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The Herald Scotland
19-05-2025
- Business
- The Herald Scotland
Public cost of Ferguson Marine hits £750m amidst overspends
The costs so far of the Inverclyde shipyard firm - whose overriding aim has been to deliver the ferries - includes sums to cover running costs, wages, a dramatic slump in the value of the ships and the escalating capital costs of producing the vessels. It soared to nearly £710m before the board last week sought £35m more public money from the Scottish Government because of further rises in the price to deliver the second of the two ferries, Glen Rosa. The Ferguson Marine bill is enough to cover the cost of 13 ferries of the type currently being built at the Cemre Marin Endustri shipyard in Turkey. It is enough to provide over 3,400 settled affordable homes in Scotland's housing emergency. It comes as analysis from ferry operator CalMac showed total maintenance and repair costs to the ageing lifeline fleet totalled £252.2m with annual costs rising from £14.8m in 2014–15 to £41.8m in 2024–25 — an increase of 183%. Scottish Conservative MSP Edward Mountain, who is convener of Holyrood's transport committee said: 'I despair that the Scottish Government's business sense and management is so appalling that they can't even recognise they've made a mistake.' Katy Clark, who is Scottish Labour's shadow community safety minister said there was "gross mismanagement" adding: "It's outrageous that hard-pressed families enduring a cost of living crisis are being made to pay the astronomical cost of this." The Scottish Government is currently doing due diligence over the further request for taxpayer backing. The cost of Ferguson Marine, which currently employs over 400 staff, including over 100 sub-contractors, equates to £400m more than what public spending watchdogs Audit Scotland were expecting would be spent to finally deliver the two ferries in 2022 during its inquiry into soaring costs. In the first five years of nationalisation, the final public cost of Ferguson Marine ended up being nearly double what had been budgeted for. It went from a £257m budget to a £468m actual cost. John Swinney and Katy Clark (Image: NQ) But that doesn't include the £120m ploughed in before nationalisation or the further planned spend in the pipeline - with £62.68m budgeted for 2024/25 and £47.86m pencilled in for 2025/26. A £69m overspend in 2023/24 alone - with costs totalling £131m was said to be in the main due to huge slump in the value of the two fiasco ferries being built there. There was a further £9m overspend caused by further works needing done to the ferries and a £3m overspend over crew costs for the Glen Sannox. Glen Rosa and its sister ship Glen Sannox were both due to be online within first seven months of 2018, to serve Arran. It emerged last week that Glen Rosa is not expected to be delivered until the summer of next year - between April and July while total forecast costs for that ship alone rose by £35m. Ferguson Marine (Image: Newsquest) The costs of Ferguson Marine has soared from £17m in the first year of nationalisation in 2019/20 to £131m in each of the 2022/23 and 2023/24 financial years. Read more from Martin Williams When the contract was agreed in October, 2015, both ferries were due to cost a total of just £97m - and were to be paid for by CMAL by repaying a ministers' loan over 25 years through using revenue it generates from the fees it gets from the lease of vessels like operator CalMac's ferry fleet and harbour access fees. But part of the Scottish Government's special deal to allow then independence-supporting tycoon Jim McColl's Ferguson Marine to win the contract in the wake of CMAL's concerns over a lack of financial guarantees, meant that loan was wiped out. The £83.25m that was drawn down to pay for the construction of the vessels was said at the time to have been "eliminated" after Ferguson Marine under Jim McColl fell into financial trouble. The Scottish Government had previously pumped in £45m in taxpayer-backed loans into Mr McColl's firm which was mostly lost when it fell into administration. It managed to recover just £7.5m from that through the purchase of the Ferguson Marine assets. While then finance secretary Derek Mackay was telling the public one £30m of the £45m loan was 'to further diversify their business", internal documents state the real reason was that FMEL was in financial trouble and at risk of falling into administration. And ministers sought to ensure there was a 'right to buy' of Ferguson Marine when it provided the £30m loan knowing it was creating a path to a controversial state ownership. Highland and islands region MSP Edward Mountain, said: 'The mismanagement of the ferries contract and the nationalisation of Ferguson Marine has cost Scotland dear. Edward Mountain at Ferguson Marine (Image: George Munro) 'This cost is not just financial – we must not forget the islanders, who have had to pay with restrictions on their ability to travel. 