SCOTLAND's public spending auditors have said there remains doubts over the long term future of the taxpayer-owned publicly owned shipyard firm at the centre of the nation's ferry fiasco because of a lack of a business plan.
Audit Scotland has said questions remain despite attempts by new management to map out a long-term future, beyond the delivery of two lifeline ferry vessels Glen Sannox and Hull 802 that are over five years late with costs soaring.
Nationalised Ferguson Marine has previously responded to concerns over its status as a going concern by insisting there is a strong future for the business, despite its last annual financial review for 2021/22 admitting there was "significant doubt" over its ability to continue as a going concern over questions over future funding.
The board of directors went on to say that they are working with the Scottish Government to "continue to develop our strategy and processes to deliver a sustainable business model which will secure the long-term position of the company".
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The Scottish Government in response to concerns said its priorities were to complete the ferries and secure the yard's future, while the deputy first minister said that ministers remained "committed to do all that we can" to help achieve a prosperous future for the yard.
But the Auditor General Stephen Boyle insists it is premature to say that the beleaguered shipyard has a future and is safe.
He said: "There are two significant vessels to deliver. But there are doubts about the long term viability until it is clear there is a plan in place... that plan is awaited."
Continued concerns over its future have come as it emerged a new round of bonuses were being made to Ferguson Marine directors - despite an ongoing furore over the failure to deliver two long-delayed ferries.
Ministers have confirmed that a new round of bonuses amounting to over £47,000 is being made to Ferguson Marine directors this year - despite the ongoing furore over the failure to deliver two long-delayed ferries.
READ MORE: Auditor concerns over shake-up of bonus culture at Ferguson Marine
Ministers say that further bonuses are legally required to be made for the year 2022/23 despite concerns over £87,000 paid to executives at the ferry fiasco firm in 2021/22.
This brings the total level of bonuses due to be paid out over two years to £134,218.
The first of two instalments of £23,609 has already been processed and was made in Ferguson Marine's April 2023 payroll with the second payment of £23,609 due in June, subject to ongoing discussions involving the board chairman Andrew Miller.
Ms Robison says that they were the result of the "legacy contractual commitments" made in November, 2022 "without the prior knowledge of the Scottish Government" and were "legally required".
But the First Minister Humza Yousaf has said there should be no bonuses paid in this financial year to bosses at Ferguson Marine.
The head of Audit Scotland has said moves for a shake-up over governance rules at Ferguson Marine have still to be resolved despite a row over the controversial £87,000 bonuses paid in 2021/22.
Audit Scotland has said that a revised performance framework for Ferguson Marine's senior managers and chief executive was still awaiting approval and consideration by the Scottish Government.
Mr Boyle said that spoke to the "lack of clarity" over how the Scottish Government expected Ferguson Marine to operate.
He said he doubted the controversial bonuses paid to bosses at Ferguson Marine can be recovered and described the payments as “unacceptable”.
The yard, which was rescued from administration by the Scottish Government in 2019, has struggled to complete two lifeline ferries, with further delays also announced by the yard in March, pushing the delivery date for the Glen Sannox and Hull 802 to the end of this year and 2024, respectively, five and six years later than originally planned. The costs of delivery which were originally set at £97m are thought to have quadrupled.
Direct capital spending on the two lifeline ferries hit £61.1m in the last financial year alone. But the budget for Ferguson Marine was just £35.9m meaning there is an overspend of £25.2m.
In 2021/22 ministers approved £115.1m in spending on Ferguson Marine - more than twice the planned budget.
READ MORE: CalMac ferry remains sidelined months after rust and engine issues
Analysis of the money trail based on the Scottish Government's own accounting and audits revealed that the cost to the taxpayer of supporting Ferguson Marine both before and after it forced its nationalisation has soared to more than £450m.
Asked if the yard has a viable future, Mr Boyle said: "I am not able to say yes it does or it doesn't".
He said: "What we are looking at is beyond the delivery of Glen Sannox and Hull 802. Is there a long term order book?
"Is there progress in terms of a relationship with BAE Systems. But in order to transition effectively to long term successful shipyard there has to be a clear business plan supported by a viable workforce. And that's what's awaited."
South Scotland MSP, Craig Hoy, who is chairman of the Scottish Conservative and Unionist Party asked Mr Boyle during a Public Audit Committee meeting: "The Scottish Government and the former First Minister have said when asked about what has gone wrong, and shortcomings and the misgivings that we should leave all that to one side because ultimately they have saved the yard and saved the jobs in the yard. Is it premature to say that this yard has a long term future that it's safe?"
Mr Boyle said: "I think that's clear. There are two significant vessels to deliver. But there are doubts about the long term viability until it is clear there is a plan in place... that plan is awaited."
He said a lack of shipbuilding skills in Scotland was a risk to the yard's future.
He said: "It is all very well to have intent to secure new contracts.... but Ferguson Marine has a highly skilled workforce and it's also an ageing workforce. And it's using contractors to support the delivery of the vessels. That may well be the intent... but as part of the overall assessment of the viability of the yard, we have to be absolutely clear where the skills, where the labour is coming from.
"So again, we will assume and expect that when the government completes its viability assessment, it will have a clearer understanding of what labour provision will be available, not just in the immediate term, but in the years to come on and how it will plug that gap."
Audit Scotland said that the shipyard firm reported that there were "limited shipbuilding skills available in Scotland and that, to date, it has been unable to compete effectively with the private sector for skilled staff".
The watchdog said that this has "implications for future costs and [Ferguson Marine's] ability to secure and deliver future contracts".
He said: "That is a very clear risk to the future viability.
"There are many factors to that to that, the ability to compete with private sector, which feels unusual in the relatively short time that it's been a public entity.
"These are the factors that the yard's business plan will have to make assumptions [over]. It's workforce plan will have to be part of that, how it secures and retains the future workforce.
"There is no shortage of labour in the longer term, as supported by adequate training, apprenticeships and so forth, that could provide a future for the yard. It is the transitioning from where they are now into a longer term, workforce that will be the key task for the management of the yard and the Scottish Government."
In response to past concerns over the future viability of Ferguson Marine, chief executive David Tydeman said last month: “Looking ahead, post-delivery of the two LNG hulls, we believe there is a strong future for the yard based on two visible pipelines: winning further shipbuilding contracts from Caledonian Maritime Assets Limited [the Scottish Government-owned ferries owner and procurer]as well as contracts for BAE to support its T26 frigate programme by building modules within the yard ready for assembly at its Govan shipyard. We already have some staff seconded to Govan and the arrangement is working well.
“We intend to submit a strong bid for CMAL’s small vessel replacement programme (SVRP) and believe we are well placed to win this 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.
“The Small Vessel Replacement Programme (SVRP) ferries will be an evolution of three electric hybrids - MV Lochinvar, MV Hallaig and MV Catriona - successfully built by the shipyard in 2012-2015.
"Drawing on this previous experience and capability means we avoid a steep ‘first-of-class’ learning. Securing this programme of work would allow us 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.”
Shona Robison, the deputy first minister and finance secretary has confirmed that Ferguson Marine is currently undertaking to reform the remuneration and reward arrangements and that governance associated with that will "help achieve that".
Ferguson Marine was approached for comment.
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