Ferguson Marine to go back into private ownership

Ferguson Marine was taken over by the Scottish Government four years ago after its financial collapse under the control of tycoon businessman Jim McColl as a row erupted over long delays and mounting costs over the delivery of two lifeline ferries.

Glen Sannox and Hull 802 were due online in the first half of 2018 when Ferguson Marine was under the control of Mr 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. The last estimates suggested the costs of delivery could more than quadrupled from the original £97m cost.

Mr Gray confirmed the Scottish Government's intentions when asked what he thought the future holds for the yard.

He said: "We hope that Ferguson Marine can continue to make progress to being a commercially successful yard. That was the intention of saving the last commercial yard on the Clyde, to ensure that we protect the jobs, so that we can protect the manufacturing base that is there and the traditions of Scottish manufacturing.

READ MORE: Minister pledges to probe £1.6m bill for ferries that haven't sailed

"Clearly there are challenges at Ferguson's that is well documented, but we continue to work with the management and the workforce to ensure that the two vessels are delivered as quickly as possible and then there is the opportunity for Ferguson's to bid for further work and make itself commercially successful."

He was asked by shadow transport minister Graham Simpson at the Scottish Parliament's economy and fair work committee, if it was the intention to return Ferguson Marine to the private sector.

Mr Gray responded: "Yes."

"Obviously, the better Ferguson's is performing, the more likely it is that it's going to return to private ownership.

"If there are interested parties come forward [who will] talk to government or our agencies, then clearly we will take that interest seriously and do what we can to ensure that the yard is returned as a commercial going concern into private ownership as quickly as possible."

It comes after Scotland's public spending auditors have said there remains doubts over the long-term future of the shipyard firm 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 the two ferries.

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.

READ MORE: St Mirren embroiled in 'scandal' over 'secret' publicly funded project

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".

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 Auditor General Stephen Boyle has said it is premature to say that the beleaguered shipyard has a future and is safe.

Mr Simpson said there remained questions on how privatisation would happen.

“His admission that ‘there have been challenges’ is quite the understatement. The woeful and ongoing failure to deliver lifeline ferries makes the prospect of finding a buyer much harder," he said.

“The SNP Government must now work with the yard to get it into a position where it can compete for other work and make it fit for sale. That is undoubtedly going to need even more public money so ministers should spell out how much more they are prepared to spend on the yard.”

Continued concerns over Ferguson's future came as it emerged a new round of bonuses were being made to its directors - despite an ongoing furore over the failure to deliver the two ferries.

Ministers 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.

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.

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.

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.

A Scottish Government spokesman said: “It has always been the intention of the Scottish Government to return Ferguson Marine to private ownership – indeed, this was made clear when we announced that the yard was to be taken into public ownership.

“We are committed to securing a sustainable future for the yard and any deal would need to work for the yard’s employees and the taxpayer.”