BUSINESS minister Ivan McKee has come under fire for being "economical with the truth" to MSPs when he said six months ago that the budget to complete Scotland's ferry fiasco vessels was on target when officials warned him it was not.

It has emerged that briefing and background notes in relation to parliamentary questions surrounding Scotland's ferry scandal revealed that due diligence had been taking place over extra costs since early June.

Mr McKee told MSPs in answer to a topical question on September 6 that the current budget for the two vessels at the centre of the fiasco "remains £123m, as was set out in the Cabinet Secretary for Finance and the Economy’s update to Parliament on 23 March 2022."

But background and briefing notes provided for officials in advance of the question put by Highlands and Islands MSP Edward Mountain, the former convenor of the rural economy and connectivity committee which branded the ferry procurement management process a "catastrophic failure" told a different story.

It said: "Due diligence by Ferguson Marine on the costs to complete both vessels has been taking place since early June.

"The matter remains unresolved and numbers have not yet been signed off by the board even after three months work.

"No formal request for additional funding has been made to the Scottish Government and estimates still remain provisional.

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"No change to existing budgets has been either assessed or agreed but we do anticipate a formal request from [Ferguson Marine] in the coming weeks and work will need to commence now on assessing the cost estimates."

Video: What Ivan McKee said

Email exchanges between David Tydeman, chief executive of nationalised ferry operator Ferguson Marine and his counterpart at vessel owners and procurers Caledonian Maritime Assets Ltd indicate they both knew of issues before Mr McKee made his parliamentary statement.

They state that a formal request from nationalised Ferguson Marine was anticipated in the following weeks.

Three days after Mr McKee's update the Ferguson Marine CEO told his counterpart at CMAL that a budget increase had already been submitted and that the Scottish Government were to run a due diligence review using third party consultants."

He admitted in an email to the CMAL executive seen by the Herald: "I can't comment on value for money decision. I can highlight that the costs are the yard's best estimates and that they include premiums above competitive rates - i.e, they keep the yard operational pending decisions.."

Mr Hobbs responded: "I have had a good look through this and whilst the numbers are horrific, it looks to be a robust piece of work so far."

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The two long-awaited ferries with total costs expected to quadruple from the original £97m costs, while their delivery has been delayed by over five years due to continuing issues with design and build.

The Herald:

Mr McKee was quizzed by Mr Mountain as it was "clear" from briefing notes that he was aware that there were increased budget costs and further delays to both vessels at the centre of Scotland's ferry fiasco. He has accused the minister of a "misrepresentation of the facts or, worse, plainly untruthful".

The Scottish Conservative MSP said that before asking Mr McKee the question, he visited the shipyard, where he met the chief executive who made clear that the budget would be exceeded.

But Mr McKee stands by his statement.

In a written response, Mr McKee (below) said at the time of the question there was no formal request from Ferguson Marine over an increase in costs or an extension to the timetable for the ferries.

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"You will note from my background briefing that due diligence by Ferguson Marine on the costs to complete both vessels had been taking place since early June, however the matter remained unresolved at the time of your question.

"Cost numbers had not been signed off or validated by the Ferguson Marine board who are accountable to Scottish ministers and the parliament.

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"As would be expected, my officials would stand ready to carry out any further financial due diligence following a formal request from FMPG on additional expenditure required to complete both vessels. This formal request was received a number of weeks after the topical question was answered on September 6 2022."

But Mr Mountain hit back: "The minister is splitting hairs. Whether a formal request was received or not, the Scottish Government were acutely aware that the ferries would cost more and would suffer another delay long before they admitted this fact.

“If the minister knew this request was highly likely, why didn’t he share this with the Parliament at the beginning of September. Indeed, the minister’s own briefing notes stated that the Scottish Government were expecting a formal request from Ferguson Marine on the costs.

“Instead, the Minister gave me a categorical assurance that the ferries were to be delivered in May and December 2023 respectively.

“This answer contradicted everything I had learnt on my visit to Ferguson shipyard.

“This entire episode totally discredits Ivan McKee and his attempts to explain the situation away won’t wash with the island communities who have been waiting for years for these ferries to be delivered.

“Islanders deserve openness and transparency when it comes to the ferries scandal.”