We move to the next item of business, which is a statement by Kate Forbes on Alexander Dennis Ltd. The Deputy First Minister will take questions at the end of her statement, so there should be no interventions or interruptions.
16:44
This statement concerns the announcement that was made last week by Alexander Dennis Ltd—ADL—regarding a new strategy for its United Kingdom manufacturing operations. I want to be as open as possible in the statement and in subsequent follow-up conversations with members.
I recognise that it is a hugely worrying time for the workforce at ADL, their families and the wider community in Falkirk and Larbert. I have shared with the unions that represent that workforce my commitment to leaving no stone unturned to secure a future for the company and the workforce. The company is a significant employer and supports a highly valuable supply chain. Our focus right now is on supporting the business as well as the communities around that business.
In recent weeks, the First Minister and I, in many cases with the support of the Cabinet Secretary for Transport, have engaged extensively with Alexander Dennis and its parent company, NFI Group, to understand the issues and express our commitment to exploring every possible avenue.
We first spoke with ADL about the specific proposals on 25 May, and I believe that the company informed the UK Government at the same time. Directors of Alexander Dennis were open about the challenges posed by international competition. They also spoke of the strength of potential demand over the coming years as bus operators across the UK pivot towards net zero.
In response to market dynamics, ADL is proposing to consolidate its UK bus manufacturing operations into a single site. The company believes that consolidation will ensure
“financial sustainability and lower operating costs in the face of changing and challenging market dynamics.”
Under current proposals, manufacturing in Falkirk would be discontinued and the site closed, while production at Larbert would be suspended on the completion of current contracts.
The statutory consultation therefore places up to 400 roles at potential risk of redundancy—nearly one quarter of ADL’s entire workforce. We are determined to help the business find an alternative to that route and to find different ways to meet market challenges through investment and improved performance.
A key part of that is the ability of ADL to secure future orders. That is why we are working closely with the company to identify and secure a forward pipeline of demand for high-quality buses from Scottish and UK customers. Confidence in the demand pipeline is critical in both the short and longer term, and we recognise that a clear future pipeline of orders is the key to securing the future of bus manufacturing in Scotland.
Although the Scottish Government is exploring all possible opportunities to ensure a healthy pipeline in Scotland, it is clear that the bus market in the rest of the United Kingdom is substantially larger. Since 2020, Alexander Dennis has secured orders for 361 zero-emission buses, more than any other single manufacturer, through Transport Scotland’s Scottish zero-emission bus challenge fund and its predecessor, the Scottish ultra-low-emission bus scheme. Under those programmes, ADL has received £58 million of Scottish Government subsidy for vehicles.
ADL and bus production are synonymous, with more than a century of manufacturing excellence and innovation growing from Walter Alexander’s original coach works in Falkirk. I am sure that, across the chamber, we all respect that proud history and recognise the continuing significance of the company in the local economy.
However, this is not only a local issue. ADL draws on, and is supported by, a much larger and wider supply chain. In the past five years, Alexander Dennis has spent more than £1 billion with its 1,000 suppliers in all parts of the United Kingdom. The company’s own analysis suggests that
“For every job in bus manufacturing, there is a multiplier of three to four jobs in the wider supply chain and support services.”
A just transition requires that we retain the capacity to build low and zero-emission buses as a key part of the transition to a low carbon economy, to retain good, green jobs and skills. Buses connect communities all across Scotland, and travelling by bus is already one of the greenest transport choices that people can make. Transforming our bus networks from older diesel to zero emissions not only contributes to our emissions reduction targets but improves air quality and reduces harmful noise pollution.
Our policy interventions to date have been designed to accelerate uptake of zero-emission buses in the Scottish market. With our investment of more than £150 million, Scotland now has a higher proportion of zero-emission buses than any other part of the United Kingdom outside London. In 2024, 14 per cent of all buses in Scotland had zero emissions, compared with only 7.4 per cent in England.
