'Missing' £128m in ScotGov's take on cost of ferries scandal

If you asked the Scottish Government what the estimated total capital cost of Scotland's ferry fiasco vessels was – you would be told it is £240m.

But that is over £120m less than the actual costs to date of the much-delayed two ferries which are still to be delivered by nationalised shipyard firm Ferguson Marine.

But how can that be?

It did not go unnoticed by one or two eagle-eyed ferry fiasco watchers who made contact to question why it was that there was an apparent anomaly after Ferguson Marine chief executive David Tydeman appeared before Holyrood's transport committee this week.

So The Herald decided to ask for some clarity.

The Scottish Government in quoting the shipyard firm's update said that the "total forecast cost to complete both ships is £240m, excluding warranty costs, post handing over plus a worst-case contingency for additional costs ranging from £5m to £30m".

But is there an explanation for the gap of over £120m?

When The Herald made inquiries, it turned out that the actual capital cost to date for building the two vessels is actually a whopping £368m – over three-and-a-half times the original £97m contract.

The Scottish Government suggested that Ferguson Marine should explain the gap as the numbers that they quote come from the shipyard firm that they control.

The Herald has been told that the £128m difference related to "incurred costs" from pre-nationalisation, when the shipyard was owned by tycoon Jim McColl and called Ferguson Marine Engineering Limited (FMEL).

That is made up of a £45m taxpayer-funded loan provided by the Scottish Government and £83m in stage payments for the completion of the ferries made by Scottish Government-controlled Caledonian Maritime Assets Limited (CMAL), which owns and procures the nation's ferry fleet.

One ferry user group official said that updates over the progress of the long-awaited ferries had "always proved to be a headache".

The Herald was told that the £128m difference relates to 'incurred costs' from pre-nationalisation (Image: Newsquest)
He said: "Quite how we can get such a muddled approach to what when all is said and done is public money, is bewildering especially as there is so much intrigue around where the money, whatever that money is, has gone to."

The costing analysis was described as "opaque" by Edward Mountain, the convener of the Holyrood transport committee, which has been examining the progress of the ferries.

He had put to Mr Tydeman at a committee meeting on Tuesday that the total actual capital costs to date was £350m, while trying to do his own sums, before asking what the ships' actual market value would be.

Mr Tydeman made no argument with his calculation as he said that he thought the actual market figure was around £70m each.

Mr Mountain replied with one word: "Wow".

MSPs are continuing to raise concerns about why the Port Glasgow shipyard was awarded the contract under the ownership of then independence supporting Mr McColl to build the ferries Glen Sannox and Glen Rosa with both vessels six years late and costs continuing to soar.

Read more:

Scotland's Ferries | The state aid dilemma for ministers over CalMac

Ministers were warned five years ago by their own advisers that they faced ploughing in millions more to prop up Scotland's crisis-hit nationalised shipyard firm after having twice stepped in to bail them out while under threat of going under.  

Consultants PwC told ministers in an analysis before ministers approved a second £30m loan bailout that there remained "further risks" for Ferguson Marine which may result in it needing further funding in the future.

The Scottish Government procured advice from PwC to fashion two loan deals worth £15m and then £30m to the company and said that they said the funds would soon be exhausted.

The Scottish Government propped up the financially troubled yard twice in the space of a year in 2017 and 2018 – having gone into administration three years earlier.

Sign up for Scotland's Ferries and get extra from the journalist who broke the story.

It had been claimed that the disastrous £97m contract to build two lifeline ferries was rigged in favour of the firm run by Mr McColl, who rescued the yard in the summer of 2014 in a move partly brokered by former first minister Alex Salmond, who kept the entrepreneur abreast of businesses that needed saving.

The shipyard firm went into administration again in August 2019 – just over a year after the second Scottish Government bailout loan amidst soaring costs and delays in the construction of the two ferries and was nationalised with Mr McColl's Ferguson Marine and the Scottish Government-owned ferry procurer CMAL blaming each other for what went wrong.