

Then, Barry Smith KC was appointed to look into the allegations that were made in the programme. However, it has been reported that Mr Smith has not been asked to look at whether the contract was rigged but instead has been asked to look at whether there was fraud. That is not what I am saying but what is being reported in the press. Is that accurate? What has he been asked to do?

I cannot comment on what has been reported in the press. However, I can tell you that, quite rightly and appropriately, the CMAL board appointed Mr Smith to carry out that investigation. It has a responsibility to do that, and my understanding is that CMAL was looking at all the allegations that were made in that programme by the BBC. The review must be presented to CMAL, which will need to review and publish it. It has committed to doing that, and it is the appropriate thing to do.

Has Mr Smith been asked to look at whether there was fraud? Nobody has alleged fraud.

Again, it comes back to the issue of what the allegations are. That is an issue for the CMAL board and what it has asked Mr Smith to look at. It is perfectly entitled to commission that investigation, which it has done. I think that it was the board’s responsibility to do that and, like you, I will be interested to see the report when it is published.

Do you or your officials know what his remit is?

CMAL has asked Barry Smith to undertake a review of all the allegations that were made in the BBC “Disclosure” programme, and the focus is on whether the process was arranged or influenced in a way that was dishonest or fraudulent. To my mind, although it is a matter for CMAL, that sounds like an all-encompassing review of the important issues that were raised in the BBC programme.

When are we going to see that report?

That is a matter for the CMAL board. I think that it will be fairly soon, but I am not responsible for the timescale for that.

CMAL reports to you or your colleague Neil Gray—it reports to the Government.

It is a CMAL report to the CMAL board, and then—

Do we know when we are going to see the report? The minister says “soon”, but that could mean anything.

We are not party to that information. We know that the KC has undertaken the interviews, but we have not seen any formal findings from those. That is right and proper, because the report will be directed to the CMAL board. What actions are taken next will depend on the findings of that work.

Will the report be made public?

I think that the intention is that the report will be published in some form.

The chief executive of CMAL was pretty clear that it intends to publish as much of it as it possibly can. Obviously, it will need to take into account any relevant personal information or elements, but Kevin Hobbs has been pretty clear that CMAL is keen to publish as full an account as it can.

To make another relevant point, I understand that the Auditor General has said that he will review that report and its findings when it has been completed, to identify whether any further audit work is required. If further work is identified, we, CMAL and the wider Government are absolutely committed to engaging with it.

Once the report is published, will there be a ministerial statement?

It is up to the board to publish the content of the report. We need to review that content, and then there will be a judgment as to what is merited. I cannot prejudge the content, so I cannot tell you what happens after it is produced.

I underscore the committee’s recommendation that that investigation should be carried out “thoroughly” but also “urgently”. As Graham Simpson said, it is a year since the programme was broadcast.

I will ask another question, which was identified in our report but not really responded to by your predecessor. Will you respond now to the concerns that the committee expressed about the decision to publicly announce the preferred bidder on 31 August 2015, when

“there were still significant negotiations to be concluded”?

Again, that is the committee’s conclusion and position. Obviously, it is part of your responsibility to set out your position and your view. You went into some detail about the appropriateness of that with the former First Minister, and you have good evidence as to where things were, which has been laid out a number of times.

But what is the Government’s response to it? We did not get a response from Kevin Stewart, so we are asking you this morning.

It was appropriate for the Government to make an announcement because that would have happened in previous contexts and, for example, in relation to the allocation of contracts elsewhere. CalMac received its allocation of that tender, so it would have been appropriate for the Government to make that announcement once the process had gone through.

Your report sets out the idea that either everything had concluded or the announcement was premature. The announcement was appropriate at the time. However, the evidence that you have had includes different views and different opinions on that, which were formed in hindsight.

Is it the Government’s position that you would just do the same all over again?

No, that is not what I am saying. It has to be judged at the point in time when the work that has been carried out has been assessed and the procurement process has gone through.

Again, this is about looking back to something that took place a significant time ago. The changes that have taken place since then to improve procurement processes—prior even to the recommendations of the REC Committee and to your own recommendations—also mean that the process of decision making on investment is different. It is difficult to view something retrospectively through the lens as to what is appropriate that we as a Government currently have .

