Meeting of the Parliament

Meeting date: Thursday, June 8, 2023

Official Report 1187KB pdf

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New Vessels for the Clyde and the Hebrides (Report)

The next item of business is a debate on motion S6M-09327, in the name of Richard Leonard, on the Public Audit Committee report “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”. I invite members who wish to speak in the debate to press their request-to-speak buttons. I call Richard Leonard to speak to and move the motion on behalf of the Public Audit Committee.

14:55  

I begin by reminding members of my entry in the register of members’ interests, and by thanking the clerks and staff for their tireless work on the production of the report.

Today, we debate the findings, recommendations and conclusions of the Public Audit Committee’s report, “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”. It is a report grounded in the extensive evidence that we gathered over seven oral evidence sessions and from a wide range of written submissions.

It is a matter of record that some of the evidence that the committee took is the subject of dispute between the various parties who spoke to us, but what is not in dispute is that the people of Scotland, and our island communities in particular, have been badly let down, and that there has been a widespread failure of decision making and leadership across Government and its agencies, and by those who were previously running the yard, which goes back almost a decade.

Let me tell you who else have been badly let down: those workers in that yard at Port Glasgow. They have witnessed highly paid managers, turnaround directors and countless, countless external consultants and advisers all come and all go, when, all the time, if only the workers had been listened to, it is my sincerely held belief that these vessels would not have ended up being five years late and three and a half times over budget.

Since the committee published its report at the end of March, there have been a few developments. We have had two transport ministers—and we are now looking for a third—a new cabinet secretary, a new Deputy First Minister and a new First Minister.

In “Equality, opportunity, community: New leadership - A fresh start”, the First Minister told us:

“it is imperative that transparency underpins our approach to delivery. My government will ensure the people of Scotland have the information they need to hold us to account.”

However, Governments are judged by what they do, not by what they say they do, so I am duty bound to report to Parliament that, time after time, in the course of our investigations, we found poor record keeping of key decisions within the Government. We heard of ministers—up to and including the former First Minister—holding meetings with a private contractor behind closed doors, with no permanent civil servant present, and for which no minutes exist. A senior member of the Cabinet refused to answer the committee’s questions until requested to do so for a third time. That should not just trouble the five members of the Public Audit Committee; it should trouble every single member of this Parliament.

Delays occurred in securing the attendance of some senior civil servants, and delays occurred in receiving evidence from Transport Scotland, with little or no explanation provided for late or incomplete information.

Correspondence that could not be found for the committee later turned up in response to a freedom of information review. So, let me be as clear as I can be: if a committee of this Parliament seeks evidence from the Government, it should be provided in full. It should not be dependent on a member of the public or the press posing the same question.

Taken together, those actions show a serious disregard for openness and transparency. They also demonstrate an unhealthy disrespect for the work of this Parliament, which makes it all the more disappointing that the Scottish Government’s written response to the report that we are debating this afternoon was late, lacks any real substance or detail, and simply fails to address at all half of the conclusions and recommendations. There was no response on the role of Transport Scotland, no response on the procurement process and no response on ministerial conduct—no response! It was issued in the former transport secretary’s name, but in fairness to Kevin Stewart, he was acting on behalf of the whole Government. So, there is a collective responsibility here, which I hope not only the cabinet secretary but the First Minister will accept.

The committee, in our report, also stressed the importance of full transparency around written ministerial authority. We therefore welcome the cabinet secretary’s recent action. While we recognise that the value for money assessment by external advisors Teneo may contain commercially confidential information, it is in the public interest and it is in keeping with, to use the First Minister’s own phrase, the “imperative” of transparency, that as much of the assessment as possible is published in the coming days.

Our report also recognises the very serious allegations made in the BBC’s “Disclosure” investigation: claims that Ferguson Marine Engineering Ltd was allowed to progress beyond the pre-qualification stage of the procurement process despite being unable to meet requirements that were mandatory, and claims that FMEL also had preferential access to restricted technical information to help inform its tender bid.

Of course, it is right and proper that those most serious allegations are thoroughly investigated—that there is a due process—but Caledonian Maritime Assets Ltd is wholly owned by Government ministers, which is why we call once again this afternoon for a commitment from the Government to share the findings of the King’s counsel-led inquiry with the Public Audit Committee and with this Parliament.

We also call in the report for the Auditor General for Scotland to

“undertake a comprehensive audit of the entire procurement”

process; to

“audit the full cost of this project from start to finish once the vessels have been completed”;

and to have a laser-like focus on the £128 million of public money that was paid out to FMEL by undertaking a forensic audit of all financial records to establish exactly where the money went.

Before I finish, let me turn to the role of Transport Scotland. As we conclude in the report,

“the Programme Steering Group which it led, was weak and toothless”.

Despite having

“a critical role in communicating important information”

to Scottish Government ministers on CMAL’s behalf, Transport Scotland appears to have repeatedly failed to do so. We were even told at one point that Transport Scotland had

“no role in the contract”,

when it clearly had a central role in the contract. That is why we have fundamental, deep-rooted concerns about Transport Scotland’s position, which the new transport minister must address.

Finally, we were able to reach a significant degree of consensus in the report. The one area where there was some division is over the involvement of Scottish ministers. The majority of the committee concluded that it was “wholly inappropriate” for a Scottish minister, in the middle of a live tendering exercise, which he was overseeing, to reply to a constituency MSP that alternatives to a full builders refund guarantee had previously been acceptable, because in so doing, he compromised the integrity of the procurement process.

Similarly, the former First Minister’s decision to publicly announce the preferred bidder for the contract, even when, in the words of her own media briefing, “significant negotiations” were still “to be concluded”, most certainly weakened CMAL’s negotiating position with FMEL, not least over the builders refund guarantee.

As a committee, we are clear that record keeping and note keeping fell well short of what we would expect, so there is a failure of ministers but a failure of the civil service, too. So, it is of course encouraging that the permanent secretary has issued new guidance on the recording of decisions, but as I said to the First Minister two weeks ago, he and the permanent secretary must now mount a wider review of Government accountability and transparency to Parliament, because this report is not a report simply about value for money; it is also about trust and confidence. It is about whether the machinery of democracy itself is working in the way that it should. It is about the principles of democracy. It is about the standards of good government, of open government, of transparency and, yes, of honest government.

In the end, this is also about respect and regard for public accountability and for parliamentary scrutiny. It is about whether we treat democracy as a right and not a privilege—not just for members of this Parliament, but for the people we and the Government derive our power from. That is my deepest conviction. That is what is at stake—democracy and the trust of the people.

On behalf of the Public Audit Committee, I move,

That the Parliament notes the conclusions and recommendations contained in the Public Audit Committee's 1st Report, 2023 (Session 6), New Vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802 (SP Paper 344).

Thank you, Mr Leonard. I remind all members who wish to speak in the debate to ensure that they have, in fact, pressed their request-to-speak button. I also advise members that we have some time in hand.

On that note, I call the cabinet secretary, Neil Gray. You have a generous eight minutes.

15:06  

Thank you very much, Presiding Officer.

First, I would like to put on record my thanks to the previous Minister for Transport, Kevin Stewart, who was due to open this debate for the Government but has, this week, resigned for personal health reasons. I am sure that, like me, colleagues wish him well and thank him for his service.

I reiterate our thanks to the Public Audit Committee for its detailed and in-depth work in preparing the report. It builds on the significant work that was undertaken by the Auditor General for Scotland in production of his own report on the matter. I also take this opportunity to thank the staff of Audit Scotland for their professional and detailed approach to compiling the report and to concur with the convener in thanking the members of the committee and the clerks for compilation of the report that we are considering today.

I reiterate at the outset that Scottish ministers regret the delay to the ferries. I fully understand the distress and difficulty that is caused by it, and I apologise again to our island communities for the unacceptable delays in the delivery of vessels 801 and 802. As someone who grew up in an island community, I know very well the challenges of living in an island community in the first place, never mind when your connections are disrupted as they have been of late.

The Scottish Government has made it a priority to engage directly with communities and to hear from them in relation to those impacts. I am bound to look for solutions to alleviate the pressures on the ferry network while we await the delivery of the two vessels that we are considering today, as well as the four new ships that are being constructed in Turkey.

As we noted in response to the committee, I welcome the report’s recognition that there have already been significant improvements in procedures and processes by Transport Scotland and CMAL, working alongside CalMac Ferries, since the procurement of the vessels almost eight years ago. Improvements have already been made in the governance of port and vessel projects, and further work is on-going within the tripartite arrangement to strengthen that further. Many of the improvements were adopted prior to the inquiry into these matters by the Rural Economy and Connectivity Committee, in 2020, or the Audit Scotland report.

The work included consideration of the role and remit of the programme steering board. More recent key strategic recommendations have been channelled through that body and have been broadly welcomed by communities. They have included provision of a resilience vessel, the splitting of the Skye triangle services and plans to enable vessel 802 to be deployed alongside the MV Glen Sannox to Arran.

Following the RECC inquiry, Scottish ministers confirmed that a review would be undertaken into the existing structures, to ensure that they were fit for purpose. We have now published the project Neptune report and are engaging with communities on possible future arrangements. We have made it clear that the community view is key to this, and we are keen to move at pace to implement the change that communities need and deserve.

I have a couple of questions for the cabinet secretary. First, when are we going to find out the Government’s view on project Neptune and what the future arrangements should be? Secondly, is he going to address any of the recommendations in the report that we are debating? For instance, does he agree that there has been a significant lack of transparency and accountability throughout the project?

On project Neptune, that work is on-going, as Graham Simpson will know. On the other elements of the report, we have responded to it, and I will come to that shortly. We have responded to the report’s recommendations and have done what we can to ensure that we are giving as much information as possible—including, as far as possible, live information on the on-going situation.

When it comes to Ferguson Marine, we are committed to securing a sustainable future for the yard following the completion of vessels 801 and 802. Our decision to take Ferguson’s into public ownership not only saved the last commercial shipyard on the Clyde from closure, rescued more than 300 jobs and ensured that the two vessels that are vital for our island communities will be delivered, but also preserved businesses in the local community that rely on Ferguson’s for their viability, as I have heard over recent days from local parliamentarians Stuart McMillan and Ronnie Cowan.

Can I ask whether, before the Government nationalised the shipbuilding yard, any work was done to look at how much it would cost to maintain the original Ferguson’s workforce? A lot of the workforce left and the yard had to rehire a lot of new people.

