They instead backed a £45 million scheme that sent nearly half the work to China, despite warnings it offered “no guarantee of orders” for Alexander Dennis (ADL).
The decision has triggered criticism after it emerged from an internal Scottish Government briefing that an alternative was looked at. And insiders say that could have provided a vital pipeline of work at a crucial time.
What has actually happened at ADL?
ADL, Britain’s biggest bus and coach manufacturer, is cutting more than 100 jobs — around a quarter of its Scottish workforce — and closing its Falkirk site as part of a major restructuring.
The move follows months of uncertainty during which staff were placed on publicly funded furlough while the company waited for new orders that were expected to secure its future in Scotland. Instead, those orders have not materialised at the scale or speed required, leaving workers who had been kept in place by government support now facing redundancy.
What was the Scottish Government trying to do?
Ministers were attempting to balance two objectives at once: protecting jobs in the short term while accelerating the transition to zero-emission transport in the longer term. To keep workers in place, they introduced a £4.1 million furlough scheme designed to support employees while new work was secured.
At the same time, they launched ScotZEB3, a £45m fund aimed at helping bus operators purchase zero-emission vehicles, with the expectation that this would stimulate demand across the sector and ultimately benefit manufacturers based in Scotland.
What has been revealed in the internal documents
The documents show ministers were clearly warned about the limits of that approach before decisions were taken. Officials told them the scheme would be “a competitive process that offers no guarantee of orders for ADL (or any other bus manufacturer)”, even as the company was seeking new contracts to sustain its workforce.
They were also warned that demand in the market was weak, with bus orders “not coming to market as quickly as expected”, raising concerns about whether enough work would materialise. Despite this, ministers decided to proceed, concluding that a competitive process was the “fastest and most certain route” to deliver buses into service.
Why doesn’t ScotZEB guarantee work for ADL?
The answer lies in how the scheme is structured. ScotZEB funding is not paid to manufacturers but to bus operators, who then decide which company to buy their vehicles from. That means the government can stimulate demand but does not control where the work ultimately goes. Even when public money is involved, operators are free to choose suppliers, including overseas manufacturers, which means there is no requirement for contracts to be awarded to a Scottish firm.
Was there any alternative considered?
The documents show that officials did consider another option, sometimes referred to as a “ScotZEB 2.5” approach. This would have involved directing additional funding through an existing bidder from the previous funding round, Rock Road, which has a close working relationship with ADL.
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Within the company, that route was seen as offering the prospect of a larger and more immediate share of work at a critical time when new orders were urgently needed.
Why was that option rejected?
Officials advised that this approach “would not be within the parameters of ScotZEB2”, meaning it did not fit the rules governing the previous competitive tender scheme. In practice, that meant ministers were told they could not simply reuse or extend the earlier competition to channel funding in that way. As a result, the option was ruled out and a new competitive round was pursued instead.
How would ADL have benefitted?
The alternative route was expected to give ADL a significantly larger share of the work at a critical time.
It would have involved directing funding through Rock Road, a bus fleet manager. the ScotZEB3 awards, ADL secured around 90% of the work linked to Rock Road — leading insiders to believe that using that route could have seen the firm secure well over half of the total orders.
That would have provided a much stronger and more immediate pipeline of work when the company was urgently seeking contracts to sustain production and protect jobs.
Were there other ways the system could have been designed?
In theory, there are other models that could provide greater certainty for domestic manufacturers, but they would require significant policy changes.
One option would be for government to purchase buses directly and decide where they are built, while another would be to attach conditions requiring publicly funded buses to be sourced from UK manufacturers.
A further approach would involve guaranteeing a pipeline of orders so companies have visibility over future demand. None of these options appear in the documents as realistic choices under consideration at the time.
It is understood that the Scottish Government felt that changes to the Subsidy Control Act 2022 were not likely to unlock an ability to place bus orders directly with ADL.
So was a competitive tender the only real option?
Critics would say there were other options that could have been explored. Once the Rock Road option was ruled out, ministers were left with a choice that aligned with the structure of the original programme — a competitive process that would distribute funding quickly but would not guarantee outcomes for any individual company., including Scottish firms. That reflects the design of the system itself, which prioritises market competition and operator choice over direct intervention.
What is the real issue revealed by the documents?
The documents highlight a fundamental tension in the approach taken. Ministers introduced a furlough scheme explicitly designed to protect jobs and preserve manufacturing skills, yet relied on a funding model that could not guarantee the work needed to sustain those jobs. Crucially, they were aware of that limitation at the time decisions were made, with warnings about both the lack of guaranteed orders.
Why does this matter now?
Because the risks identified in the documents are now playing out. Orders have not come forward quickly enough, nearly half of the work has gone to China, and job loss proposals have followed. Workers who were supported through furlough while waiting for new business are now facing redundancy, bringing into focus the gap between the intention of the policy and its outcome.
What is the bottom line?
The documents show ministers were aware of an alternative route that was expected to deliver significantly more work to ADL — but chose not to pursue it.
Instead, they backed a competitive funding model they knew would offer “no guarantee of orders” for the company, even as it depended on new contracts to protect jobs.
The rejected Rock Road option was widely understood to offer a far stronger pipeline at a critical time — and insiders believed it could have seen the firm secure well over half of the orders.
The papers also raise wider questions about whether other approaches — including more direct forms of intervention seen in other sectors — were fully explored. And it indicated that ministers defaulted to a system that prioritised speed and competition over certainty for Scottish manufacturing.
The result is that a company supported with millions in public funding has still been left exposed to global competition — with jobs now set to be lost despite efforts to keep them in place.
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