What I am saying is that, looking back, the types of processes that we have now should have been in place at that point—but, obviously, they were not. We have learned from that and have improved those processes. We have been open about that.

We will come on to the business investment framework shortly. I will ask you about the issue of transparency. On 31 May, a meeting took place between the former First Minister and Jim McColl at which no permanent civil servant was present. Does the Scottish Government have a view on that?

Evidence about that was responded to by the Government and by the witnesses that you had at the time. In our response in May, we also said that it is important to keep minutes and records of all meetings. That is what happens—as is appropriate.

Do you accept that no minute of that was produced or found?

There was a record of the decision. My understanding from the evidence that was set out, which you have in your report and which you heard in the evidence sessions that you held, is that, following that meeting, there was an email exchange that made it clear what the result was. Therefore, there was a record of it but not in the normal form of a minute of the meeting. It was an exchange afterwards.

09:45  

Does the Scottish Government have a view on a meeting between a minister and a private contractor at which no permanent civil servants are present?

Well, as you know, an official was there.

I think that we were told that it was a special adviser.

It was a special adviser.

But not a permanent civil servant.

In terms of how we would normally operate and, to be fair, as was set out in the evidence sessions, the Scottish Government has been as accessible and approachable to interests as it can be, but in an appropriate way as long as things are documented. Clearly, the meeting was documented but not in the form that it would currently be done, which would be an official minute.

The former First Minister said to us:

“Officials have been unable to locate a note of this meeting”.

My understanding is that, as given to the committee in the extensive documentation, there was an email exchange that reported the meeting. You have it in the evidence that you have but, if you want to refresh the committee’s memory of it, we can provide you with it again.

That would be helpful, but it sounds a bit like you are saying that you would do the same again.

I do not think that I have said that. I have been at pains to say that part of the response has been improvements in record keeping. I am clear about that. There have been recommendations from the new permanent secretary about how decisions should be made and how things are recorded. I have observed that improvement in minute taking in the recent weeks after coming back into government.

I will move on to another area in which there has been public interest, and that is who, in the end, was responsible for signing off the contract. Mr Wilcock alluded to the 200-odd documents that the Government has released, which included email exchanges in which John Swinney’s officials spoke about banana skins, for example. There seemed to be, and still appears to be, some confusion over who, in the end, signed the contract off. Was it Derek Mackay, Keith Brown or John Swinney? Has the Government drawn any lessons from that observation of the committee?

I will provide an initial response, particularly about what happens now but also reflecting on what happened, and then I will bring in Alison Irvine.

It is important to set out that the contract is between CMAL as the procuring authority and the private company Ferguson Marine Engineering Ltd. It was a use of public funds, so the decision to approve it would need to be provided by the relevant ministers. Obviously, the transport minister would exercise a degree of authorisation or approval but would not be party to the contract.

Particularly in tight fiscal circumstances, the authorising officer has a key role on any major spend but, clearly, the finance secretary has to identify whether we have resources to do it. That is based not on the merits of the individual case but on whether the Government can afford it in its wider spend.

I hope that that gives you the shape of the situation, but I ask Alison Irvine to reflect on anything in the process then or now.

If I take what happened then, convener, I am aware that you heard extensive evidence from Mr Brannen when he appeared in front of the committee about the ministers’ decision-making role and the difference in the relationships with Mr Mackay, Mr Brown and Mr Swinney. I am happy to clarify anything specific on which you seek further clarification.

To reiterate the position as it would be now on the decision associated with the procurement of a new vessel, CMAL would present a business case to Transport Scotland. We would consider that business case as a senior management team and, off the back of that, put advice to the Minister for Transport, who would give the authorisation for the procurement to proceed subject to sufficient budgetary cover. That information would be passed to CMAL, which would remain the contracting authority.

Okay. I know that Mr Brannen was absolutely clear about pinning responsibility on Mr Mackay. As a committee, our observation was that, at the time of the decision, there appeared to be more hands on the tiller than just Mr Mackay’s. As you say, minister, we know that it was not a ministerial name on the contract, but it did require ministerial authorisation, which makes it important to us to understand who was responsible.