Obviously, challenges emerged as the work went on. Due diligence was done in terms of the nationalisation, and, of course, circumstances change, as Brian Whittle has suggested. That is something that we build into our learning from situations in which we have to make such industrial interventions, to ensure that we continue to plan and that we can respond as effectively as possible. I make no apology for the fact that what we did in nationalising Ferguson’s was save jobs, save the last commercial shipyard on the Clyde and ensure that ferries were going to be delivered for our island communities.

Will the cabinet secretary take an intervention?

I will make some progress before I come back to Mr Halcro Johnston.

I will provide more detail on the work at Ferguson’s later in my contribution, but I want to address some of the comments made, both today and previously, by the convener of the Public Audit Committee.

At the recent Conveners Group meeting with the First Minister, the Public Audit Committee convener suggested that we had cherry picked the recommendations that we responded to and used very few words. I do not agree with those comments at all, and I strongly refute that there was any such approach. We carefully reviewed the report and extracted the recommendations that were populated through the chapters. We also presented our detailed evidence and responses to the issues in the report directly to the committee as part of the evidence sessions.

More importantly, we have accepted many of the recommendations that were put forward, to ensure that we continue to strengthen future vessel procurement processes and build on previous work. That includes confirming any use of written authority on the Scottish Government website; welcoming and agreeing to the suggestion of having greater written clarity on shareholder authorisation, and having written authority and looking at how that should be sought for CMAL; reaffirming our commitment to undertake a robust lessons-learned exercise once the construction of the vessels is complete; and emphasising that all parties will engage fully with and support Audit Scotland on any further work to be undertaken.

However, there are areas in the report where no conclusion is reached, leaving statements as observations. We did not respond to those directly where there was no recommendation attached, but those were addressed throughout the evidence sessions. The convener has just said that there were seven oral evidence sessions, including with the former First Minister. Of course, if there are further areas where the committee would welcome feedback, we will seek to provide that.

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 with those previously undertaken by the Rural Economy and Connectivity Committee and Audit Scotland. Throughout its work, the committee had the full participation of a range of senior officials across a number of departments, all of whom had full respect and regard for the parliamentary scrutiny that the committee led, including those from Transport Scotland, who endeavoured to provide all information to the committee in a timely manner. As I have outlined, I understand that the committee also received evidence directly from the former First Minister.

As the matter has been raised by the convener, I can confirm, too, that, through its lawyers, CMAL has commissioned an independent investigation by Barry Smith KC into the allegations that were raised about the procurement of vessels 801 and 802 in the BBC’s “Disclosure” programme last year. Once the investigation is completed, CMAL will carefully consider its findings and what can be shared with Parliament and the committee. Although our view is that there is a need for transparency and openness on that serious matter, I stress that it is for CMAL and the procuring authority to consider next steps as a result of the investigation.

Rhoda Grant (Highlands and Islands) (Lab) rose—

I am sorry, but I need to conclude—[Interruption.] I am coming to a conclusion, although I will obviously be available in my closing statement.

I thank the Public Audit Committee and Audit Scotland for their work on the report and assure the chamber that we are progressing the matters to which we have committed and that we have detailed in our response. The Government will continue to focus on the replacement of the ferry fleet and the improvement of service delivery, with communities at the heart of that process.

I call Craig Hoy to open on behalf of the Scottish Conservatives for a reasonably generous seven minutes.

15:16  

I thank the clerks and staff of the Scottish Parliament’s Public Audit Committee for their support in compiling the detailed report, which documents a shocking series of bad decisions and poor practice, culminating in two ferries that are three times over budget and five years late. Those are two ferries that are still to set sail, and one of which it would now be cheaper to scrap and start all over again.

Long-established procurement processes were not followed. It is a sorry story of key decisions not being properly recorded, ministers failing to account for the decisions that they took, key documents going missing, the ministerial code being broken, the biggest blank cheque in the history of the Scottish Parliament being written, standard maritime construction processes being dismissed, and financial safeguards and standard builders refund guarantees being disregarded.

Surely, the biggest blank cheque was the building of this Parliament, when the Scottish National Party was not in power.

I said, “in the history of the Scottish Parliament.” The member might not have realised that, in the case that he has raised, the blank cheque was written before the building of this Parliament. On that basis, there is no point there.

The Government wrote the biggest blank cheque in the history of the Scottish Government and the Scottish Parliament, and the people are now paying the price.

This is a story of an SNP Government failing to respond time and time again openly and transparently to legitimate questions. Regrettably, this is also a story of SNP members of the Public Audit Committee blatantly seeking to undermine the report in a cynical bid to get their ministers off the hook. All the while, it is Scotland’s island communities who are paying the price.

I turn to Audit Scotland’s original report of March 2022, which made it clear that Scottish ministers approved the contract award to Ferguson Marine Engineering Limited in October 2015. They did so despite knowing the significant risks caused by FMEL’s inability to provide mandatory refund guarantees and despite the severe misgivings of CMAL.

The impartial Auditor General for Scotland said that

“There is insufficient ... evidence to explain why Scottish ministers”

made that decision. The worst part of all of that is that no minister has come to Parliament to take responsibility for the tragic comedy of errors that has unfolded.

Let us look at some of the evidence that we took and some of the key conclusions of the report: Jim McColl told us that the ferries being built at Ferguson’s are “obsolete” and will spew out “poisonous gases”; Morag McNeill, who is the interim chair of CMAL, told us that the preferred bidder announcement risked the entire procurement process. She said:

“Our preference was for that to be done on a confidential basis and for there not to be a public announcement.”—[Official Report, Public Audit Committee, 30 June 2022; c 12.]

Derek Mackay, who is the former transport minister, admitted that there had been a “catastrophic failure” at the shipyard.

Colleagues will know that the report was not agreed with the unanimous support of the committee. That is regrettable. Perpetually and in public—and sometimes petulantly in private—SNP committee members chose to dismiss the evidence, which was clear and overwhelming. A close examination of the report reveals some of the core conclusions that Mr Beattie and Mr Coffey sought to delete or dilute. For example, Richard Leonard proposed that additional wording be added to refer to the

“poor judgement”

that had been shown by Derek Mackay and

“to reflect that the integrity of the procurement process had been compromised.”

On a point of order, Presiding Officer. I thank you for taking my point of order without any notice. I am concerned that Mr Hoy appears to be putting on record and quoting things that happened at private session in committee. I seek your guidance as to whether that is permissible.

I thank Clare Haughey for her point of order. I wondered about that myself, but it is not entirely clear to me what the facts are and whether Mr Hoy is referring to a private session of the committee. Perhaps he will elucidate the matter.

I am referring to the appendix of the report that has the breakdown of the divisions that took place at each point. Each motion that was put before the committee is in the final report, which I am quoting from.

The appendices are littered with further examples—[Interruption.]—I am afraid that members will have to listen to them.

In relation to Keith Brown’s shocking attempt to dodge scrutiny by repeatedly stonewalling legitimate questions—

Members: Where is he?

That is a good question. Where is Mr Brown? Also, where is the former Deputy First Minister and the former First Minister? They are not here. Instead, the SNP has put—[Interruption.]

Ms Haughey, we do not need the sedentary chit-chat. That applies also to Mr Simpson.

Let us look at Mr Brown’s shocking attempt to dodge scrutiny. The committee’s draft report concluded:

“The lack of co-operation we experienced from the former Cabinet Secretary for Investment, Infrastructure, and Cities is also a matter of serious concern.”

Mr Beattie’s response was to argue that, again, we should hit the delete key.

Richard Leonard proposed additional wording to reflect that CMAL’s negotiating position was “almost certainly” weakened by the public announcement on the preferred bidder, as CMAL itself said to the committee. The conclusion that we reached in the draft report was reasonable. It read:

“The Committee is not convinced that such a public announcement was necessary or indeed appropriate for this project, especially at that time, given the considerable work and negotiation that was required before CMAL could take a decision to award the formal contract. We believe that this almost certainly weakened CMAL’s negotiating position with FMEL”.

Mr Beattie’s response, again, was to try to hit the delete key.

SNP members did not stop there in their attempts to whitewash the report on behalf of their ministers. The draft report stated:

“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’.”

Again, SNP members disagreed, voting in vain to remove the passage.

They were similarly obstructive when it came to following the money. On the use of the £10 million loan to FMEL, the report’s conclusion was clear. It read:

“The Committee considers that transparency over the use of public money is essential. This example falls well short of the standards of transparency we would expect.”

Is it not strange that a member of the Public Audit Committee—one who was also, at that stage, the treasurer of the SNP—would take issue with such a conclusion? Perhaps now we know why there was such an absence of financial control that the SNP was able to sneak a motorhome on to its books without, apparently, the knowledge of its own treasurer.

When it came to the meeting between the First Minister and Jim McColl—a meeting of which the recollections of the two protagonists differ significantly—there was, again, an SNP attempt to neuter the committee. The report says:

“record and note keeping of these meetings was weak and fell well short of the standards of transparency and accountability we would expect. It is particularly concerning that there does not appear to be a full record of the meeting held between the former director of FMEL and the First Minister in May 2017. A permanent civil servant should have attended and produced a record of that meeting in line with established protocols in the Scottish Ministerial Code.”

Yet again, Willie Coffey and Colin Beattie sought to play down criticism of the Scottish Government by seeking to remove elements of that clear account of the evidence session.

Will Craig Hoy give way?

I do not have time.

In the end, thankfully, their attempts to divert, dilute, distract and delete legitimate criticism of the Government did not succeed, and the report stands as a solid piece of work, for which I thank my other committee colleagues. However, the SNP not only attempted to amend the report; they sought to undermine it.

Upon the report’s publication, a statement was released by Mr Coffey and Mr Beattie through an SNP spokesman. It said:

“The headlines chased by the committee convener significantly embellish the actual substance of the report, which offers very little in the way of new information.”

For the record, I disagree entirely with that view, and I support the convener in his conclusion that the people of Scotland have been badly let down by SNP ministers. On reviewing 16 hours of scrutiny and thousands of pages of evidence, only a lame lapdog or a lackey could come to a different conclusion.

The Public Audit Committee’s verdict on the SNP’s long-running ferries fiasco was fair and proportionate. Our report identifies a series of failures on an unprecedented scale.

15:25  

I am grateful for the opportunity to speak in the debate on behalf of Scottish Labour. I wish my colleague Alex Rowley a speedy recovery from his recent planned surgery, and I wish Kevin Stewart well, too.

When I start my speeches in Parliament, I almost always say that I welcome the chance to speak in the debate, but there is nothing to welcome about one of the biggest public procurement disasters in the history of devolution, which has resulted in ferries that are three times over budget and five years late. However, I want to thank the Public Audit Committee and, in particular, the convener and its officials, for their extensive work, which they did in spite of the difficulties that they encountered, as outlined by Mr Hoy.