In addition to supporting operators to embrace zero-emission buses, we have also invested directly with Alexander Dennis. Scottish Enterprise has a strong 10-year-plus strategic partnership with Alexander Dennis and has supported the company with technology development, skills and cultural transformation over many years. I think that it was clear from the letter from Alexander Dennis just how much it values that on-going support.
Over the past 10 years, Scottish Enterprise has awarded £30.5 million in research and development support to ADL, as a contribution towards £120 million of R and D spend by the company. Those grants have supported the development of ultra-low-emission and zero-emission technologies at ADL. Scottish Enterprise and Transport Scotland continue to provide on-going support to the company, both directly and through support for the adoption of zero-emission buses.
I turn now to the Government’s response to ADL’s consultation. We will work in close collaboration with the company, the trade unions and the UK Government to find practical solutions. We will not play politics with this situation, and we will continue to explore every avenue to avoid job losses.
I spoke with the Secretary of State for Scotland on 4 June, and we agreed to establish a cross-governmental working group to discuss options to stimulate demand and avert job losses. The second meeting of that working group was held on Monday this week, and the group will meet again at the beginning of next week.
We recognise ADL’s historic leadership in championing the cause, including through its co-chairing of the industry advisory group on the automotive sector and the subsequent Scottish bus decarbonisation task force, which published its pathway to net zero in 2022. The pathway describes a shared approach between Government, operators, manufacturers and the finance and energy sectors to creating a net zero future for buses. The leadership of bus operators such as First, Stagecoach and Lothian Buses in committing to go to net zero by 2035 is to be commended. That represents a wholesale change in how the bus sector operates, creating challenges but also new opportunities.
I recognise that ADL cannot stand still, and we want to support the company to innovate and bring forward new products that reflect changes in the sector. In this Government, we will continue to do all in our power to support Alexander Dennis and its highly skilled workers.
Following the announcement, I updated local elected members. I spoke with Michael Matheson, who is a long-standing advocate for the company, and also to Brian Leishman MP, whose constructive approach I am grateful for.
On Monday and again yesterday, I spoke with the trade unions that represent ADL workers in Scotland—GMB and Unite the Union—in separate meetings. They impressed on me the positive engagement that they were having with ADL, and they emphasised the importance of having a pipeline of orders for Falkirk and Larbert as part of any solution. That is precisely why that is a solution that we are working through.
I welcome the constructive approach of Unite the Union and GMB Scotland, and we share an absolute commitment to do all that we can to save those jobs. I will continue that dialogue every few days over the coming weeks.
It is important that we in the chamber put aside politics and work together during the 45-day consultation period in order to find practical solutions, hopefully well in advance of the end of that consultation period, to support the business and safeguard production of zero-emission buses in Falkirk and Larbert. We will need to collaborate across the chamber, with the UK Government and with procuring authorities to achieve success. That is where I think that there is an opportunity to find a solution.
Members of the Parliament, particularly those who have constituency interests, will want to be kept up to date, so I undertake to update members as frequently as they wish.
As we move to questions, I recognise that members have a tendency to pose multiple questions in their speaking slot, not all of which I might recall in my efforts to answer them. I would be happy to take an opportunity after the statement to go into more detail on the solutions that we are looking at and how we can collaborate to put them into practice.
The Deputy First Minister will now take questions on the issues that were raised in her statement. I intend to allow 20 minutes for questions, after which we will move on to the next item of business.
I thank the Deputy First Minister for advance sight of her statement.
My heartfelt thoughts—and, I am sure, those of every other member—are with the workers and families who have been impacted by this terrible move. I hear what the Deputy First Minister says about setting politics aside, but our role here is to scrutinise the performance of the Scottish Government.