As I say, we are interested to find out what lessons have been learned from that and how we can get more clarity on what was actually a very important decision and one that has become more important with hindsight, as things have progressed.

I was trying to provide that clarity that, with regard to the process that is followed, the responsibility for the decision on the procurement of vessels is for the Minister for Transport, subject to the financial provisions being in place. I just wanted to check that you are comfortable with that.

Yes, but it is not even clear, Ms Irvine, whether Mr Mackay was on holiday and therefore Mr Brown signed the authorisation, for example. All that I am saying is that there continues to be a degree of confusion about that process and where the authorisation lay.

I will bring in Mr Beattie, who has some questions that develop the theme of Transport Scotland’s role.

Good morning. It is clear that the role of Transport Scotland was seriously called into question in the report. I will mention a couple of things. The project steering group that Transport Scotland led was seen to be weak and ineffectual, and Transport Scotland officials failed to communicate some quite important information to the Scottish ministers on CMAL’s behalf. In the Scottish Government’s response, no reference is made to those concerns. Are you able to take the opportunity now to respond to those concerns about Transport Scotland?

Again, I note that there are clear recommendations and asks of Government in the report, and that is what Kevin Stewart’s response of 23 May identified. Throughout the report, the committee—quite rightly—makes statements with regard to your views and conclusions on certain situations, and the committee has taken a view on Transport Scotland.

Clarity and understanding are sought with regard to Transport Scotland’s role then and now. On that work, Transport Scotland advises Government and provides information. I think that information was being provided previously, but we have now formalised that process far more. For example, in relation to CMAL’s advice and information to us about what is happening in Turkey with the four vessels, I hear that directly. I have regular direct conversations with CMAL, and I work with Transport Scotland on that.

However, with regard to the management of the contract and the parties to that contract, that was private to Ferguson Marine Engineering Ltd and CMAL, as I have said previously.

Therefore, information does flow and that process is far more formalised, and probably far more direct, than it was previously.

On the project steering group, the issue is what its role was then and is now. Again, to unpick that in detail, you can have criticisms of what has happened before, which the committee does and has set out in its report. The Government was not asked to comment on that, so I have given you a view just now.

Alison Irvine or Chris Wilcock—whoever is more appropriate—please can you set out the role of the project steering group then and now in relation to that type of work.

I start with the reflection that we have a very different process now with regard to how we alert ministers to issues. The observations and criticisms that were picked up in the Rural Economy and Connectivity Committee report and alluded to here were that the network strategy programme steering group was receiving reports and not passing those timeously to ministers. We would probably dispute that we did not share information with ministers. There is a question about how that was recorded, the timing of it and the point at which we formally escalated it. I think that it was December 2017. I cannot remember the exact date, so forgive me for that.

However, there is now a very different process for sharing information with ministers, so, along with Mr Gray, the minister will get quarterly reports—or reports of whatever frequency, as they come in—for vessels 801 and 802. Also, as we receive reports from CMAL on the Cemre vessels, we share those immediately. Again, those go directly to ministers, whether things are going well or otherwise, so that they can see how things are progressing.

We are still working on the reform of NSPSG, but it is fair to say that we have made significant changes since the 2015 period to move that to being a more functional, focused decision-making space rather than an information-sharing space, and there will perhaps be some other groups below it. It is a work in progress, but we are looking at that.

I would reflect on some of the more recent strategic decisions that the group has taken around the recommendations to ministers to split the Skye triangle route, retain a resilience vessel and have vessels 801 and 802 working on the Arran route. That is how we would like to shape that group and see it working in the future—as a group that makes strategic high-level recommendations to ministers.

I am pleased to hear that we have learned lessons and that improvements have been put in place, but we are looking back to see what happened. Do you agree—I guess that this is a question for Transport Scotland—that ministers were left somewhat blind as to what was going on in the initial stages because of the lack of reporting from Transport Scotland?