The motion asks us to note the conclusions and recommendations of the report. I not only do that but put on record that I agree with those recommendations, even if the SNP members of the committee, who tried to remove any criticism of Scottish Government ministers from the report, do not. I say to them that almost everyone with any sense in Scotland knows that the Scottish Government is ultimately responsible and at serious fault for this fiasco. The attitude and failure of those SNP committee members to fully recognise that reflects very badly indeed on them.

This week on South Uist, as we do every week on many of our islands, we see the impact of the ferries debacle, with people paying the cost of this Government’s failure. Of course we need to look at how our ferry services will be run in the future, but the number 1 reason for people in Scotland not having a reliable ferry service is that they do not have a reliable ferry fleet. Despite what the First Minister claimed earlier in the chamber, over the SNP’s time in office, only six ferries have been built in 16 years, whereas 10 ferries were built by the previous Labour-Liberal Democrat Government in half that time—in eight years.

Because of the current fiasco, we face a situation in which our ferry network is in crisis and we are having to build ferries in Turkey. We are also having to pay £1 million a month for the catamaran MV Alfred as a relief vessel.

The Public Audit Committee’s report sheds light on how that situation came to pass and raises a series of concerns about the SNP’s financial mismanagement and irresponsibility. It also highlights the considerable lack of transparency and accountability on the part of all those involved, including Government ministers. From FMEL not being open about its inability to provide a full builders refund guarantee to the current First Minister exercising “poor judgement”, in the words of the committee, when he was transport minister and stating that he had no knowledge of the preferred bidder when evidence suggests that he did, the entire scandal has been characterised by the complete opposite of transparency.

It is little wonder that there are still so many unanswered questions. In particular, the fact that serious questions about competition and serious concerns over the integrity of the procurement process remain compromises public trust. The findings of the KC’s inquiry must be shared with the Parliament in full—no ifs, no buts. I say to the cabinet secretary that it is not for CMAL to tell us what it will and will not share with the Government. That report must be shared in full—no ifs, no buts. [Interruption.] I could not make out what the cabinet secretary was saying there. I would welcome confirmation from the cabinet secretary that the KC’s findings will be given to Parliament in full, with no redactions.

No one in Government has taken responsibility for the situation. We have had a merry-go-round of ministers, who once could not get down to the yard for a photo opportunity quickly enough, but who are now desperate to avoid any association with the fiasco. Real responsibility would mean Government ministers fixing this mess and seeing the job through until it is done.

The Government has also failed to hold senior management to account. Those managers should not have received a penny in bonuses while ferries were delayed and over budget. To add insult to injury, the former turnaround director was paid £2 million, despite overseeing more delays and increasing costs. People do not want to hear the Government say, “I agree with you and that was wrong”; they want ministers to get their money back.

There is a lot of blame to go around in this fiasco. Ministers, agencies and management are all responsible but, as the convener said, the one group of people who have been entirely blameless throughout are those in the Ferguson’s workforce. In fact, if the warnings from the GMB union had been listened to earlier, we might not be in this mess now. It is vital that we listen to them in future.

Along with Alex Rowley, I met GMB shop stewards Alex Logan and John McMunagle at the yard some weeks ago. They are calling for investment in facilities at the yard and for it to be directly awarded contracts to build smaller, simpler, standardised vessels in order to secure a positive future for Ferguson’s and its workforce. That work could easily be done at the yard, as has been demonstrated previously. The workforce should not be judged because of these two vessels. The Ministry of Defence work from BAE Systems is a vote of confidence in the yard and the Scottish Government should follow suit by awarding contracts from the small ferry vessel replacement programme, although with robust oversight in place.

We need a national ferry building programme that gives our islanders the ferries that they deserve and builds them efficiently here in Scotland, not in Turkey. Nor should the Government sell off the yard now. This is the Government’s mess and it is the Government’s job to clear it up and to help restore the yard’s reputation.

The committee’s report highlights a lack of financial responsibility, transparency and, ultimately, responsibility. There has been inadequate oversight of the entire situation from start to finish and a complete disregard for stakeholder engagement. Despite what SNP members of the committee may think, islanders, workers and all of Scotland’s taxpayers are paying the price for this SNP Government’s incompetence and financial mismanagement.

15:32  

I apologise, Deputy Presiding Officer, because, as agreed, I will be unable to remain in the chamber for the conclusion of this debate, as I need to attend a teachers event in Aviemore this evening. I assure members that I will be listening online throughout my journey to the Highlands, and I honestly mean that.

I recognise Kevin Stewart’s contribution to ministerial office and wish him well with his health, which is more important than any job. I also thank the committee and clerks, and I thank the convener for an opening contribution in his usual passionate style.

When the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy announced to the Parliament that he was issuing a ministerial direction ordering Ferguson’s to complete the two ferries and overriding the value-for-money test, he could not resist making a virtue of that decision. In the wake of a humiliating admission that it would be cheaper to scrap the second boat and start again elsewhere—

Will the member give way?

Let me conclude this point.

In the wake of that, he thought that it was time to claim credit for that decision, making a virtue out of it while taxpayers picked up the tab, shipyard workers were humiliated and islanders were on the march. The truth is that he had no choice, because choosing any other option would lead to further delays and would finish the yard for good, but the fact that he had no choice does not mean that it was a good decision. There is little in this sorry saga that has been a good decision.

I am glad that Willie Rennie provided the additional context for my decision. I proceeded with written authority over a narrow value-for-money assessment, which did not take account of the impact on the community, the yard, or island communities in the event of further delay. Does Mr Rennie accept that, in the context of that wider consideration, that was the right decision to take?

Who created that context? It was this Government that made a series of terrible decisions over many years, many of which were outlined by Richard Leonard in his opening remarks.

It has been an expensive episode. The mistakes have been so costly that, if we had awarded the contracts elsewhere back at the start and sent every Ferguson’s worker home with £300,000 in their back pockets—a third of a million pounds for every worker to sit at home—we would still have change left over, and we would have two ferries sailing to the isles now, serving the islanders and the communities that we seek to represent.

However, the minister thought that it was wise to take credit. He hardly flinched as he opened the taxpayers’ cheque book to sign a blank cheque and spend taxes that were raised from nurses who battled through the pandemic, teachers who work long hours to keep up with the demands of the job and workers who do 12-hour shifts in a fish factory or juggle three jobs just to make ends meet. Perhaps the minister should think of those people next time he seeks to blithely spend millions of pounds of their money.

The ownership of this fiasco is not in doubt. We should remember that it was the SNP that brought in its favourite businessman to run the yard when he had never built a ship in his life; the SNP that awarded the contract to the yard; the SNP that interfered in the procurement process for party advantage; the SNP that interfered with the builders guarantee; and the SNP that took over the yard when it collapsed. The minister thought that he should take credit for saving the yard when it was his Government’s decision that put it under potential threat.

We thought that we had seen the worst, but the fury on the faces of the South Uist islanders has told us just how angry they are. Lines of cars were parked up for as far as we could see at Lochboisdale and 600 people rubbed shoulders to make their views known. That is about a third of the population of South Uist and Eriskay. We would need 500,000 Glaswegians in George Square to match that strength of feeling. They are angry about the lost bookings and because businesses are under threat, income has been lost, hospital appointments have been missed, weddings have been postponed and there are empty shelves in shops.

What is worse, the Government is not providing even a penny in compensation. Ministers are content to issue a ministerial direction to spend millions more at Ferguson’s, but there is not a penny for the shopkeepers of South Uist. Ministers are happy to shell out £1 million a month for the MV Alfred, but there is not a penny for the bed and breakfasts on Eriskay. Ministers sit idle while Ferguson’s pays millions in bonuses to the bosses, but there is not a penny for the islanders.

Apparently, the money would be better spent by CalMac. Apparently, it is for the greater good. We have come to a pretty pass, have we not? Those who have suffered the most at the hands of this incompetent Government are lectured by ministers of this Government about the sacrifices that they need to make for the greater good.

I say to the Government: for goodness’ sake, stop the faffing. Give the islanders the compensation and end the insulting boasting about the virtue of the Government’s decisions. Do the right thing.

We move to the open debate. I advise members that, at present, we have some time in hand, so that can be factored in. If that changes in due course, the chair will advise members, and at that stage any interventions will require to be accommodated within members’ speaking slots.

15:38  

First, I say to Brian Whittle, who asked the cabinet secretary a question regarding the yard, that it was genuinely a working museum. There had been very little investment in the building or the kit within it. The workforce was trying to build ships using kit that went back to the 1940s. That was when the yard was under private ownership. It was nationalised for some time in the 1970s, but the yard had a complete dearth of investment for decades.

Will the member take an intervention?

Will the member take an intervention?

I will take an intervention from Mr Whittle, as I mentioned him.

If that is the case and the yard is in such a bad condition, why did you award the contract to it?

Members should speak through the chair.

As the cabinet secretary indicated earlier, due diligence had taken place—[Interruption.]

We need to hear Mr McMillan’s contribution.

—and we need to remember the investment in the yard to update it. I do not know whether Mr Whittle has been to the yard, but anyone who has will have seen that a lot of investment has gone into it since 2014.

I was not going to touch on project Neptune, but I have grave concerns about it and have written to the Scottish Government about that. A number of members attended some of the events that were hosted by Jenny Gilruth, the then transport minister. As a consequence of those events, I wrote to the Scottish Government, because I felt that project Neptune would, potentially, be a wasted opportunity.

I was genuinely shocked at Willie Rennie’s comments about the yard. Clearly, he would not have stepped in to save it and it would have been shut. He referred to a sum of £300,000 per employee, but that might have related only to the first two ships. What would have happened after that?

At no stage did I say that I wanted to close the yard. I said that I wanted the Government to do things properly. If it had done so, we would not be in the situation that we are in and we would have two ferries. The Government has failed. Does he accept that?

Mr Rennie said that he would have awarded the orders to a yard elsewhere. [Interruption.] That is what Mr Rennie said. As a consequence, the yard would have closed. There would have been no yard and no workforce there.

I want to put on the record my appreciation for the Ferguson Marine workforce. Whether intentionally or not, they have been dragged through the mire throughout, which has been completely unfair on them all. That is where sections 226 to 231 of the committee’s report are extremely helpful. The workforce at the yard have the skills, the ability and the experience. They want the best for the yard—a sustainable and prosperous future. I gently highlight to the chamber that the continual hammering of the yard does nothing to improve the morale of the workforce, nor their hopes and aspirations for its future.

Will the member take an intervention?

I have already taken a few interventions, Mr Simpson.

