State ownership of Ferguson Marine was 'in the public interest', says minister

And islands minister Paul Wheelhouse insisted that the government would have far rather have seen it continue as a private business.

The development came as the Scottish Government on Tuesday came under fire for failing to explain how it was that it created a pathway to the controversial state takeover of Ferguson Marine while issuing a £30m loan which it said was “to further diversify their business" but knowing that it was actually address the danger of its financial collapse.

Ferguson went into administration following a dispute with Caledonian Maritime Assets Ltd (CMAL) - the taxpayer-funded company which buys and leases publicly owned CalMac's ships on behalf of the Scottish government - over the construction of two ferries under a £97m fixed price contract.

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The Scottish Government began the process of taking control of the last civilian shipyard on the Clyde in August, last year, as it went under because of the soaring costs of the ferry contract - which have now more than doubled.

It has emerged that further delays - brought about by the coronavirus pandemic - means that the both ferries are up to nearly five years late.

The MV Glen Sannox is now destined for the Arran to Ardrossan route betweeen April 2022, to June, 2022. A second vessel, known only as Hull 802 due for use on the Uig-Lochmaddy-Tarbert triangle - will not now be in service until between December, 2022 and February, 2023.

Mr Wheelhouse admitted that relations between the yard and CMAL were “very strained”.

The minister who was quizzed by MSPs on the rural economy and connectivity committee over whether everything could have been done to mediate and stop state intervention said: "Based on the information that was available to us this was the best approach from a public interest perspective and the best result to deliver the ferries and to ensure that costs were minimised to the government.

"I just want to reassure, that we did look sincerely at everything we could to avoid that situation. It is not ideal for us to take over the ownership of the yard," he said. "We would far rather have seen the yard succeed and continue to operate as a private business.

"But we are where we are. We have done what we have to protect the interests of the communities relying on the ferries to ensure they are delivered as early as possible, to protect jobs and the economy of Inverclyde."

Asked if the ferries should have been scrapped and started again, he said it would then have "extremely unlikely" that the over 700 direct and indirect jobs that depend on the yard would be sustained if that had happened saying it would have led to "devastation of the business" and the local economy.

Appearing at the final evidence session of the inquiry called Mr Wheelhouse said the Scottish Government did what it could to ensure the project was finished on time as the relationship between Ferguson Marine and CMAL broke down.

"It’s obviously been very disappointing to see the outcome that we now have, although I’m heartened by the fact that so much progress has been made by Mr Hair and the team at Ferguson Marine in Port Glasgow to turn the business around and work in partnership with trade unions.

"There’s a much-improved atmosphere within the yard, as Ms Hyslop said yesterday.

"We are in a better place than we were a year ago in that respect but we have obviously had significant difficulties to encounter throughout."

He continued: "So it's not a satisfactory situation, but I'm satisfied that the Government is doing everything it can to deliver the vessels as quickly as possible while protecting the jobs in the yard and the economy of Inverclyde.

“We have acted appropriately, I believe, to achieve those aims."

The economy secretary Fiona Hyslop later said it was vital that ministers stepped in.

She said: "It was on the basis that it would secure the workforce, the yard and the vessels.

“That would have been compromised by other options in a way that I don’t think would’ve satisfied the public, ourselves as a Government, or indeed the workforce and local community and the people of that area.”

Mr Wheelhouse also said it was the former owners of Ferguson Marine who were responsible for the major delays and cost overruns that have plagued two CalMac ferries.

He said: "An independent review of the process has concluded contractor failure has been the cause.”