I will ask Transport Scotland to review that, but, having looked again and read this committee’s report and the REC Committee report, I think that information was shared. Have improvements been made? Yes. However, I think that you wanted to direct your question to Transport Scotland.

I am not sure that I agree with Mr Beattie’s characterisation. I think that, in evidence to the committee, when we appeared before it previously, we reflected on some of the reports that were going to NSPSG suggesting that there were challenges with the project but also setting out, certainly at the earlier stages, that the yard and CMAL were working on solutions and that there was the point of recovery. Again, on reflection, on whether we would share more details with ministers now, yes, we absolutely do that, regardless of whether things are going well or challenges are appearing.

Do you agree that the project steering group, which was led by Transport Scotland, was, in fact, ineffectual?

It was not—

I think that that could be answered in different ways, depending on what you think that its role should have been.

Yes, and I think that we were clear that the group was not party to the contract. It did not have the opportunity to intervene when things went wrong. Again, I think that we set that out in some of our evidence. It was never intended to be a conduit to manage those difficulties.

The observations about and the issues with the role of NSPSG were about that escalation point to ministers and whether that could have been more formalised or improved. That is almost a moot point, given that we now directly report, as we go along, the issues to ministers and the progress, good or bad.

Do you think that there was an expectation among the participating stakeholders that the project steering group had a strong role in this, when that did not exist?

There might have been an expectation on the part of the contracting parties, because there was clearly a breakdown in how the contract was working between the two parties. However, on the point about Transport Scotland not being party to the contract, what it was looking at was in terms of support for a process that needed support.

During the process, Transport Scotland had a member on the CMAL board or attending the board meetings. How did the reporting line work, from that individual back to Transport Scotland, and then feed back to the Scottish Government?

Chris Wilcock, are you happy to answer that?

Yes, absolutely. It is important to note that that individual was on the board in the sponsor role rather than directly discussing any issues with the vessels. There would have been instances when someone was attending the board meetings and such matters were discussed. However—I know this because I was in that role at one point—that person would have been very clear that, if there were issues, they had to be formally discussed with Transport Scotland. Indeed, that is where those discussions were taking place with my predecessor, in my current role, and the director of ferries—or the director of aviation, maritime, freight and canals, as it would have been then.

The Transport Scotland member attended the board in the sponsor role to engage on that basis; they would not be directly discussing those issues. The board papers would also be shared with other members in the team but, as is evident, there were focused discussions and the CMAL-Transport Scotland liaison space was where those issues were being taken forward.

10:00  

Was Transport Scotland’s role in providing the sponsor team support successful?

I will pick that up and take it into the territory of how we have learned the lessons from that.

Transport Scotland is the sponsoring authority of a number of bodies. I became interim chief executive in March. Subsequent to my taking up post, I have tried to bring all the sponsorship and liaison work together so that, as part of the sponsorship process, I am hearing directly from the sponsors monthly about the issues that are raised as a way of driving improvements in how information is shared within the organisation and in relation to the point at which the level of risk is shared with ministers.

That is not to take away from the criticisms and comments that have been made about the performance of Transport Scotland and the different structures that we had in place, but I hope that the committee will take that as a degree of assurance that we continue to improve the way in which we manage valuable and important assets for the country.

It is encouraging to see that improvements are being made and that lessons have been learned, but we are looking at the historical situation and the role of, for example, Transport Scotland as the sponsor in this particular instance. Do you think that it was successful in that role?

The sponsorship is of CMAL, as the organisation, so the issue is the sponsorship of CMAL.

Surely, in the sponsorship role, you would be picking up on the issues around CMAL and, where necessary, feeding that back to ministers.

As Alison Irvine pointed out, we now have clearly distinct and separate roles there. The sponsorship and policy functions now sit in two different directorates in Transport Scotland. Previously, those sat together within the same team; we have separated those out now.

The same issues would be raised. As we set out in our responses and in the papers that we have published, in relation to the issues that were being escalated by the policy team—either via the NSPSG or direct engagements with ministers—the same message would be communicated. Whether from the sponsorship side or the policy side, we would be reporting the same issue, which we did.

I will move on from sponsorship, over which there is clearly a question mark.