The narrative needs to change so that the yard can develop for the future that we all claim to want. With that, I am keen to ask the committee’s convener a question. He used the word “rigged” on the BBC’s “Good Morning Scotland” programme on the day of the report’s publication, but that word does not appear in the report. Sections 84 and 85 of the report cover the issue, with section 85 stating:

“While this is a serious allegation, the Committee does not in this report draw conclusions from the BBC programme.”

Surely, the convener would accept that using that type of language, even when paraphrasing someone else, only plays into the hands of those who want the yard to fail.

No, I do not, Mr McMillan. I have been fighting for that yard, those workers and those jobs for decades, so I will not take lessons from Mr McMillan about who is on the side of the yard or not. If the word “rigged” was used, it would have been a quotation, because that is the expression that was used by the team that produced the BBC’s “Disclosure” programme. They said that the process was rigged. It is not the committee’s position that we endorse that. I would merely have been reflecting that in an interview with the BBC.

That is certainly not how it looks from the transcript.

I fully support the actions that the Scottish Government took to save the yard in 2014 and 2019. The awarding of the contract for the two vessels secured the yard’s future. Make no mistake: as we have heard in recent months in the chamber and outside it, if the orders had gone elsewhere, the Scottish Government would have, quite rightly, been criticised. I would have led the campaign for the orders to go to the yard. Neil Bibby touched on the issue of work going to Turkey. If we did not have the yard, those orders would also have gone to Turkey. We would not be having the debate today, nor many of the others that have taken place in the Parliament, if the orders had gone elsewhere. Instead, the residents of the new apartments that surely would have been built on the site of the former shipyard would have been enjoying views over the Clyde and living beside Newark castle.

Will the member give way?

No.

As far as the workforce, the Port Glasgow community and I are concerned, Ferguson Marine must remain a shipyard for many decades to come. The pie-in-the-sky idea of shutting the yard and moving it to Inchgreen dry dock is a non-starter. In addition, to those wishing to buy an apartment in Inverclyde with a view over the Clyde, I say that there are plenty of places to go to see that. Shipbuilding in Port Glasgow must remain.

I welcome the fact that much of the committee’s report helps the reader to understand more about what has happened. I note, however, that it is clearly not a unanimous report. Members have touched on that.

I want to touch on a factual inaccuracy that centres around my letter to the Scottish Government and the subsequent reply. I became the MSP for Greenock and Inverclyde in 2016—not before then. I am sure that Duncan McNeil would not be too happy about being airbrushed out of his earned position in relation to the time covered by sections 86 to 93, and subsequent sections also contain that factual inaccuracy.

Specifically in relation to section 89 and the reply from the Scottish Government, I am sure that a similar section and division would have appeared if the then cabinet secretary or minister had either not replied or replied providing no information.

As section 88 of the report states,

“The constituency MSP for Greenock and Inverclyde was undertaking his duties as an elected representative by approaching the then Cabinet Secretary for Finance, Constitution and Economy to ask what alternatives to a BRG existed, in a bid to support the shipbuilding industry in the area they represent.”

I stand by my decision to write to the then finance secretary, and I was content that the minister at the time provided the information, which I clearly shared with FMEL and the committee. What decisions were taken thereafter was a matter for FMEL.

It is also important to highlight the oral evidence that is documented in section 156 of the report.

Mr McMillan, I am being generous, but you need to start to conclude.

Okay. I will finish this point, if I may.

The quote from the then chief executive of Transport Scotland is interesting. He said:

“We still had the outcome of the procurement, which told us that it was the best bid for price and quality, and we had secured some negotiations of risk from CMAL to Ferguson’s and from us with CMAL.”

I will not apologise for our Government stepping in to save the yard in order to save the jobs and get those ferries finished. That will certainly provide a future for many people in my community in the decades to come.

15:47  

I welcome the opportunity to speak in the debate. I thank the Public Audit Committee and its clerks for their work in delivering the report and bringing the debate to the chamber.

I have to say that it is almost uncomfortable watching SNP members trying to defend the indefensible. We are debating a ferries scandal that goes back many years and that has resulted in an eye-watering overspend that is three times the initial budget. There are still no ferries, and island communities are now cut off from supplies and livelihoods. It is a case of £338 million for two ferries. From start to finish, this has been an unmitigated disaster from the SNP. It started with the dodgy procurement process, mired in allegations of being rigged, in which Ferguson’s was announced as the preferred bidder without the mandatory builders refund guarantee, as highlighted by the Auditor General for Scotland, Transport Scotland and CMAL.

We had a shipbuilding company at odds with CMAL and the Government, which led to it going into administration; a staged launch, with painted-on windows; missing meeting records; and a First Minister who somehow could not recall vital information when giving evidence to the committee—let us not forget that she could not recall more than 50 times.

If that was not enough, we now discover that hull 802 will not be value for money and that it would be cheaper to reprocure a brand-new ferry. Yet the Scottish Government keeps on digging. That is on top of designing a ferry that will not fit into the port that it was procured to sail from. You could not make this up. A credible, sensible Government faced with these problems would apply the rule: when in a hole, stop digging. However, the Scottish Government continues to dig the hole, employing highly paid consultants to explain why it is right to keep digging the hole and why, if it does not work, it should just keep digging faster.

I have no doubt that the final play will be a cabinet secretary at pains to explain why this mess is, somehow, somewhere else. The reality is that the Scottish Government has now dug a hole so deep for itself and for island communities that our next transport minister is more likely to be found on Bondi beach than Barra.

The Scottish Government’s track record on rescuing failed businesses involves one flop after another. It might make such investments with the best of intentions, but, time and again, they end in failure. What is worse is that it does not seem to learn from its mistakes. The biggest issue for me is the total lack of commercial knowledge that is apparent. Even if we accept that, quite reasonably, the Scottish Government stepping in to take over a business such as FMEL is not necessarily about making a profit for itself, there is a worrying impression that there is no limit to the amount of money that it will pour in.

I have listened intently to Brian Whittle’s comments. Is he suggesting that hull 802 should be scrapped? If that were to happen, it would have an adverse effect on the workforce and the future of the shipyard.

The Scottish Government got itself into a position in which the only decision that it could make was to complete hull 802. Willie Rennie said that, too. However, it is the Government’s mistakes that are costing the Scottish population and our taxpayers money upon money, which is ridiculous.

There is a time and a place for the Scottish Government to step in and prevent a business failure, but, in such cases, there should be a clear due diligence process to understand the scale of the financial commitment, a clear commercial plan about what is needed to turn the business around and, crucially, a properly defined set of criteria for exit.

At Prestwick airport, we have seen the lack of a clear exit path, which has left what should be a commercially viable business sitting on a Scottish Government balance sheet. Offers from the private sector to buy the airport have been rejected—assuming that even an acknowledgement of them is given. Last week, when the cabinet secretary was questioned in committee by my colleague Graham Simpson, we discovered that he did not even know that there had been a note of interest in purchasing Prestwick airport.

The most crippling problem that all such businesses face is the same: the SNP leadership’s sheer ignorance of how business works, which has now been compounded by the detachment from economic reality that the Scottish Greens have brought into Government.

In committing to save the shipyard, the Scottish Government set out three objectives: complete vessels 801 and 802; safeguard jobs; and give the yard a future. I see it failing on at least two of those. As I said earlier, many of the original workers were lost and the new company had to hire many new staff. Given the colossal cost overruns and delays, it is hard to believe that there was not a better way to achieve the same goal.

What would have been the overall cost had the Scottish Government decided to support the original Ferguson’s, which was at least being run by business people, rather than to nationalise a company when the cost had soared to an unacceptable £130 million? Now, the cost sits at £338 million, with four new ferries having been procured without the Scottish Government’s own shipyard even being on the tender list.

That is why the SNP-Green coalition Government should never be allowed anywhere near business decisions. Its inability to recognise its catalogue of mistakes and its commercial ineptitude have left island communities cut off, to the ruination of their way of life. The First Minister’s platitudes, with woolly promises of a resolution by 2027, have left us wondering how many islanders will be left to welcome the ferry when—or, indeed, if—it finally arrives.

15:53  

I think that you will find that the SNP members on the committee agreed with substantial critical elements of the reports. The offensive comments made by Mr Hoy and Mr Bibby are pretty disgraceful but, sadly, not unexpected these days from their two parties.

Mr Hoy could have said what he said about me and my colleague Colin Beattie at any time at all, but he said not a word. That is tawdry and cowardly, Mr Hoy. In any case, he also has a brass neck, Deputy Presiding Officer, as he decided to conduct his own inquiry halfway through our committee’s work while still pretending to remain objective.

I have a minor comment for Mr Whittle, which is about the famous painted windows. They were done at the request of the workers and no one else; the workers wanted the ship to look as best it could for that occasion. To level that remark at the Government is just ridiculous.

Will the member give way?

No—I listened to you without making any comment, Mr Hoy, so I ask you to do me the same courtesy for once. Just for once, show some courtesy and respect.

Mr Coffey, we need to not refer to “you”, because that means me. I do not think that you are referring to me. Speak through the chair, please, Mr Coffey.

My abiding memory of the evidence sessions that we had on the issue was of the conflicting nature of most of the evidence and the difficulty that we all had in deciding who and what to believe.

Will the member take an intervention?

No, thank you.

Will the member take an intervention?

Did the member hear me say, “No, thank you”?

Mr Simpson, I think that Mr Coffey has made it quite clear that he is not taking an intervention.

I have only started.

Inevitably, the risk is that we end up citing and emphasising the evidence that suits the political narrative that developed around the project. That is a loss to the overall purpose of audit and our obligation to the public to try to get to the bottom of things.

When we met them last October, the workers’ representatives at Ferguson’s agreed that the Scottish Government’s decision to award the contract saved the yard, saved hundreds of jobs and saved shipbuilding on the Clyde. Most of us will agree with that. Curiously, that did not manage to feature in the committee’s report on our meeting, but it is worth putting that on record, as it was Mr Hoy who asked the question.

If we want to try to get close to the reasons behind the delays to the ferries and the cost overrun, we should ask the people who know the most—the workers and the current management team charged with delivering the ferries to completion. We see the answers fairly clearly in their testimony to the committee. When we spoke to the workers’ reps, they were clear that the problems occurred at the outset, with the original management team’s decisions and a lack of consultation with the skilled workforce, which has many years’ experience of successfully building ships on the Clyde. They said that, due to the size of the contract for the two vessels, the yard would never be able to accommodate the two ferries at the same time and, with the significant changes required to reconfigure the yard, it was going to be impossible to meet the original timescales.

