FERRIES FIASCO

The people of Scotland and island communities have been badly let down by ferries project, says Holyrood’s Public Audit Committee

The people of Scotland and island communities have been badly let down, says Holyrood’s Public Audit Committee in a report published today which exposes a ferry fiasco riddled with failures in governance, transparency, accountability, communication and record-keeping.

The report highlights key failings exposed throughout the Committee’s scrutiny of the Auditor General for Scotland’s Report New Vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802 (1) and recommends change to ensure that future vessels are delivered on time and on budget.

It highlights, for example, the Committee’s serious concerns around the initial stages of the procurement process and, having now established that FMPG holds FMEL’s financial records, calls on the Auditor General for Scotland to complete a forensic analysis of how £128.25m of public money was spent by FMEL.

The report shines light on the serious failings of Transport Scotland, including the ‘weak and toothless’ Programme Steering Group it led and its’ consistent failure to accurately and timeously reflect CMALs concerns to Scottish Ministers.

It also calls into question the role of various Scottish Ministers. The majority of the Committee considered that both the First Minister’s decision to publicly announce the preferred bidder when considerable negotiations were still required – and the decision to proceed in the absence of a full guarantee, weakened CMAL’s position when the standard of FMEL’s work became an issue (2).

The report acknowledges that the Scottish Government’s ‘Project Neptune’ provides an opportunity for governance reform but says that a formal review of the entire project on completion of the vessels is essential for learning lessons for future projects.

Launching the report, Convener of the Public Audit Committee Richard Leonard MSP, said: “The people of Scotland have been badly let down by this project. There have been collective failures at government and agency level from the start. It has been dogged by a lack of transparency; by ineffective governance arrangements; by poor record keeping within the Government; and by baffling communication failures.

“Throughout our scrutiny, we took a wide range of evidence, navigating our way through many conflicting perspectives to reach the conclusions set out today. We had to battle to get some of the information we needed. Sadly, despite our best efforts, some questions remain unanswered.

“We recognise the efforts by the Scottish Government to protect jobs at Ferguson Marine and commend the workforce for their resilience during what has been and continues to be an extremely challenging time. Their experienced voices should have been listened to from the outset.

“It is vital that lessons are learned. That means much needed reform of governance arrangements for future vessel projects. But it also means a change in the way the Government and its agencies conduct themselves and are accountable to Parliament and the people. That is a challenge for the Permanent Secretary and the new First Minister.”

Further recommendations for improvement put forward by the Committee include:

• Greater transparency where Scottish Ministers use written authority and shareholder authorisations and recording these occasions as a matter of public record.
• Scottish Government to now further review and refine its record-keeping and reporting procedures.
• Scottish Government to ensure its Business Investment Framework is sufficiently robust so there is transparency around the expected public benefit of future interventions in private companies, and greater public reporting.
• Upon completion of vessels 801 and 802, Transport Scotland and CMAL to undertake a formal project review to learn vital lessons.
• Parliament to be updated on the investigation into allegations raised about the procurement process.

(1) The remit of the Public Audit Committee’s inquiry was to scrutinise the Auditor General for Scotland’s (AGS) report, New Vessels for the Clyde & Hebrides: Arrangements to deliver vessels 801 and 802 (published 23 March 2022), which focused on events after Scottish Ministers announced Ferguson Marine Engineering Limited (FMEL) as the preferred bidder on 31 August 2015. 

(2) Committee members Colin Beattie MSP and Willie Coffey MSP did not support these findings. Full details of where there was division can be found in the report at Annex C – Extract from minutes.