During our scrutiny, Transport Scotland came in for criticism in relation to, at times, its attendance at committee to give evidence, and late and incomplete evidence being received from it with little explanation as to why. That led the committee to question the

“level of respect and regard shown for accountability and parliamentary scrutiny.”

It also issued important evidence to the committee the day after our report was agreed, meaning that it could not be used to better inform the report’s conclusions. Does that show evidence of “respect and regard” for parliamentary scrutiny?

In my detailed examination of the process, I took that part of the committee’s report, and looking into what had happened, very seriously. I have asked what happened, and I have made it clear that I always expect—as I am sure that we do across Government—that there is co-operation and attendance when required.

The situation seems to boil down to one request for absence, which was for the then interim director general—I think that that was his title. His evidence has already been referred to, so he had already appeared before the committee. My reading of the situation is that two previous interim chief executives and other senior officials appeared before you; Chris Wilcock did as well. The committee had one extensive session and you decided to have a second one, at which point the—I am trying to remember what title he would have had at the time—

The interim director general.

The interim director general could not come to the second meeting as you had requested but said that he could come to another one and tried to get alternative dates. That was one instance and that is the explanation. You have referred to some instances, but I am not sure whether there were any other instances where an official did not appear.

On the issue of not providing complete information, we have addressed that in response to Sharon Dowey’s questions. There were two issues, which were the letter exchange between the former transport minister and a regional MSP, in which it was identified that, due to a formatting error, a paragraph had been left off that letter—that administrative mistake should not have happened and an apology was given—and the draft press line that was subsequently found and supplied through another route. I can understand the committee’s point of view around the latter arriving the day after you finalised the report, but Transport Scotland would not have known the date on which you were doing so. I accept the explanation that that was sent to you as soon as the press line was found.

Those were the instances; I do not know whether any other instances happened. There seems to be generalisation that a number of officials had not appeared or that far more pieces of information were not given than those that have been identified and referred to. That is my understanding. However regrettable it was—and apologies were given—I do not think that it was, in any way, obfuscation or anything such as that. As minister, I would not expect that from any official at any point and I respect that officials did not do that at the time.

Thanks for that clarification, which leads me neatly to issues around record keeping. The committee concluded at paragraph 47 of the report that record and note keeping of meetings throughout the vessels project involving Scottish ministers was

“weak and fell well short of the standards of transparency and accountability we would expect.”

The Government’s response noted that

“further guidance has been issued and all parties ... continue to make improvements in record keeping”

and so on.

Can you provide any detail of what those “improvements in record keeping” have involved since our report was published?

I think that I have already addressed that issue in other answers. Record keeping has improved. It is not that there were no records but that they did not give the level of satisfaction that they could have given. Specific meetings were identified in your report, as they were in the REC Committee report.

It is about ensuring that records—not just of meetings but, critically, of decisions that were taken—have improved. I do not know what guidance the permanent secretary has issued to civil servants, but I understand that communication has taken place, so improvements should happen, and they have happened over many years.

It is difficult because one is reflecting on what happened eight years ago in comparison with what is happening now and on improvements along the way. As I said in an answer to another question, the new permanent secretary has been quite clear as to what the expectation is with regard to the production of those records. Do any officials want to reflect on what the changes are and on how they have been communicated?

I can pick that up and add a bit more detail. The minister has already talked through the minuting of meetings and its impact on record keeping and so on.

The other important aspect is that, when officials provide advice to ministers and we get a response back from ministerial offices, there is a very clear statement at the top of that response that says something like: “This forms part of a ministerial decision, so it should be part of the official record.” It is then the responsibility of officials to store the response appropriately. That is part of a very detailed but very helpful way of ensuring that officials are clear about what should be kept as part of contemporaneous and significant record keeping for prosperity.

I add that I have a strong view on that, because I was the minister who brought in legislation on record management systems for public bodies, which stemmed from a very sad situation that affected children who had been in care and whose records were lost. I felt very strongly that we should always have records because of that. That was in a different circumstance, but it has implications for all public bodies. The issue is that we must have a record management system that enables retrieval. In terms of that legislation and implementation, that applies across all public bodies.