That was confirmed again at the committee meeting last week by the chief executive of Ferguson’s, David Tydeman, who said that the mistakes that were made by the original FMEL in 2015 and Ferguson Marine (Port Glasgow) Ltd in 2019 in relation to

“design management, build sequencing and contracting strategies, embedded unrecoverable delays into the programmes.”—[Official Report, Public Audit Committee, 1 June 2023; c 2-3.]

The big question for all the partner agencies is this: why did no one spot that at the outset and intervene to try to correct it? My colleagues and I are on record asking that question of the Government and its agencies.

One or two worrying aspects that stood out for me relate to the build sequencing, some of which seemed to be done purely to trigger payments rather than making sense in the construction process. Our predecessor Rural Economy and Connectivity Committee noted that in its report in the previous session. There were also various milestones along the way that were not tied to quality delivery.

In my role as a member of the Public Audit Committee and with the experience that I have to draw on over many years in management systems and quality processes, it seems obvious to me that an essential part of any tendering process is that people should conduct a full capability assessment on anyone who wants to deliver work for them. It is surely not enough to accept a tender without fully examining the capability of the contract bidder to deliver the order to the quality required and within the timescales and budget agreed. The committee recorded that important finding in our report.

If people do not get the project specification correct at the start, it is unlikely that anything will be delivered in time and on budget at the end. That is a maxim in any construction process, whether that is for ships, bridges, schools or anything else that people intend to build. That is one lesson that our committee has pointed to for many years.

In the Public Audit Committee, our focus is principally on following the public pound and holding not only the Government but its agencies and delivery partners to account for how that money is spent. At the end of our inquiry, despite our best efforts collectively, even we as a committee could not reach a conclusion on how substantial parts of the £128 million that the convener referred to had been spent. I pay tribute to my friend and colleague Colin Beattie for his forensic scrutiny of that on behalf of the committee.

I know that the Auditor General for Scotland is still considering that issue. Our committee will await his decision on whether he can continue to pursue that further.

In summary, the inquiry has been an extremely difficult one for all members of the committee. We do not have direct expertise in shipbuilding, and we rely on those whom we invite to be in front of us to offer accurate testimony to help us in our scrutiny process. Inevitably, as I said earlier, the political dimension dominated the majority of the narrative, and it still does, much to the anger of the workers. That makes it difficult to reach a consensus, which would, in my view, have given us a stronger report for Parliament.

All the parties involved have lessons to learn, particularly in the interests of ensuring that projects are rigorously defined at the outset. That is the key to success, in my view.

I remain hopeful that the current management team, led by the excellent Mr Tydeman, and the magnificent workers at Ferguson Marine are allowed to get on with the job of completing these vessels for us and the public they are intended to serve.

16:00  

I commend the committee for its report and its recommendations. It is painful for me to read it, not only as a parliamentarian but as someone with a deep connection to Scotland’s shipbuilding industry. My family has worked on the Clyde for generations, and it was a great moment of pride for me when, in 2011, I continued that tradition by joining BAE Systems. I was working at BAE Systems in Govan in 2014, when Ferguson Shipbuilders Ltd went into administration and was rescued by the Scottish Government. We all celebrated that moment—we all thought that that was a good move, because we all believed in the future of Scottish shipbuilding. However, it is one thing to have sentiment, and another thing to have competence—that is the thing that has been sorely lacking in the past decade of policies around the shipyard, as the report clearly spells out.

One of my jobs when I worked at BAE Systems was to do benchmarking against shipyards around the world. That involved working with an organisation called First Marine International, which I have a close connection with. I know that it has been heavily involved in Ferguson Marine and in trying to understand how to make it an effective shipbuilding operation. Its recommendations were used by BAE Systems in its project to build on the Clyde what was commonly known as a frigate factory but was intended to be a complete under-cover shipbuilding system using a semi-tandem production methodology. That was a complex thing to achieve, but we focused our efforts on trying to deliver it, because we knew that that is the basis on which world-class shipbuilding is undertaken anywhere else in the world. We needed to be in the upper quartile of the league table that is developed by First Marine International, which goes all around the world to maintain that benchmarking study. We developed that design and I am pleased to see that, although there were a few false starts, planning consent has been granted and the construction of a new, integrated shipbuilding facility is under way in Govan, underpinned by a permanent and continuous shipbuilding programme for eight type 26 frigates, financed through the Ministry of Defence.

That is in contrast to what has happened at Ferguson Marine, and we can use that as a useful basis when considering what we need to do. It is one thing looking at the report and tearing lumps off each other, but we have to raise our sights and think about what we want to do as a country. Do we want to have commercial shipbuilding in this country or not? That is the question that we must answer robustly. Do we want to have a national shipbuilding system? We must come to a conclusion on that because, if we want to do that, it is not good enough to simply say that we want it; we must also put in place the building blocks for it. First and foremost, we need a shipyard that is capable of undertaking the work. Willie Coffey mentioned that building a fit-for-purpose shipbuilding facility is either a pie-in-the-sky idea or it is essential, because, certainly, vessels 801 and 802 were not capable of being built in the current shipbuilding facility.

I have been to Ferguson Marine on several occasions. It is not a shipyard that is fit for purpose. Fundamentally, it is too small. The members of the workforce are fantastic and highly skilled. Many of them work between various shipyards and programmes—as members might imagine, Scottish shipbuilding is a small world. The issues with the yard are nothing to do with the workforce or their skills; they are to do with the fact that we did not put in place the fundamentals first of all but, instead, we charged into a mighty Trojan horse of a project that has gone spectacularly wrong, and we are now trying to recover our position.

The question is, do we put in place the necessary finance and capital to build a world-class shipbuilding facility? I am sure that First Marine International has said on many occasions what sums are needed in order to do that, so, do we put in place the essential financing? A criticism that has often been made is that Ferguson Marine did not have in place a builders refund guarantee, which is the financial cornerstone for any shipbuilding project in the commercial world. The reality is, however, that no British bank will provide a builders refund guarantee; that is a not a financial product that is offered in Britain. The Royal Bank of Scotland used to do it all the time—in fact, RBS was one of the world’s biggest ship-financing institutions—but after the 2008 crash it withdrew from that market completely.

Only a matter of weeks ago, I asked the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy whether the Scottish National Investment Bank would put in place a facility for builders refund guarantees so that Scottish shipyards could undertake commercial work. He said that the bank is not minded to do so at this point. I say to the minister that, if we intend to be a commercial shipbuilding nation but we do not have the fundamental cornerstone of financing in place, we cannot do it.

That is part of the reason why the current system has never worked. The facilities are not adequate, the financing is not in place and a patient forward programme is not in place. The current procurement system is not set up to allow Scottish businesses, or Scottish builders, to win. That is why we see the perverse spectacle of more than £200 million of public money flowing into the Turkish economy to build ferries there, when we know from economic studies that every £1 that is spent on a shipbuilding programme in this country returns £1.30 in value. We are cutting our own throats here. If we have a Parliament that is set up to try to build and grow the Scottish economy and try to build prosperity for our communities, this is a singular failure from which we should be trying to learn.

We should be understanding what the solutions are. The facilities and the financing need to be put in place in a way that is competitive, and the procurement needs to be structured in such a way that it allows for series build in order to enable efficiencies to be gained.

Between the first of the type 45 destroyers that we worked on at BAE and the sixth, we saved something of the order of 30 per cent in man hours. That shows what can be achieved with a continuous ship-build programme. That is what needs to be put in place for us to succeed, and that is why it is essential that the Government finds a means by which to get the small vessel replacement programme structured in such a way that it will be delivered by Ferguson Marine or an equivalent national shipbuilding champion in the commercial world. There can then be a conveyor belt of production so that the workers can achieve the necessary learning curve, and it can be underpinned by financing and facilities that are fit for purpose.

That is the point: if we can get those things in place, we can be a successful commercial shipbuilding country again. While we ruminate and chastise everyone for the failures over the past decade, the solutions are staring us in the face. We have achieved it with naval shipbuilding and we can do so with commercial shipbuilding, and I urge the minister and all colleagues in the chamber to collaborate constructively in order to achieve that for us all.

16:07  

It is as well to start—as we have all done in several previous ferries debates—with a frank acknowledgement of the situation that we face. Many of us were in the chamber in October 2015 to hear the contract award announcement for vessels 801 and 802. I doubt whether any of us, even in our uneasiest dreams, could have imagined that we might be here nearly eight years later, discussing the circumstances of those two vessels’ on-going construction.

Will the member take an intervention?

I will begin with a sentence or two first, if I can—thank you.

The Public Audit Committee’s report that we are debating today adds to the work that has been done by the Rural Economy and Connectivity Committee in its inquiry in session 5, and in the Auditor General for Scotland’s report in March last year. As the Audit Scotland report, “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”, notes,

“Procuring both vessels at the same time was intended to be the start of a standardised approach to building new vessels”

for CalMac.

The contract was for a combined £97 million for both ships, with delivery due in May and July of 2018. Those were intended to be the first in a series of vessels, which would have seen the average age of CMAL’s major vessels reduced from 21 years in 2017 to 12 years by 2025.

Instead, as has been very well, but fairly, rehearsed, island communities have been left waiting for new vessels during that period. As a result of the sequence of events, which members have gone through today, many island communities are still depending on vessels such as the MV Isle of Arran for network resilience. That vessel, for members who do not know her, is so old that she predates the emergence of Apple personal computers and commercial camcorders.

I spend a great proportion of my life raising concerns about the ferry network, which is a measure of just how essential ferries are for every aspect of island life. That reliance on an ageing and overstretched fleet is, of course, having real and serious consequences for my constituents.

CalMac crews and shore staff do an outstanding job, but CalMac, as a company, can and should do much better for island communities. This winter’s annual refit programme has been one of the most chaotic in living memory and has shown itself to be maddeningly inflexible to changing circumstances. The latest decision to deprive South Uist of its ferry service entirely—again—for all of June is one example of why island voices are increasingly, as we have all heard, being raised to use phrases such as “out of touch” and “remote” when describing CalMac’s upper management.

I do not mention all that, in relation to the operation of ferry services, to deflect from the undeniable reality that CalMac does not have enough ships to fulfil its duties as an operator, or even, at present, to sail from all the ferry ports that are advertised on its timetable.

I welcome the news that the Glen Sannox, however belatedly, now shows signs of being ready for this autumn, and that progress with vessel 802 suggests that she might be in service late next year, just as I also warmly welcome the award of contracts to build another four new vessels, the construction of two of which is now well under way.