This crisis did not come out of the blue. However skilfully it was delivered, the statement cannot conceal the truth. The Scottish National Party Government was warned repeatedly for more than a year and did nothing. When ADL asked for support, it was met with silence. When Scottish jobs were on the line, the Scottish Government was looking in another direction. When orders for buses were needed, those orders went to China. This was not a matter of subsidy control; it was strategic neglect. Ministers now want to hide behind technicalities that a farthing’s worth of creativity and an ounce of leadership could have overcome—£90 million of public money went to ADL, but there was not even a guarantee of jobs. This is not just about industrial failure; it is a betrayal of Scottish manufacturing and, after everything that has happened in that area of Scotland, it is a betrayal of the Forth valley workforce.
I will ask this question again, plainly. Why, under the SNP Government, was public money spent not in a factory employing skilled Scottish workers in Falkirk but in a factory thousands of miles away in China?
Stephen Kerr might not want to believe what I have said, but perhaps he will believe what the company said in its letter. It was very clear about how much it valued Scottish Government support over the past few years. I will provide the statistics in a moment. It also cited a competitive imbalance in the UK market as part of the reason for the decision.
Here are some figures. Since 2020, ADL has secured orders for more than 360 vehicles through Scottish Government funding programmes. I imagine that my Labour colleagues might talk about Manchester, so let us compare that with how many vehicles were ordered via Manchester—the number was 160. ADL got all the demand for double-decker buses resulting from the Scottish zero-emission bus challenge fund.
On procurement, we have supported Alexander Dennis within the legal structures in which we have to operate. ADL has been clear that the challenge across the UK is to do with a competitive imbalance. Public bodies must comply with procurement regulations, the Subsidy Control Act 2022 and other relevant legislation.
Stephen Kerr said that we have offered no support in the past year—I am happy to be corrected if that is inaccurate. Since 2020, ADL has received £58 million of funding for zero-emission buses, and Scottish Enterprise has supported Alexander Dennis with £30.5 million in research and development support. That is the investment that we have made.
We understand that, if we are going to find a route forward to support the workforce, which I intend to do, we have to be realistic about what the challenges are. I have set out in my statement that the route to providing support involves looking at ADL’s cost base, considering what additional support we can provide to help with productivity and to lower costs, and ensuring that there is demand. That is why we are working with the procuring authorities, not just in Scotland but further afield, to look at whether we can develop an order book for ADL.
It is completely untrue to suggest that the Scottish Government has not acted over the past few years to support local manufacturing. The correspondence with ADL refers to that competitive imbalance, which we have to confront, recognise the root causes of and work through.
I thank the Deputy First Minister for advance sight of her statement.
As a matter of record, last year, under those contracts, there were 252 bus awards, but only 44 went to Alexander Dennis. The figures that the Deputy First Minister quoted for Manchester are since 2022, whereas the figures that she quoted for Scotland are since 2020.
A cross-party group of MSPs met workers from Alexander Dennis. Two things are very clear from that meeting. First, the urgency of the matter is clear—if there is no action within weeks, jobs will be lost by August—and, secondly, we need orders on the book.
Will the Scottish Government undertake an urgent review of the Subsidy Control Act 2022? Based on advice from the Cabinet Office, I understand that variation can be made through a direct award in relation to social value and by disregarding non-treaty state suppliers such as China. The Scottish Government might want to consult mayoralties that have used those aspects.
What assessment has been made on overreliance on a single country of manufacture for bus supply, given that buses are critical transport infrastructure? What steps will be taken to use the Scottish Government’s convening power to convene bus operators, both private and public, in order to bring forward orders and facilitate the order book that the 400 Alexander Dennis workers so badly need?
Another helpful clarification, I hope, for Daniel Johnson is that ADL secured orders for 72 of the 252 vehicles in ScotZEB 2. A number of those were not able to be delivered by the company, so the final order for ADL involved fewer vehicles, but it is important that the record reflects the truth in relation to securing orders.
I am quite astonished that Daniel Johnson asked me to review the Subsidy Control Act 2022, which is a reserved matter. We are looking at how we can support domestic manufacturing, and we have been engaging with the UK Government on that. He will know that procurement rules are broadly aligned across Scotland and the UK at large. All awards of public contracts must comply with the provisions in procurement legislation.