Good morning, Fiona and colleagues. I will ask a couple of questions about the written authority. The committee recommended in its report that Transport Scotland and CMAL should clarify in writing the procedure for seeking reassurances from Scottish ministers, and the Government’s response to that was that it accepted it and looked forward to incorporating the process in the next revision of the framework agreement with CMAL. Can you provide an update on whether that has been done and, if it has, how it is progressing?

There are specific requirements for notification in the Scottish public finance manual. It is an area that I want to seek clarification on, in terms of what is shared and when. It is obviously published and it goes to the Auditor General, and my understanding is that the accountable officer wrote to the Auditor General when the latest written authority was provided.

Written authorities very rarely happen in ministerial directions—they are few and far between. I never gave a ministerial direction during the period that I was previously a Government minister. I emphasise that they can be appropriate and there is a process for issuing them. However, the issue is whether they are routinely sent to the clerk of the Public Audit Committee, which I think was one of your recommendations—I think it was in paragraph 408, on page 77 of your report. My understanding is that the last one was sent to the clerk. However, that would not necessarily happen often. Colin Cook, can you confirm that I have got that right about the process?

That is the process.

A few things are tied up in that. We are working on a new framework agreement that oversees the relationship between the Scottish Government and Ferguson Marine. That is very close to being completed, and it has clarified a number of issues around the governance relationship between us and that organisation.

The written authority was prepared by the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy specifically in relation to the projected increase in costs that was reported in September 2022 in relation to vessel 802. He took a view on the value-for-money case that was presented for that particular projected increase in costs.

Is the Government’s acceptance of the committee's other recommendation about the publication of written authorities on the Government’s website a commitment to publishing not only that written authority but any that may have occurred in the past? The committee is interested in seeing any examples of such written authorisations that have been sought and given.

As you know, written authorities can happen in any area that is within ministerial control—not only this one—and they are issued very rarely. One of the questions that I have about the progress of it is whether it is in the current edition of the Scottish public finance manual or whether it will be and when. It has an impact on other areas. That is why I want to check on that. I went through your report identifying what was partially responded to and what was fully responded to. That area was partially responded to, but was it fully responded to? It will certainly be drawn to the attention of the Auditor General.

10:15  

Going forward, we accept the committee’s recommendation that confirmation of written authorities should be published on the Scottish Government website. You made a specific request about the clerk to this committee automatically getting such confirmation. That information could be found on the website, but, as the Public Audit Committee, you have specific duties and responsibilities, and I just wanted to check that that will happen should there be a written authority at any time in the future.

I think that the committee was keen for that to be broadened so that we could see any governmental written authorities that have been given in the past. Is that part of what you might consider doing?

I think that we have had this discussion at previous meetings. There had not been a written authority for many years, but, as the head of the team that prepared the underpinning advice for the written authority that was issued, I can say that the experience, the guidance and the knowledge of civil service colleagues in the Scottish Government enabled that to happen in an appropriate way. All of that support and expertise would be available to anyone who was preparing advice for ministers that could lead to a written authority in the future.

Thank you for that. I have a slightly broader question. From the outset of the committee’s work on its ferries investigation, it has been clear to me that the key problems were probably built in from the start of the project, and you have mentioned that in your comments to the committee. Constantly changing the design specifications as the ships were built was a recipe for the cost and time overruns that we have seen.

If we look at the performance of all Governments, past and present, we see a litany of public procurement cost overruns. The public can see that, too. What is your perspective on why some—not all—public projects go wrong? Do you agree that it is absolutely vital that projects are planned carefully at the outset and that recognised quality management standards and processes are deployed, so that all projects—whether they are construction projects, information technology projects or anything else—have a fair chance of being completed on time and on budget? Can you assure the committee that that approach will be taken from now on with any procurement projects that the Government might commission?

I am not the minister responsible for public procurement policy, but I think that you are inviting me to give a general response as a Government minister. Obviously, there is the specific example of the ferries. You said that there had been a litany of public procurement issues, but I make it clear that the Scottish Government has embarked on a number of major transport projects that have come in on time and on budget. Clearly, the ferries project has not, which is why the committee and others have held inquiries into it, but I make it clear that the general practice in the Scottish Government and in Transport Scotland has been good in that respect.