The Cabinet Secretary for Wellbeing Economy, Fair Work and Energy’s decision to give a ministerial direction for vessel 802 to be completed at Ferguson’s was, despite much bluster from some quarters in the chamber today and previously, the right thing to do. It might well have cost less to start again and build elsewhere, but the costs of waiting for the necessary two or, probably, three years extra to do so would have been borne by island communities and businesses, as they continued to deal with disruption.

The Public Audit Committee agreed

“with the REC Committee that the decision-making structure for the procurement and construction of new vessels to serve the Clyde and Hebrides ferries network is cluttered and lacks transparency.”

The landscape of differing responsibilities of Scottish ministers, civil servants, CMAL, CalMac and Transport Scotland is—in my view and that of many others—very complex indeed. I hope that the work, through project Neptune, that is under way to review governance arrangements, provides an opportunity to set some of that right. Angus Campbell from the ferry users community board has been diligently going around the country to ensure community input in any future reform.

On a personal note, I thank the outgoing transport minister for the very considerable efforts that he made in office to engage with many island communities, including mine, and I wish him all the best for improvement in his health.

Everyone on the islands is painfully aware—believe you me—of the failings that are associated with the building of the Glen Sannox and vessel 802. Those failings have had undoubted consequences, both economically and socially, for my constituents. However, they also raise wider questions about how, in the future, the management of ferry services by CalMac can be done more effectively. Not least, I hope, if I can be entirely frank—and as other members have mentioned—that CalMac will take the hint that there is something far wrong with the matrix that it uses to decide which ferry services to abandon at any time, given that, generally, the same ferry service is abandoned. Government and CalMac alike will need to address all those questions in order to ensure that we have the ferry services that we need for the years ahead.

16:13  

I thank the previous two members for their contributions.

One of the most striking comments that a witness ever made to a parliamentary committee inquiry was in late 2020, when a question was posed to a witness about why the outcome of a hugely valuable public procurement exercise, which named its price up front, would produce a winning bid that was deemed to be highest in quality and highest in price. In response, the witness said:

“I do not know the answer, but three things spring to mind. One is incompetence; another is vested interest; and the final one is corruption.”—[Official Report, Rural Economy and Connectivity Committee, 29 January 2020; c 23.]

We could construe that response as being an abstract or even unfair critique of the Government, but is there, perhaps, any truth to it? I think that it sums up the entire fiasco in three damning accusations.

All 129 pages of the aptly named “Construction and procurement of ferry vessels in Scotland” report, which was penned by the Parliament’s Rural Economy and Connectivity Committee, made for damning reading. I declare an interest, in that I co-authored it. There was an equally critical Transport, Infrastructure and Climate Change Committee report as far back as 2008. One Mr Patrick Harvie MSP oversaw the production of that report, back in the days when the Greens had some backbone. I see that they could not even be bothered to turn up today.

There have been many more indictments of the situation since last year’s Audit Scotland report, and the latest 125-page instalment by the Parliament’s Public Audit Committee is a granular and forensic piece of work. However, all those reports have gathered dust on the shelves of numerous transport ministers.

The key protagonists of the whole sorry saga lie in three camps. The first are those who were thrown under the proverbial bus, and who are not here to defend themselves today. I refer to Paul Wheelhouse and Derek Mackay. In the second camp are those whose transport failures in office were instead rewarded with the heady heights of high office—today’s First Minister’s question time best illustrates that. However, those whom I suspect are the real authors of this entire mess sat at the very top of Government—those who signed the cheques; those who announced the deal at a party conference before the deal had even been signed; and those who ironically smashed a bottle of Arran whisky against the hull of vessel 801 some six years ago. They occupy the Government’s back benches, when they are not popping up on daytime chat shows. I note that not one of them has had the guts or the shame to turn up to Parliament today to defend themselves or their actions.

There were three devastating charges. The first was “incompetence”—the incompetence of numerous ministers, who could not sit CMAL, FMEL and Transport Scotland around the table to negotiate, oversee or manage disputes among the three of them.

Will the member take an intervention?

I will in a second.

There was the incompetence of making payments for milestones, which had either been artificially reached or not met at all, and the incompetence of giving so-called loans, which would knowingly—clearly—never be paid back or were used for purposes other than those for which they were intended. The incompetence of insisting on a type of engine technology was the source of much cost and much delay, and there is still much doubt over its use or efficacy.

Nicola Sturgeon and John Swinney hijacked the yard and its workers for politics and public relations. Does the member know when was the last time either of them showed face at Ferguson’s?

I suspect that they do not have the guts to show face, because they know that their actions and the actions of the Government and its agencies have paved the way for the disaster that we see now.

I come on to the second charge that was set out in that evidence session—“vested interest”. That is relevant because we do not know what Alex Salmond promised Jim McColl back in the heady days of 2014, and we do not—the report alludes to this—know what Nicola Sturgeon promised Jim McColl in 2015, 2016 or even 2017 because there are no minutes of those meetings.

We should not forget that the Scottish Government is the yard’s biggest creditor. The Government and its agencies saw the yard spiral into administration on their watch. The vested interest hid from scrutiny behind the cloak of commercial confidentiality every step of the way. Ministers were given 29 options to resolve the yard’s financial problems, which were all presented to them independently by PWC. Instead, they forced their way into the boardroom of the yard and took control.

What about the vested interests of the turnaround directors? The only things that turned around were their personal fortunes. We will never know where that huge pipeline of prospective commercial work went. Where are all the requests for information, and where are all the tender responses that were piled up on Ferguson’s boardroom’s whiteboard?

We never found out the effect that state ownership would have on the yard’s ability to compete for commercial work. We never got a response to the Competition and Markets Authority’s warnings about directly awarding contracts. We never found out why Jim McColl’s offer to buy the yard back, even the one just a couple of weeks ago, went unnoticed and unresponded to.

We never even knew who else bid for the yard before the Government nationalised it. As members are right to point out, all the while, the good workers and grafters of that yard, under direction, were welding pieces of ship completely out of kilter with what they knew to be right. They were under direction, just so that the then First Minister could turn up for a photo shoot.

However, it is the third, final, and most grievous charge that I must raise Parliament’s awareness of, and that is the charge of “corruption”. Only in Scotland could people get away with a decade-long scandal such as this and have not one single person lose their job. Not one single person has paid the price for this sorry saga. Actually, I lie, because taxpayers have paid the price, as have our islanders on Arran, who have to turn up to see whether the ferry is running then wait to see whether they are lucky enough to get on it. Let us not forget that the whole Northern Irish Government collapsed after a renewable heat scandal that cost its taxpayers a couple of hundred million pounds. I suspect that here that would barely make a topical question.

All the while, here in Edinburgh we have ministers who get around the problems with Scotland’s ferries. What do they do? They charter ferries to get around. That is the reality for them, versus what is happening in our island communities. I hear the Government party members moaning, because they do not like the truth, Presiding Officer. This latest report—a damning one, at that—is the last of many such reports. It lays bare the simple truth on all three counts—incompetence, vested interest and corruption. The Government is undoubtedly guilty as charged.

Rona Mackay is the final speaker in the open debate.

16:21  

I would have liked to intervene on Craig Hoy earlier, to ask whether he thought that it was respectful or fair to constantly refer to a member who is not in the chamber because he is ill and who has no recourse to reply. I thought that that was shameful.

I am speaking today not to rake over the coals of what has happened on the hugely important issue of ferries. The committee’s convener and members have rightly addressed many aspects of the challenges that have led us to where we are now. Ministers have apologised for the delay to the ferries and for the distress and difficulties caused. However, I would like to repeat what the cabinet secretary said in his opening speech: the Scottish Government will never apologise for taking action to save more than 300 jobs at Ferguson’s shipyard.

Will the member take an intervention?

No, thank you.

This debate is about standing by our commitment to the shipbuilding communities in Inverclyde and our island communities that rely on the vessels that are currently being built at Ferguson’s. Vessels 801 and 802 will provide a high-quality lifeline service to our island communities, who I know are having a desperate time right now. Speaking as someone who represents an urban mainland constituency, I honestly cannot imagine what islanders are going through and I hope that the situation is urgently remedied, for very obvious reasons.

Will the member take an intervention?

No, I am not taking interventions, thanks. [Interruption.] No—thank you.

There is no doubt that our island communities deserve to be supported by two new energy-efficient vessels—[Interruption.]—with the capacity and reliability that is required to support vibrant island economies. [Interruption.]

I ask members to refrain from making remarks from a sedentary position. Please continue, Ms Mackay.

Thank you, Presiding Officer.

Although the pure value-for-money assessment of vessel 802 is challenging—there is no doubt about that—the Government had to take a very finely balanced decision. We must take into account the added delays, the wider benefits of continuing to have the vessels built at Ferguson Marine and the full cost of not doing so. A new vessel could not be deployed until May 2027 at the earliest—four years from now, and two and a half years later than the current delivery timescale. It would just not be acceptable to ask our island communities to wait for that further period. We all know that they have waited long enough.

Will the member take an intervention?

I am not taking interventions.

Vessel 802 will provide lifeline connectivity to the mainland and ensure that people on the beautiful island of Arran are supported for their day-to-day needs around health, education and commercial activity. It will also provide a resilient service to support the tourism industry, which contributes so much to the island’s economy. Recent issues with the reliability of an ageing island fleet and the costs associated with hiring replacement vessels in order to maintain services have merely added to the compelling case for delivering additional capacity as quickly as possible. That is why the Scottish Government has issued a written authority to continue to complete delivery of both vessels at Ferguson Marine. The project costs of completing them are currently estimated to be £202.6 million, including contingency.

Publication of the Public Audit Committee’s report “New Vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802” was welcome, and I congratulate the committee on a thorough and balanced report. It recognised that there have already been significant improvements in procedures and processes by Transport Scotland and Caledonian Maritime Assets Limited since the procurement of the vessels almost eight years ago. Both organisations, along with CalMac Ferries Ltd, are committed to continuing to building on those improvements—particularly in how the communities and stakeholders are embedded in the process and in ensuring that value for money for taxpayers underpins investment decisions.

The Scottish Government supports the growth of commercial shipbuilding in Scotland—and why would we not, with our proud shipbuilding heritage? The Scottish Government is in active engagement with Audit Scotland on strengthening the business investment framework within the Scottish public finance manual. It will agree an action plan with Audit Scotland to increase transparency and further enhance that framework, to ensure a consistent approach to future investment while ensuring that ministers have appropriate flexibility to intervene to support industries and communities. Of course, any decision on further audit work is for the Auditor General for Scotland, but all parties will fully engage in any work that is identified.

In response to some of the remarks that have been made today, I say that the Scottish Government is committed to transparency and has proactively published more than 200 documents on its website—[Interruption.]—if members would care to look.

