NEW fears have surfaced over whether two vessels at the centre of Scotland’s ferry fiasco will ever set sail as it emerged an agreement over the publicly funded budget for the nationalised shipyard firm at the centre of the row has stalled for months.

It comes as it emerged ministers approved £15m of an £87m extra public funding request in December to deliver two long-delayed ferries by nationalised Ferguson Marine as a "precautionary response to a material risk related to cash flow", while they consider whether the increased costs were value for money.

Meanwhile a row has erupted over an £11m shortfall in the extra money that executives indicated was needed in September to deliver the ferries.

It comes as Ferguson Marine, meanwhile, has been in a race against time to lodge statements on its financial status after moves were taken to dissolve the shipyard firm.

Following a September board meeting, Ferguson Marine’s chief executive David Tydeman indicated that a further £87m was needed to deliver the ferries with overall costs at that point snowballing from the original £96m to £340m.

Ministers kicked off a period of due diligence to ensure a “rigorous approach is taken to scrutinise this request for additional funding”.

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Deputy First Minister John Swinney said on December 15 that £15m interim funding was being allocated to Ferguson Marine in this financial year to the project with a further £57m set for the budget for next year.

But the Herald on Sunday can reveal that while the Scottish Government's wide-ranging budget bill was passed in February 21, approval for the Ferguson Marine spending was not. And an official budget analysis coinciding with Mr Swinney’s statement stated that the funding proposed was actually £60.87m.


With only £15m committed, that meant that the stalled budget was still nearly £11m less than the Ferguson Marine chief executive originally indicated was needed in September.

Ministers have also had to provide a 'letter of comfort' which they say allowed the vessels to continue to be built in the meantime.

And Scottish Government sources confirmed the Ferguson Marine spending has not been passed and remains under ‘due diligence’.

Ferguson Marine has been classified under “significant issues” in Scottish Government financial statements.

At the centre of the debacle are two lifeline ferries, Glen Sannox and Hull 802 which were due online in the first half of 2018 when Ferguson Marine was under the control of tycoon Jim McColl, with one intitially to serve Arran and the other to serve the Skye triangle routes to North Uist and Harris, but they are at least five years late. The last estimates suggested the costs of delivery has more than quadrupled compared to the original £97m cost.

The stalling over the budget has led to concerns that it is a major factor in the nationalised firm facing the prospect of being closed while being sanctioned after failing to lodge its annual accounts on time.

One ferry user group official said there should be an inquiry into the public financing of Ferguson Marine.

"There has to be serious concern about what is happening to Ferguson Marine and the ability to deliver these ships when the accounts cannot be signed off and there are baffling questions over whether the Scottish Government will approve the budget and whether it is even enough to get these important ferries finally delivered."

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Highlands and Islands MSP Edward Mountain, the former convenor of the rural economy and connectivity committee whose probe into the construction of the ferries for CalMac branded the management process a "catastrophic failure" was concerned that there remained a "significant" funding gap "without any explanation as to why yet".

He said the Scottish Government had "two big questions to answer - has the Scottish Government approved of Ferguson Marine’s request for additional funding and, if not, is this one of the reasons why the shipyard missed the deadline to file its accounts to Companies House?”

The latest financial statements actually show that the proposed budget for Ferguson Marine was to be £67.648m, a 69.8% rise on the previous year with £6.548m of that to go to support operating costs.

Ferguson Marine, which was taken over by the Scottish Government four years ago after its financial collapse under the control of tycoon businessman Jim McColl was due to deliver their annual accounts on December 31 but they are still due.

Companies House, the UK Government executive agency which oversees the incorporation of firms across the nation triggered a "strike off" process over a week ago which meant that Ferguson Marine and three other allied companies that are trying to deliver the two lifeline ferries could be formally closed.

Ferguson Marine had confirmed the problems relate to audit issues that were beyond their control and have told Companies House officials they expect to file the accounts by the end of March.

Companies House has now discontinued the dissolution process off the back of the Ferguson Marine assurances.


Ferguson Marine has already received financial sanctions amounting to at least £600 for failing to file details of financial affairs in good time three years ago before new leadership was brought in.

The firm is due to incur penalties of at least £1500 for late filing of four sets of accounts. If it goes beyond March, the penalties will more than double.

Ferguson Marine say they had assurances that the firm will not be removed from the companies register as long as they meet the undertakings given that they will file the accounts by the end of March.

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Companies House, however, still started the process to dissolve the four companies that make up the shipyard group that are all owned by the Scottish Government.

Mr Tydeman has said that the reasons for the delay in lodging accounts was "currently beyond the directors' control".

He expects the accounts to be filed by the end of March, following adoption and approval by the Scottish Parliament, planned for mid-March.

He insisted that the issue with the account "does not affect our ability to keep trading and continue the work in progress".

A Scottish Government spokesman said: “We remain committed to the completion of the vessels, and supporting our island communities that rely on this type of vessel.”