To directly answer Daniel Johnson, we are looking at all options. I appeal to members to consider what the company specifically cites as its primary challenges, so that, instead of going off to try to fix things that politicians have come up with, we try to fix the issues that the company has identified as needing to be fixed.
Over the course of last week, I had an opportunity to engage with the unions, and I visited the factory to speak to workers on Monday. It is clear from all the discussions in which I have participated that they see a way through the short and medium-term challenges that the company faces, but the only way in which that will be achieved is if the Scottish and UK Governments work together to find it.
I therefore ask the Deputy First Minister two specific questions. First, will she set out what measures the Scottish Government is looking at taking forward to address the short-term challenge that the company has with a lack of orders? Secondly, what action is being taken to address the fundamental challenge that the company faces with the uneven playing field whereby the Chinese bus sector will go from having a 10 per cent share of the UK market at the end of last year to a 35 per cent share this year? How will we deal with that challenge under the Subsidy Control Act 2022, and what measures is the UK Government saying that it will consider to address the uneven playing field that the company faces?
Michael Matheson is right to say that there is cause for hope in terms of finding a way through the present challenges. I hope that the gist of my statement was that I think that there are solutions there, but those can be delivered only through collaboration, which is why I emphasised the point about needing to work with people and not to resort to politics.
On the short-term measures, one of the challenges is that, even if we are able to identify demand, there might be a short lead time before that demand can come to fruition.
The member will know that we are exploring issues in and around furlough, for example. The Scottish Government has never run a furlough scheme. Obviously, the company was able to be part of a furlough scheme during the coronavirus period, and we are looking at whether that would be useful to the company to retain its workforce. There is also scope to look at whether other work could be provided to keep the local workforce employed. The primary short-term measure is how we support the workforce while developing that order book.
On the fundamental challenges that the member asked about, I have referenced the fact that we have to comply with public procurement regulations, subsidy control and so on. We are looking at how far we can push that and how far we can support local manufacturers while working with procuring authorities—in other words, people who actually own and run buses—to understand the demand and bring that together with a support package for the company. Those are the issues that we are working through and consulting the unions on. I am very hopeful that we can find a solution if we collaborate.
The Deputy First Minister says that ADL cannot stand still. It is not standing still—it is moving to Scarborough. She says that she wants to support the company to innovate and bring forward new products. I think that it is a bit late for that. She also says that she wants to collaborate. I agree with her on that. She is busy talking to the Cabinet Secretary for Transport, but she might want to listen. I think that we should collaborate across the chamber.
The Deputy First Minister says that she has formed a task force. I would like to know what the task force has discussed already. To follow on from Michael Matheson’s question, what specific things is the task force looking at doing? If the Deputy First Minister wants to collaborate, I suggest that we get on with it in the next few days, because the company has not got long.
The task force is a group of officials from the UK and Scottish Governments and it is looking at how far it can push the procurement and subsidy control rules, so it is entirely in line with what has been discussed.
On the point about collaboration, I am more than delighted to collaborate with Graham Simpson on the ideas piece. I imagine that he does not procure buses directly, either. The collaboration that I am talking about is very much with procuring authorities—the people who own and run buses. That is key.
I would not be so quick to dismiss the point about innovation. When we speak to the company, we hear that there are two elements. The first is that it needs an order book and the second is that it needs to be competitive. The research and development investment that Scottish Enterprise has made, for example, helps it to compete. The two elements are important—reducing the cost base and ensuring that the company has buses to build.
In a statement on 11 June, the chief executive officer of Alexander Dennis said:
“The stark reality is that current UK policy does not allow for the incentivisation or reward of local content, job retention and creation, nor does it encourage any domestic economic benefit.”
He further made it clear that its commitment to the UK is dependent on the content of the UK Government’s forthcoming industrial strategy. To what extent has the Scottish Government been consulted in relation to the preparation of said strategy and, in particular, the mitigation of the issues that Alexander Dennis outlined?