Members!

Scottish ministers have taken action to ensure the completion of two ferries by Ferguson Marine, following a due diligence assessment carried out on forecast costs. I believe that that is entirely the right decision. Cabinet secretary Neil Gray has clearly outlined the Scottish Government’s commitment to supporting the completion of the vessels, which remains the quickest way of introducing new lifeline connectivity for island communities. I look forward to the delivery, as soon as possible, of those two vital vessels and I thank the skilled workers who are working so hard to make that happen.

We move to winding-up speeches.

16:26  

We are grateful to the Public Audit Committee and its staff for their work on the report.

The workforce at Ferguson’s has been let down by the Government. Stuart McMillan seemed to suggest that members in the chamber are hammering the workers at the yard, but they are not; they are hammering his Government. If he tries to divert that anger, it is he who is causing distress to the workers at the yard. The workforce at CalMac has been let down as well, but those who have been most let down are the communities that are being driven to their knees by the lack of ferries.

Neil Bibby and others talked about the unprecedented protests in South Uist. A turnout of a third of the population is unheard of anywhere, yet that is what happened in South Uist at the weekend. They have had enough. This has to be fixed. They need ferries. It will not be fixed without a transport minister, so why the delay in appointing one? Can the First Minister really not find a willing candidate on the back benches?

Richard Leonard talked about the committee report and the lack of transparency—the evasion and how the Government avoided questions and even refused to attend. It did not even have the courtesy to respond in time and in detail to the committee’s report. If that is how the Scottish Government treats the Public Audit Committee of this Parliament, I begin to wonder, but it is exactly how it also treated Audit Scotland. We need transparency. This is the squandering of public money and the betrayal of communities.

Neil Bibby and Craig Hoy added their voices in condemnation of Willie Coffey and Colin Beattie, who tried to water down the report. Their role on the Public Audit Committee is to represent the people of Scotland, not the SNP. For the minister to tell us today that CMAL will decide which parts of the KC’s report will be published is absolutely shocking. This is a failing Government trying to hide the truth.

The Scottish Government is squandering taxpayers’ money. The cost of the MV Glen Sannox and hull 802 would have been almost enough to renew the whole fleet. Bizarrely, the Government is also paying Pentland Ferries an amount for a nine-month hire that would pretty much have bought the boat. Brian Whittle talked about paying for consultants. Indeed, the Scottish Government paid for consultants on project Neptune and is now going through another procurement worth millions of pounds for more consultants. That is wasted money when a bystander could tell it for free that what we need is ships and that that is the only way to solve the problem.

The Scottish Government needs to sign off on a design that will fit harbours, put a running programme of replacement out to tender and build an interchangeable fleet with capacity to cover dry dock and high season. Doing so will mean investing in shipbuilding—Paul Sweeney made that point. At this moment, it does not really matter who runs the contract, because you cannot provide a ferry service without boats. Although the Scottish Government loves to point fingers at CalMac, it is simply passing the buck for its own incompetence.

Alasdair Allan and the Scottish Government talked about and put blame on the matrix. If you change the matrix, you simply cut off another community and pit communities against one another. We are already pitting tourists against locals, freight against passengers—divide and rule simply will not work.

I hope that the member is not entirely surprised that I am standing up for communities in my constituency who find themselves on the receiving end of the matrix.

I am trying very hard to stand up for every community in my constituency, because they all need ferries and none of them deserve to be cut off because of incompetence.

That is not just a waste—indeed, a squandering—of public money on ferries that might never sail; the economic damage to our communities is immeasurable. Bus tours with buses that carry 40 people at a time to hotels and B and Bs have stopped coming to Uist. Visitors are cancelling not because they do not want to come, but because they cannot. Hospital appointments are being missed—people are missing their chemotherapy appointments. Shelves are empty. Weddings are missed and, as Willie Rennie said, funerals are, too.

Where is the compensation for those businesses? They say that they do not want compensation and that what they want is ferries. Without the ferries, however, what they need is compensation. Communities are being damaged by a Government that should be protecting them.

Staff are facing abuse. The staff who are trying to serve those communities are bearing the brunt of the frustration of people who are desperate to travel but cannot. I ask people to take it out not on the staff but on the Government that has let them down.

The whole fiasco shows the reality of a Government that is not focused on the needs of the people it should be serving. It is a disgrace that people are cut off, that livelihoods are being damaged and that the whole island economy is being wrecked. It does not have to be like this, but the Scottish Government avoids responsibility and seeks to sow further division, pitting community against community and sector against sector.

The Scottish Government needs to stop, step up and help our island communities. It needs to provide compensation, and it needs to provide ferries.

16:33  

I thank the Public Audit Committee for an excellent report. Rarely has there been such a scathing committee report, but rarely has there been such a scandal to report on—in fact, in my view, there has not been one.

The committee blasted what it called “significant failings”—that is rather stating the obvious. It said that

“vessels are now millions of pounds over budget and years behind schedule”

and that

“Scotland’s taxpayers and island communities have been badly let down by many of those involved in the project”,

which is correct. It said that there was a

“lack of transparency and accountability”.

There was the issue of the lack of a builders refund guarantee and ignoring CMAL’s wish to retender. The committee questioned the former First Minister’s

“decision to publicly announce the preferred bidder”

when she did, and said that there is still “uncertainty” over

“which Minister had the final sign-off on the contract.”

The committee branded the programme steering group, which Transport Scotland led, as “weak and toothless”. Of course, there were meddling ministers, too, none of whom has taken the rap. A good quartet of fiddlers can make sweet music, but Mackay, Swinney, Brown and Sturgeon have struck a bum note with islanders throughout this sorry saga.

At least Mr Mackay came to the committee to give his side of the story, as did Ms Sturgeon. Sadly, efforts to pin down Keith Brown came to nothing, leading to the committee chiding him for his “lack of co-operation”. What did canteen Keith, last seen stirring up constitutional grievance—

Mr Simpson, we will address members by their proper full names, and we will not use nicknames in the chamber.

What did canteen Keith Brown, last seen stirring up constitutional grievance—

Mr Simpson, I ask you to apologise and move on.

I apologise.

What did Keith Brown, last seen stirring up constitutional grievance in a members’ business debate and making a spurious point of order, have to hide? Quite a lot, I suspect. Is it not significant that none of the saga’s key players who still belong to the Parliament are here today to face the music?

It is a sorry saga, indeed, with no ferries yet and hundreds of millions of pounds of our money squandered. And for what? It is all because the SNP was hellbent on giving the yard the contract, even though it plainly was not the right thing to do. However, it gave ministers—including Humza Yousaf, Mr Mackay and the selfie queen herself, Ms Sturgeon—the chance to get their pictures taken in hard hats. The most infamous of those was taken in 2017 at the fake launch by Nicola Sturgeon, which is known as the painted-on windows launch. Six years later, there are still no ferries. My advice to anyone who has to take a decision on it is to keep SNP ministers well away when the Glen Sannox is actually launched into service, which I hope will be next year.

As the committee said, there has been a shroud of secrecy hanging over aspects of this matter. There was the meeting between the discredited former First Minister and Jim McColl, for which there is no minute. Craig Hoy was quite right to say that she might have broken the ministerial code, but we have a broken system, whereby the First Minister marks their own homework and that of wayward ministers. That must change.

We have discovered through FOI that a meeting between Transport Scotland and CMAL officials on 29 September 2015—just days before Ferguson’s was awarded the contract—was also not minuted. Whatever could the reason be for such an oversight?

We know that the SNP members of the committee tried to water down the report. That is not their job, and they should be ashamed of themselves. No amount of spin and bluster can hide the fact that this is the biggest public spending scandal of the devolution age. The project was cleared once John Swinney was sure that there were no “banana skins”, but there were so many banana skins that you would think that the vessels had already sailed to South America and back. Chance would be a fine thing—Arran would do. All the time, the islanders are without a ferry and the costs go up and up.

We had the BBC “Disclosure” programme claiming that Ferguson’s was given preferential treatment when it won the contract. We now learn that it would be cheaper to start again than to complete vessel 802 at Port Glasgow. However, we have not been told the figures, so we cannot assess that decision. That would amount to transparency, and this Government does not do transparency.

To listen to SNP members today, with the exception of Alasdair Allan, we might think that nothing had gone wrong and the Government had done nothing wrong. At least we have had some plain talking from Craig Hoy, Neil Bibby, Willie Rennie, Brian Whittle and—the only Green in the chamber this afternoon—Jamie Greene.

We need to look to the future. What does the future hold for the yard? Again, trying to get an answer on that from the Government is absolutely impossible; Mr Gray will not tell us what he thinks the future holds. We have had the project Neptune report, but we do not know what his conclusion is. We do know that there is still a bottomless pit and a blank cheque, and it seems that that will go on and on.

Will Graham Simpson take an intervention?

I am just finishing, Mr Sweeney.

It is a scandal—the biggest scandal of the devolution age—and somebody has to take responsibility.

16:40  

I begin by echoing my opening remarks and thanking Richard Leonard and the Public Audit Committee for their resolute scrutiny of Scotland’s ferry sector, and I add my thanks to the Auditor General and his team for the quality and depth of their work over recent years. Their scrutiny has enabled debates such as the one that we have held today to take place. The Parliament can be proud of the role that it has played in improving the way in which the Scottish Government manages its strategic commercial assets and delivers vital services to our communities.

Although it was inevitable that we would hear a variety of opinions today, I had hoped that the Parliament would have been—as it should have been—united in its determination to support island communities and retain the proud tradition of shipbuilding on the Clyde. I pay tribute to Willie Coffey and Colin Beattie, as I do to all other members of committees of this Parliament who consider the evidence before them and take judgments based on that evidence, and I think that it is shameful that their contributions have been denigrated. As Willie Coffey said, the issue has become so polarised and politicised that, unfortunately, I do not even think that I can say that the proud tradition of shipbuilding on the Clyde is supported unanimously in this Parliament.

Will the cabinet secretary give way?

I will do shortly.

I assure colleagues that we are committed to expanding and improving the resilience of lifeline services to island communities. In his excellent speech, Alasdair Allan pointed out why that is so important. We are also committed to securing a sustainable and successful future for the Ferguson’s yard, and to providing opportunities for future generations to learn and practise skills and trades that can define our future as much as they distinguished our past.

