NEW fears have emerged over the future of the nationalised ferry fiasco firm Ferguson Marine - as ministers continue to stall on signing off on £60m of extra funding.
Public finance watchdogs Audit Scotland has said that there are "risks and uncertainties" over the financial future of Ferguson Marine going forward while the costs of delivery of long-delayed ferries has soared.
Ferguson Marine insists there is a strong future for the business despite doubts expressed.
The Herald has confirmed that while Audit Scotland said funding of nearly £60m was allocated in the budget approved by Parliament, it has still not been signed off and is still subject to due diligence. Sources say that is is not due to complete for weeks.
The Auditor General Stephen Boyle still flagged concerns about financial viability.
He also raised questions over the soaring costs of the two long-delayed ferries and "unacceptable" bonus payments.
The damning analysis of Mr Boyle came after the Herald revealed that the Scottish Government bill for nationalised Ferguson Marine which is delivering the ferries has soared to more than £450m.
The sum was more than £200m more than what public spending watchdogs were expecting would be spent to finally deliver the two ferries at the centre of the Ferguson Marine debacle last year during its inquiry into the rising costs.
Mr Boyle has said there was doubt about the longer-term viability of the Ferguson Marine Port Glasgow (FMPG) shipyard, despite sustained investment by the Scottish Government.
READ MORE: 'Beyond scandalous': Ferry fiasco firm costs taxpayer nearly £500m...so far
He said the company directors’ own assessment of going concern identified "risks and uncertainties relating to the longer-term funding and financial viability" of the nationalised firm.
Any future public funding required will now need to be approved, subject to due diligence, through future Scottish Government budgets and revisions.
Audit Scotland says the amount of investment ultimately required to maintain Ferguson Marine as a going concern will depend on decisions about its future operating model and workforce requirements.
Currently Ferguson Marine's workforce, while skilled, is ageing and is being supplemented by the use of contractors, Audit Scotland said.
Meanwhile Ferguson Marine has reported that there are "limited" shipbuilding skills available in Scotland and that, to date, it has been unable to compete effectively with the private sector for skilled staff.
"This has implications for future costs and Ferguson Marine's ability to secure and deliver future contracts," said Audit Scotland.
Rising energy and supply chain costs are also putting pressure on Ferguson Marine's budget.
The Auditor General also said that uncertainty remains over the final costs and completion dates of Glen Sannox and Hull 802. Both vessels were due online in the first half of 2018 when Ferguson Marine was under the control of tycoon Jim McColl, with one initially 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. It is suggested the costs of delivery has quadrupled compared to the original £97m cost.
Concerns were also raised over the payment of performance bonuses to senior managers at Ferguson Marine Port Glasgow.
He indicated that Ferguson Marine needs £9.5m more to fund the vessels over and above the £60m needed for 2023/24 - which is going through due diligence.
READ MORE: Ferguson Marine: Ferry firm sanctioned twice over financial fails
Audit Scotland says £87,000 of performance bonus payments were paid to senior Ferguson Marine managers during 2021/22.
They say it is "not clear" how their performance was assessed, nor were appropriate frameworks and governance in place.
In 2016 Nicola Sturgeon featured in a 'Standing up for Scotland' video at Ferguson Marine. Source: SNP
Mr Boyle said Ferguson Marine should have sought Scottish Government approval for the payments.
Ministers say they are now expecting the company to provide a strategic business plan in due course for comment and agreement.
The Scottish Government said that it is committed to helping Ferguson Marine secure a long term sustainable future for the yard.
David Tydeman, Ferguson Marine chief executive said after the delivery of the ferries he believed there was a " strong future for the yard" through winning further shipbuilding contracts from Scottish Government-owned vessel procurers and owners Caledonian Maritime Assets Limited as well as contracts for BAE to support its T26 frigate programme.
He said they are preparing to submit a strong bid for CMAL’s small vessel replacement programme (SVRP) and believe they are well placed to win the contract, "given our experience of exactly this type of work in the past".
"Securing this business, alongside completion of the two dual fuel vessels, is now our primary focus and central to the future of the yard," he said.
He said securing the SVRP programme of work would allow the firm to "steadily increase efficiency, programme management, labour profiles and outputs, and place the yard in a competitive position for future larger and more complex ships, including those required by the offshore wind farm market over the next 15 years".
READ MORE: Ferguson Marine did not bid for new ferries contract given to Turkey
The Herald revealed three weeks ago that the taxpayer-supported nationalised shipyard firm has been sanctioned twice over its financial dealings before facing moves to be closed.
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 were due to deliver accounts on December 31 but are still due.
Companies House, the UK Government executive agency which oversees the incorporation of firms across the nation triggered a "strike off" process which could have seen Ferguson Marine and three other allied companies that are trying to deliver two long-delayed lifeline ferries formally closed.
Ferguson Marine confirmed the problems relate to audit issues that were beyond their control and Companies House has confirmed that the strike off process has been cancelled, while the firm pledged to lodge accounts by the end of this month.
The Auditor General says the Scottish Government has assured Ferguson Marine there will be financial support for at least another year, enabling delivery of vessels 801 and 802.
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But the Herald revealed that the budget for next year has still to be approved and has been going through due diligence since September.
Audit Scotland said that further investment in the shipyard and workforce are also needed to help secure future contracts.
The Scottish Government has commissioned an independent review of future options for the Ferguson Marine shipyard which is due to report shortly. A Scottish Government spokesperson said: “It is a concern that Ferguson Marine did not inform or seek approval from the Scottish Government before bonus payments were paid to senior managers. This should be done as a matter of good governance.
“However, the new senior management team is committed to consulting with the Scottish Government as required on this issue in the future. Significant progress has been made by the chief executive and chair of the board on the governance structure at the shipyard over the last 12 months.
"We deeply regret that work on the two ferries is taking longer than it should. The Scottish Government remains focused on supporting our island communities that rely on this type of vessel.”
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