The member is right to quote the letter and to talk about some of the changes that need to be made. Ultimately, this is about supporting Scotland’s industrial base and the wider manufacturing base. We recognise the huge economic impact of the manufacturing sector on our economy, and ADL has long been a critical part of that.
On the UK Government’s industrial strategy, we have engaged with the UK Government to represent the interests of Scottish industries. We very quickly engaged with the UK Government on these matters, knowing full well that ADL had already been in touch with it.
I would be grateful if we kept questions and responses concise. There is much interest in asking a question, and we are marching through the available time.
I remind members of my voluntary register of trade union interests.
The Deputy First Minister’s statement is more a defence of the Government’s position than it is a plan of action to save these facilities and to save these workers’ jobs.
The fact is that the last two factories building buses in Scotland are facing closure at a time when there is no shortage of orders for new buses. That comes in the shadow of the closure of the Grangemouth refinery, and here we are again facing a close-and-import strategy. When is the Government going to recognise that these are strategic national assets? When will we see a proper Scottish Government industrial strategy? When will the Government understand that manufacturing matters, rescue these jobs, prevent these closures and save this industry?
Manufacturing does matter. I whole-heartedly agree with Richard Leonard’s point that this comes after the impact of Grangemouth, which is why we are focusing all our efforts on finding a solution, and it is why we have been engaging with Unite, GMB, the company, the UK Government and procuring authorities to do that. I am sorry that he felt that my statement was a defence of the Government’s position, because as far as I am concerned, it set out a clear road map for how we can find a solution, which will be to secure orders and reduce costs through investment. To me, that is a pretty clear approach for us to take.
There is work to do to deliver that. In my answer to Michael Matheson, I noted some of the points that we might need to address in the short term, which I have been engaging with unions about, so I think that we are all on the same page about what needs to be done. It is not all entirely within the Scottish Government’s gift, but we recognise our convening power and ability to bring people together. If we can also get some support from the UK Government on things such as the 2022 act, that will be even more helpful.
The prospect of job losses is extremely distressing for workers and their families, and I welcome the Scottish Government’s urgency in addressing the matter. Can the Deputy First Minister provide an update on the Scottish Government’s latest engagement with the employees of Alexander Dennis and the trade unions to ensure that their voices inform the Scottish Government’s work?
My approach has been to engage with the unions in an open manner. We have shared the progress that we have made and our thinking with them, and we have tested whether they would support the options that we have identified as a potential route forward, which I think is really important. We recognise that the workforce will be feeling uncertain. Support will be available to them but, to be blunt, my priority is to find an avenue through this and to ensure that the company has a future. I have set out the way in which I think that that can be done.
I will leave the party politics out of it for a moment and ask the Deputy First Minister how we can support the workforce. There is a need to retain the workforce, and there may also be a need for retraining, particularly in the short term. I am aware that Forth Valley College has received some funding support from the UK and Scottish Governments to help the Grangemouth workers to retrain and move into sustainable jobs for the future. What kind of discussions has the DFM had with Forth Valley College about supporting the Alexander Dennis workers?
The member is absolutely right to identify that the workforce is key. We have been talking about innovation, but skills have to be a part of that. Right now, my primary approach is to work through the unions as representatives of the workforce, which is key. Essentially, I am taking a lead from them on what their priorities are. That has informed my approach so far in looking at how we can make investments to improve productivity, as well as securing orders for the future. Those are the two priorities that have been identified. The member will know, from having engaged with the Government in the past, that we stand ready to support colleges, for example, to provide retraining or skills opportunities. That is definitely an option in this case.
Flexibility around procurement rules and subsidy control is an age-old problem; we have debated that problem endlessly. What is new about what the Deputy First Minister is setting out today in respect of such flexibility? Is she offering real hope? Is there new flexibility? Can she spell out exactly what she is looking to find?