In that regard, I want to thank Paul Sweeney for his speech and, in particular, for what he said about the need to raise our eyes and ask ourselves whether we want to continue to have commercial shipbuilding on the Clyde in the future. I can assure him and other colleagues that we do. We want the Ferguson’s yard to improve its productivity and to compete successfully for new work as it becomes available. In that regard, I agree with Neil Bibby’s plea for greater accountability and responsibility to deliver the ferries. I took the decision to provide written authority for the completion of 802 for that very purpose, and I will keep working with Paul Sweeney, Stuart McMillan and other local representatives to ensure that we work with the management and the staff at the yard to deliver the ferries within the timescale that the management have outlined for us and support them with a forward work programme.

I am encouraged by the fact that, in the evidence that he gave to the Public Audit Committee last week, David Tydeman, the chief executive of Ferguson Marine, suggested that there was at least £250 million of work available for the yard to compete for. That is a prize worth fighting for, and I know that the Parliament will support the efforts of the workforce to attract as much of that business as possible.

There is lots of shipbuilding work out there in the world to be won, but the point is that Scotland will not win any of it unless we have competitive facilities that are invested in. No investment has taken place in Ferguson’s or an alternative shipbuilding location in the area. In addition, no builders refund guarantees are available in the Scottish economy at the moment. What are we going to do to fix those fundamentals so that we can win some of that £200 million-plus business and bring work to our yards?

I will absolutely consider Paul Sweeney’s point about financing. We are considering the request that has been made for capital investment in the Ferguson’s yard. He is right: if we want the yard to be capable of greater productivity, there needs to be investment in it. As he will be aware, we face difficulties in that regard in relation to state subsidy. We need to be careful about what we do there. We are considering those matters, and he and other colleagues can rest assured that we will do what we can to ensure that the yard is as competitive as possible.

As Rona Mackay said, my decision to provide written authority for hull 802 to continue to be built at Ferguson Marine (Port Glasgow) was a clear demonstration of the Government’s determination to give the yard the support that it needs to create a successful future.

I say to Craig Hoy and Brain Whittle that, as they know, narrow value for money assessment does not consider something that I am sure they would support me in valuing, which is the impact on the yard, the local economy and the island communities that must be at the centre of my considerations. I took a decision that was, first and foremost, in the interests of our island communities and would protect them from the delay of up to two and a half years—

Will the member accept an intervention?

Hold on.

That delay would have followed had we decided to go through the complex and time-consuming process of reprocuring an alternative vessel. I took a decision that was in the interests of the yard, its dedicated workforce and the community in and around Port Glasgow. They have been through a lot in the past few years and I wanted to give them a degree of certainty and provide a platform on which they can build a successful future.

Is the cabinet secretary prepared today—as he has not been previously—to say how much it will cost to complete vessel 802 at the yard?

The estimate of that cost is already in the public domain and, as I have previously told the committee and have said today, I will look at what more information can be published in future.

Will the cabinet secretary take an intervention?

Will the cabinet secretary take an intervention?

I need to watch my time. I will see if I can come back to Mr McMillan if I have time before I conclude.

No one is pretending that there have not been mistakes, over many years, in the delivery of the two new vessels. Audit Scotland has been both clear and constructive in identifying things that could have been done differently and I assure colleagues that we are equally clear in our determination to listen to Audit Scotland’s suggestions and to learn lessons from its reports. That is the best way to ensure that we provide the services that people have the right to expect and that we guarantee the future of a proud industry with an illustrious past and, I believe, an exciting future.

I place on record the thanks of the Port Glasgow community and also of the workforce for the decision that was recently taken regarding hull 802. That point was made very clear when I met with GMB representatives and shop stewards last week, and I put it on record to the Scottish Government.

I thank Stuart McMillan for that point, which is appreciated.

My appreciation, like his, goes to the workforce for their contribution and for the hard work and dedication of the people who work in Scotland’s ferry sector. I acknowledge how difficult it must have been for them to frequently read and hear some of the negative press and to hear some of the comments made here today. That cannot be easy. To all of them—those who work on ferries or look after passengers, who manage the complex logistics, maintain and repair ferries or craft and build new ferries for Scotland’s seas—I say thank you. We are very lucky to have the whole industry working together in the service of Scotland’s seas, and I want to keep it that way.

I call Sharon Dowey to wind up on behalf of the Public Audit Committee.

16:47  

I thank those in the clerking team for the huge amount of work that they have put into compiling the report and I thank Audit Scotland for its input. I also thank members from around the chamber for their contributions today. It is reassuring to know that so many are committed to scrutiny of the issues raised in the report.

Although I am pleased to close the debate on behalf of the Public Audit Committee, I do so with considerable regret that this Parliament is once again debating two vessels that should have set sail five years ago but are currently three and a half times over budget. Significant failings throughout the project have let islanders down and have caused disruption to their lives. Lessons must be learned.

I start by echoing the convener’s concerns about the Scottish Government’s response to the committee’s report. It is a seven-page document, of which only around half addresses the committee’s key findings, conclusions and recommendations, whereas the rest merely reproduces large sections of our report and lacks the detail that the committee hoped for.

For example, the committee expressed serious concerns about Transport Scotland’s role in the project. As CMAL’s sponsor, Transport Scotland had a critical role in communicating important information to Scottish ministers on CMAL’s behalf. We are clear that it consistently failed to reflect CMAL’s significant concerns to Scottish ministers, whether those were in relation to the high-profile public announcement of FMEL as the preferred bidder or the awarding of the contract to FMEL.

Given the extent of the concerns that CMAL raised regarding the financial risks associated with the contract, Transport Scotland should have sought written authority from Scottish ministers before any further progress was made with the project. Indeed, as it materialised, the absence of a full builders refund guarantee, coupled with there being no general quality standards in the contract, resulted in CMAL’s position being significantly weakened when problems with the standard of FMEL’s work became apparent. Brian Whittle and Jamie Greene covered those points in detail in their speeches. No comment at all is offered in relation to any of those concerns.

The Scottish Government’s response does, however, highlight the recent approach that has been taken with the provision of the written authority to secure the continued build of vessel 802 at FMPG. It is recognised that the Scottish public finance manual has specific requirements for the notification of any instance of written authority, which must be drawn to the attention of the Auditor General. I welcome that that was adhered to. However, I take this opportunity to reiterate the committee’s call for the Scottish Government to follow the UK Government’s example and proactively publish on its website a list of all occasions when written authority has been sought, in order to improve openness and transparency in that area.

I turn to the committee’s concerns about the Scottish Government’s commitment to paying additional vessel costs regardless of the final price. Although the Scottish Government has challenged this assertion, the committee remains concerned about the on-going significant risk that costs will continue to rise. That is, of course, now proving to be the case, with the former Deputy First Minister announcing in March that an additional £6 million would be allocated in the financial year 2022-23. That comes alongside the more recent announcement by the cabinet secretary in May, which clarified that additional money will be allocated during the current financial year following a process of due diligence.

It is extremely disappointing that at no point does the Scottish Government’s response address the committee’s well-founded concerns about those soaring costs. The final costs are still unknown. Willie Rennie raised his concern about a blank cheque being written, which is also a concern for the committee.

The Scottish Government’s response does, however, welcome

“the report’s recognition that there have ... been significant improvements in procedures and processes”

by Transport Scotland and CMAL since the procurement of vessels 801 and 802.

I think that it is clear to everyone that one of the principal drivers of the catastrophic failings in the process was the breakdown in relationships between the main protagonists: CMAL, Transport Scotland, the Scottish Government, the manufacturers and probably CalMac as well. Did the committee consider what changes could be made to those relationships to ensure that such breakdowns do not happen again?

That was covered in the committee’s report. It has been noted that there has been an improvement in the relationships between them, but we obviously need to keep tabs on that.

It is fair to say that the report notes some signs of progress. For example, we are encouraged that there appear to be signs of more constructive relations between the new management and the workforce and between FMPG and CMAL. However, the committee wants to see much more progress to ensure that this situation never happens again.

Although we note the action that the Scottish Government has taken to publish a business investment framework to strengthen its approach to investment in private businesses, we are clear that the work should not stop there. That is why we are calling for more to be done to strengthen the framework to better outline intentions over risk tolerance and risk appetite and the expected public benefit of future interventions. The Government indicates in its response that it is

“in active engagement with Audit Scotland”

on the matter, but it is unclear how or indeed when that will be achieved.

I turn to the intervention of several Scottish ministers throughout the project, on which a majority of committee members raised concerns. Central to those concerns was a lack of transparency about why certain decisions were taken, whether that involved a lack of documentary evidence to clarify why the former First Minister led on the very public announcement of the preferred bidder, a lack of documentary evidence to explain why Scottish ministers accepted the associated risks in approving the awarding of the contract to FMEL, or the fact that a full record of a meeting between the former director of FMEL and the former First Minister appears not to exist.

Even more challenging is that poor record keeping means that the Scottish Parliament and the public are in the dark about what happened at some crucial stages of the project. Although it is encouraging that the Scottish Government has issued new guidance on the recording of decisions, we are unanimous in calling on it to further review and refine its record-keeping procedures, which would facilitate scrutiny and improve transparency as well as accountability. I share the convener’s concerns that the Scottish Government’s response to that recommendation does not provide the committee with any meaningful detail on how it is being addressed. A number of developments have taken place since the report was published, and it is clear that further developments will follow.

Notwithstanding our continued scrutiny of the auditor general’s section 22 report on FMPG, we await the Net Zero, Energy and Transport Committee’s forthcoming report on a modern and sustainable ferry service for Scotland and the next steps that are associated with the governance review, project Neptune. It is encouraging that the Government shares the committee’s opinion that the review does not represent a silver bullet in preventing a similar situation from occurring again.

Presiding Officer, do I have time to cover members’ contributions?

Yes, you have time.

Graham Simpson spoke about the lack of transparency and accountability and the lack of a builders refund guarantee, which was mentioned by quite a few members. Craig Hoy spoke about the insufficient evidence to explain why ministers made their decisions, which the committee would like to have more transparency over. He also mentioned that island communities are paying the price, which was mentioned by many members, including Rhoda Grant, Alasdair Allan, Neil Bibby and Stuart McMillan. Stuart McMillan also raised concerns that the shipyard’s workforce was being criticised. I say to him that the report’s criticism was of the ministers and Government bodies that took the decisions, not the workforce.

Will the member take an intervention?

Sorry, I am closing.

Paul Sweeney mentioned that, if we want to be a shipbuilding nation, we need to look at the basics. Rhoda Grant said that we needed to sign off a design that would fit harbours—it may have helped for her to have been part of the procurement process.

I take the opportunity to restate the committee’s call for a formal review of the project to be undertaken on completion of the vessels, which will help the Scottish Government to learn vital lessons for the future so that Scotland’s taxpayers and island communities can have confidence in the procurement and construction of future vessels.

That concludes the debate on “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”.