However, it is clear that that has not been the case in this instance, as the committee’s report says. With regard to improvements, I reassure the committee that we will pull together the lessons learned and document those. Some of those lessons are about processes—mention has been made of the Scottish public finance manual—while others relate to CMAL’s practices. A lot of changes to those practices have already had an effect in relation to the four vessels that are being built in Turkey.

As far as governance is concerned, you are absolutely right to say that it is important to get processes right at the beginning. Anyone who has been involved in any major project will know that, if you get things right at the beginning, there is less chance that there will be difficulties later on. I absolutely understand that.

You asked me to give you an indication of improvements that are being made. Transport Scotland has already made changes. That work was in progress even before the REC Committee’s report and this committee’s report. I think that it would be helpful to draw those together at the end of this project, so that we can itemise all the changes and improvements that have been made.

There is now enhanced governance around vessel projects, with dedicated project groups for projects and programmes; there is improved focus on the use of existing risk registers for each project or programme; and there is scrutiny and sign-off of all vessel and major port projects by Transport Scotland’s investment decision making board, which is at chief executive and directors level. There is also greater use of independent gateway processes, and approval now requires an accountable officer template to be completed by the relevant cab sec and the cab sec for finance, which I think Alison Irvine set out in her area. In relation to lessons learned about design faults at the beginning of a project having consequences, we have seen those consequences even more latterly, in relation to some of the processes.

Although I think you are asking for an opinion as opposed to a response, I have tried to provide not only an opinion but also responses as to where the Government is already making changes in specific areas. I also want to reinforce the fact that, when projects go well—we have seen that, for example, in relation to the M8 improvements and the Queensferry crossing—we take them for granted in many ways.

I absolutely accept that there were severe overruns in this project, which is why the committee is doing what it is doing, but the challenge when you are auditing something from a historical time—from eight years ago—is that some process changes will have taken place along the way. I want to reassure the committee that, as the minister, I will keep on top of that to make sure that that continues.

Thanks very much for that, minister. In the interests of time, I will hand back to the convener.

One of the areas where we suggested that there could be a revision is the public recording of decisions. In this case, the CMAL board was overridden by a shareholder authorisation that has an equivalence with a written authority. I wonder whether you could respond—in writing, not right now—with the Government’s position on the public recording of instances of shareholder authorisation being required.

There is quite a lot to that, because there is a difference between ministerial direction, shareholder authorisation and a letter of comfort. A letter of comfort is what was provided. In the interests of time, I am happy to give a written explanation of what that was and what the committee is asking for.

Well, the Government was the only shareholder involved. Anyway, that would be helpful.

I will turn finally to Graham Simpson, who has some more questions to put.

Minister, you will be aware—because you will have read it in the committee’s report—that the Auditor General has been frustrated at the lack of powers that he has to get to the bottom of where £128 million was spent by FMEL. He has asked for more powers, and the committee has written to Neil Gray about the issue. I wonder what your thoughts are on whether the Auditor General should have those extra powers.

Clearly, the Government—through Neil Gray—will reply to that request in the timescale within which the committee has asked for, and I do not want to second guess that reply. I understand that the Auditor General is going to give evidence to the committee on his responsibilities. I am not sure whether he has asked the Government directly for that power or whether he has asked the committee. The request is for the power to look at the accounts of a private company—in this case, Ferguson Marine Engineering Ltd—and that is a request for the cabinet secretary, Neil Gray, to respond to.

In general, there are issues around private companies working with the Government in any shape or form being subject to the Auditor General and their being able to investigate them at any time by request of a special order. That has risks in relation to what that might mean for investment and partnership and whether companies would want to enter into any arrangement. That is a risk element that is nothing to do with this specific case, but the unintended consequences of doing that in principle, as opposed to the merits or demerits of this particular case, are worth exploring. I also reflect on my point that the committee had feedback and evidence from David Tydeman as to where he thought the spend went and where the problems were, as well as from CMAL, which the committee evidenced in its report.