What I am looking to find is a means by which we can work with procuring authorities—people who actually own and run buses, in other words—to secure further orders for ADL. The Scottish Government does not own buses directly, which is why we need to collaborate. Some of the early conversations with the UK Government have been very helpful in that regard, and have helped us to understand what mechanisms are available. The Subsidy Control Act 2022 is reserved to Westminster—it is not brand new, but it is fairly recent, having been enacted in the post-Brexit years—and discussions around that have been useful. I hope that that answers the question about what is new.
I welcome the SNP Government’s commitment to supporting public transport and operational sustainability, notably through schemes such as the Scottish zero-emission bus challenge fund. Can the minister say more about any support that has been received by Alexander Dennis through that scheme and its predecessor, the Scottish ultra-low-emission bus scheme? Will she tell members how many orders Alexander Dennis has secured through the Scottish Government’s funding programmes, such as ScotZEB?
I am happy to confirm that, through ScotZEB 2, ADL initially secured orders for 72 of the 252 buses, and that, since 2020, through the Scottish ultra-low-emission bus scheme and the Scottish zero-emission bus challenge fund, it has received £58 million in relation to the procurement and building of buses.
Along with what happened at Grangemouth, the situation with Alexander Dennis represents a double blow to the people of Falkirk, and my thoughts are with them.
Following the loss of 400 jobs in Grangemouth, up to 1,600 jobs are now on the line as a result of Alexander Dennis being forced to relocate to Scarborough. When will the Scottish Government publish an economic impact assessment for the area?
We do not want to lose those jobs, so all of the focus right now is on saving them.
My question is similar to Meghan Gallacher’s. What assessment has been made of the economic impact of the potential job losses, particularly following recent losses of other industrial jobs in Forth valley?
As I said to Meghan Gallacher, my primary focus is on protecting the jobs, and that will be my priority.
We are all behind the Scottish Government and the UK Government as they try to save bus manufacturing in Scotland.
On the point about the forward order book, which is all that matters now, section 12 of the UK Procurement Act 2023, which was commenced in February this year, requires that contracting authorities
“must have regard to the importance of … maximising public benefit”
when awarding contracts, which is much stronger than the Procurement Reform (Scotland) Act 2014, which only requires authorities to consider social value. Will the Deputy First Minister consider how we can strengthen the language in the 2014 act?
In addition, will the Deputy First Minister take cognisance of the quality concerns that have been raised by bus operators in Scotland, such as McGill’s Buses and First Glasgow, around ADL’s electric vehicle products compared with their Chinese equivalents? Will she consider how we can establish a kaizen group involving the operators, Scottish Enterprise and the Scottish manufacturing advisory service to provide assurance and restore confidence in ADL’s products?
I remind members of the requirement to use a virtual background when participating remotely.
The UK Government’s Procurement Act 2023 introduced some reforms to procurement procedures in the rest of the UK. In some ways, it can be said to be an attempt to catch up with the Procurement Reform (Scotland) Act 2014, as that placed a sustainable procurement duty on public bodies that means that, before they carry out a regulated procurement, they must consider how the procurement process can
“improve the economic, social, and environmental wellbeing of the authority's area … facilitate the involvement of small and medium enterprises, third sector bodies and supported businesses in the process, and … promote innovation”.
The rest of the UK is bound by the same international agreements on procurement as Scotland is, and, in common with the rest of the UK, Scotland cannot legislate to allow for discrimination in favour of domestic bidders at the expense of other bidders with which a relevant trade agreement applies. Those are the issues that we are trying to grapple with.
I am grateful for the tone of Paul Sweeney’s question and note that he said that he backs the efforts of both Governments—that is helpful, and I am grateful for it.
I refer members to my entry in the register of members’ interests—I spent 22 years in the bus industry.
Can the Deputy First Minister confirm that the Scottish Government does not purchase or own any buses, but it provides a grant to bus operators to offset the difference in cost between a diesel bus and a zero-emission bus?
Yes, and that is precisely why we are working with procuring authorities.
That concludes the ministerial statement.
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