Ferguson ferry scandal: Bill for dual fuel vessels to rise again

Stephen Boyle presented a report on the 2021/22 audit of Ferguson Marine to the Public Audit Committee at the Scottish Parliament this morning.

It details a number of issues surrounding the ferry fiasco, including the spiralling cost of building the Glen Sannox and Hull 802, plus the controversial bonuses paid to six senior managers.

The committee heard that a 'letter of comfort' written to the nationalised yard details the Scottish Government's commitment to the site until February 2024.

Sharon Dowey, Conservative MSP for South Scotland, asked Mr Boyle if the shipbuilder had been written a ‘blank cheque’ for the ferries - which were initially due to cost £97million.

Auditor General Stephen Boyle presented his report to the Holyrood committee (Image: Scottish Parliament TV)

She said: “The report highlights that there could be future funding requirements of £9.5million based on Ferguson Marine’s estimated final costs.

“The report also highlights that the consultant commissioned to review Ferguson Marine's financial forecast raised some concerns, including the estimate of contingency being too low.

“On that basis, how realistic do you consider the future funding requirement of £9.5 million to be?”

Mr Boyle responded: “I think it’s hard to be definitive about that at the moment. So that’s the best current estimate effectively.

“The outcome of the due dilligence exercise suggests that they need to build more contigency into the estimates.

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“That seems pretty sensible given what we’ve seen already of this project, that it’s continued to cost more and take longer than had been expected.

“I think it would be folly to suggest that’s a reliable final number that will be spent to deliver the vessels at this stage. It needs close and careful management.”

Current estimates indicate that MV Glen Sannox will be ready by the end of 2023, with Vessel 802 working towards a completion date of the end of 2024.

Ms Dowey highlighted that this goes beyond the Scottish Government’s current 12-month commitment to FMPG.

Mr Boyle said: “The committee’s asked the question as to whether or not there is an open-ended commitment. Contractually, that’s not quite the case.

Mr Boyle answered questions from MSPs Sharon Dowey and Richard Leonard (Image: Scottish Parliament TV)

"There are potential breaks in the contract as it relates to not delivering the vessels in accordance with the timescales. It’s the timescales that matter.

“It’s accepted that the contract continues and continues to be funded unless the Government says otherwise should those timescales not be met.

“There are opportunities to review timescales and future commitments still to come, but those are the most up to date dates we are aware of.”

Committee convenor Richard Leonard also noted a disparity in costs between the vessels, with Glen Sannox expected to cost £101m and Hull 802 having an estimated final spend of £106.8m.

Mr Boyle told the MSPs that he understands the difference is related to price increases in materials and building supplies.

After the committee heard its evidence the topic of the ferries was also raised at First Minister's Questions, with Humza Yousaf telling the chamber that he had listened to Mr Boyle giving evidence.

Mr Yousaf said government due diligence regarding the project is due to be completed in the next couple of weeks, and described the cost overruns and delays as 'unacceptable'.