I know that you want me to say either yes or no, but that is not my decision, and I will not take it on behalf of somebody else. You will know this from your experience in dealing with public bodies, but the issue is whether you can have the Auditor General investigating a private company. Technically, you probably could, but what would be the consequences for other situations with private companies in the future if there was a risk that the Auditor General could seek and secure powers of investigation? That is stating the fairly obvious to you as a committee.

Okay. So, essentially, we will have to wait and see what Neil Gray says.

Yes. I will not—I cannot—give you that answer.

Okay. Following on from what Willie Coffey asked about the written authority and the whole cost issue, the cost of these vessels seems to go up and up, which is why we ended up with Neil Gray giving that written authority. Is there a point, in your view, at which the Government should say, “No more”?

The issue is about what is in the public interest. Is it in the public interest to ensure that vessels are completed for the islanders? As transport minister, I have spoken to island communities and I want all six vessels to be completed, because we need that resilience—that is the risk element that we have just now. The issue is also about the yard and the capacity for shipbuilding jobs in the future. There is the question, too, of how we ensure that the yard can be successful, which is obviously Neil Gray’s responsibility. In this instance, there are many different aspects to decision making around spend.

The safety approvals for the two vessels are progressing well, and that will be reported to the NZET Committee by the end of the month, in the next update. I understand that, once we have got through that process, the vessels will then go to sea trials. Then we will start on the launch of 801, which will be a great relief to the islanders. My job, as minister for transport, is to support island communities to receive their vessels.

You can make a judgment—and all MSPs will make a judgment—about our saying yes or no, but the cabinet secretary for the economy, Neil Gray, clearly set out how important it was that 802 in particular—which is obviously a challenge—should progress and be delivered.

I am not really clear what your view is on the question.

At any point in time, there is a question about whether the Government should stop funding something. Decisions will be taken across the piece, and sometimes the decision will be taken not to continue with something. All that I am saying is that the cabinet secretary, Neil Gray, made the position quite clear—he came straight to Parliament to report that forthrightly and openly, which is what Governments should do around such major decisions. There might be instances in which the answer is to do the reverse, which could happen in any ministry or portfolio at any time, so it depends on the circumstances at the time.

I have one more question, which is about the future of the yard, because you mentioned it—I realise that it is probably Neil Gray’s responsibility, but you are here and you did mention it. The chief executive, Mr Tydeman, has recently asked for more money for the yard—I do not know how much—in order to modernise it, which, in my view, could make the yard commercially viable. Has that request come across your desk and are you sympathetic to it?

Again, it is about delineating responsibilities. I understand that the First Minister, the Deputy First Minister and the cabinet secretary met with the chair and the chief executive of the nationalised Ferguson Marine Port Glasgow to discuss those issues. In relation to any investment decision, one has to identify what the processes are—as you would expect, because that is exactly what your committee has been doing. Proper processes and due diligence have to be in place to ensure that value for money, public interest and all those matters are addressed. That is what the process is.

I cannot comment. All that I can say is that there is a general and, I think, cross-party willingness for Ferguson Marine to be successful. To reflect on the convener’s point about the workforce, the evidence in your report is that they were positive about the chief executive, who had been talking about the need to get into a profitable situation, to secure more work and so on.

I am pleased that that is the agenda that is being discussed but I cannot comment on how and when the decision will be made on that matter.

10:30  

I confirm that we are carrying out due diligence on the request from the CEO. We have to look at it in relation to subsidy control rules, and we need to ensure that it represents value for money for the taxpayer. We will be open and transparent and will report to the Parliament when a decision is taken.

Thank you. We have run over our time slightly. I suspect that we could go on much longer, minister, but the committee has another evidence session this morning.

I thank all of you—Fiona Hyslop, Colin Cook, Alison Irvine and Chris Wilcock—for your time and input this morning. There might be things that we want to follow up with you in writing, but I thank you for your openness in answering the questions that we have been putting to you.

I suspend the meeting to allow for a change of witnesses.

10:30 Meeting suspended.  

10:36 On resuming—