THE Clyde shipyard that has caused huge problems for the SNP Government was regarded as being in “close to irreversible” decline 15 years ago, it has emerged.
Newly opened Scottish cabinet records show the struggling Ferguson yard in Port Glasgow was causing headaches for the then Scottish Executive in 2005.
The records show Labour First Minister Jack McConnell tried to find out if more public work could be awarded to it despite strict EU rules on state aid and open competition.
The now-nationalised yard went bust in 2014, was resurrected by tycoon Jim McColl as Ferguson Marine, fell back into administration in 2019, and is currently at the heart of a Scottish Government financial scandal.
It was awarded a £97m contract to build two state-funded CalMac ferries in 2015, but the work went disastrously awry, and the boats will cost nearer £200m and are four years late.
Around £45m in Scottish Government loans to keep the yard afloat have also been written off.
A Holyrood committee inquiry last month concluded the management process had been a “catastrophic failure”, with blame on all sides.
Now cabinet minutes from mid-2005 show Fergusons had a long history of causing political pain over the award of publicly-funded contracts.
They show then Liberal Democrat Environment minister Ross Finnie briefed the cabinet on contracts for two new Scottish Fisheries Protection vessels and a CalMac ferry, which might be award to the Polish Remontowa yard, with Fergusons losing out, because of EU rules.
The minutes said: “Mr Finnie said that it was a very difficult situation.
“If the contracts were awarded to the Remontowa yard, there were no other orders in prospect for the Clydeside shipyard and, since the launch of its last ship a month previously, the yard had declined to a state that was close to irreversible.”
In discussion, Scottish ministers said there was “an increasing perception that state aid rules were interpreted by the UK Government in a manner which undermined the interests of UK and Scottish companies”.
The Cabinet noted the outlook for the yard “with concern” and “agreed that further work should be done to examine current state aid and procurement practices” in Scotland.
Two months later, the Scottish Executive awarded the contract for one of the fisheries vessels to the Polish yard, prompting Fergusons to lay off 100 members of staff.
Mr Finnie told the cabinet that Remontowa had complied with EU procurement rules to win but “it was difficult to explain to Scottish taxpayers why public funds were being used to buy a vessel in Poland and to make redundancy payments to shipbuilders in Port Glasgow”.
He also told colleagues that “although work was in hand to try to ensure that Fergusons was able to secure the contract for a second [fisheries] vessel, there were important issues in relation to the application of the competitive tendering process which the Executive needed to address as a matter of urgency.
“In particular, he said that lack of coordination and consistency in the interpretation and application of EU procurement rules between the Executive and other Scottish public sector bodies was unacceptable”.
The Government’s top official was told “as a matter of urgency” to come up with plans to “ensure consistency and professionalism in the procurement advice used by the Executive and other public sector bodies in Scotland”.
The Permanent Secretary was also told to check if the UK Government and European Commission might re-examine the application of EU procurement rules “to ensure that a significant national interest in the position of specific indigenous companies could be taken into account”.
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