'I know that the Scottish Government will argue that it was important to keep Ferguson Marine open, but frankly they could have given a million pounds to every worker there and still had two ferries built in Turkey in half the time." Concerns have heightened over the future of taxpayer-funded Ferguson Marine, after CMAL rejected its bid for a crucial £175m contract to build seven loch-class electric ferries. The contract has ended up with Remontowa Shipbuilding in Gdansk. The board of the loss-making now Scottish Government-owned shipyard firm has previously admitted that questions over further financial support from ministers was casting a "significant doubt" on its ability to continue operations and that the contract for the seven ferries was crucial. Ferguson Marine's contract loss to Poland came after the Scottish Government-owned procurer previously awarded two other ferry contracts to Turkey - with the Scottish Government-owned firm again losing out. Supporters had been campaigning for a direct award of the contract to ensure its future. But ministers decided a direct award could be subject to legal challenge, leading to uncertainty and delay and decided instead to go out to tender. West of Scotland MSP Katy Clark said: "Passengers have been woefully let down by the abysmal and extremely expensive failure to deliver the two lifeline ferries. "Island communities and businesses have been left with nothing whatsoever to show for this gross mismanagement. "There has been a complete absence of leadership from the Scottish Government and successive SNP First Ministers who have presided over this fiasco. "John Swinney must urgently take personal charge of ensuring that the long delayed ferries are delivered by the end of this summer." A ferry user group official said that a public inquiry was needed to investigate whether the public were getting value for money from "propping" up the shipyard. "Islanders just want to see an end to all this," he said. "It seems that every month there are extra costs and extra delays to these ferries and all we want is to see them actually delivered. "The costs of Ferguson Marine are truly unthinkable when you consider how much it is costing to produce ferries for Scotland in Turkey. "The majority, I think, would like to see a thriving Scottish shipyard producing the ferries that Scotland needs, but the reality is that it has been so fundamentally mismanaged by managers and politicians and allowed to be, that you really do wonder if it ever had a future, and whether throwing good public money after bad was ever the wisest route to take." A Scottish Government spokesman said: 'When the Scottish Government intervened to save Ferguson Marine, we did so with a goal of securing a sustainable future for the last commercial shipyard on the Clyde and its skilled workforce. 'Scottish ministers have been clear that a further delay and increased estimated cost to deliver the Glen Rosa are unacceptable and that taxpayers, and the communities which depend on the island ferries service, deserve better. Ferguson Marine's leadership must take immediate and sustained action to restore trust, enforce delivery discipline, and bring this project under control.'
The Herald Scotland
19-05-2025
- Business
- The Herald Scotland
Public cost of Scots ferry firm hits £750m amidst overspends
The costs so far of the Inverclyde shipyard firm - whose overriding aim has been to deliver the ferries - includes sums to cover running costs, wages, a dramatic slump in the value of the ships and the escalating capital costs of producing the vessels. It soared to nearly £710m before the board last week sought £35m more public money from the Scottish Government because of further rises in the price to deliver the second of the two ferries, Glen Rosa. The Ferguson Marine bill is enough to cover the cost of 13 ferries of the type currently being built at the Cemre Marin Endustri shipyard in Turkey. It is enough to provide over 3,400 settled affordable homes in Scotland's housing emergency. It comes as analysis from ferry operator CalMac showed total maintenance and repair costs to the ageing lifeline fleet totalled £252.2m with annual costs rising from £14.8m in 2014–15 to £41.8m in 2024–25 — an increase of 183%. Scottish Conservative MSP Edward Mountain, who is convener of Holyrood's transport committee said: 'I despair that the Scottish Government's business sense and management is so appalling that they can't even recognise they've made a mistake.' Katy Clark, who is Scottish Labour's shadow community safety minister said there was "gross mismanagement" adding: "It's outrageous that hard-pressed families enduring a cost of living crisis are being made to pay the astronomical cost of this." The Scottish Government is currently doing due diligence over the further request for taxpayer backing. The cost of Ferguson Marine, which currently employs over 400 staff, including over 100 sub-contractors, equates to £400m more than what public spending watchdogs Audit Scotland were expecting would be spent to finally deliver the two ferries in 2022 during its inquiry into soaring costs. In the first five years of nationalisation, the final public cost of Ferguson Marine ended up being nearly double what had been budgeted for. It went from a £257m budget to a £468m actual cost. John Swinney and Katy Clark (Image: NQ) But that doesn't include the £120m ploughed in before nationalisation or the further planned spend in the pipeline - with £62.68m budgeted for 2024/25 and £47.86m pencilled in for 2025/26. A £69m overspend in 2023/24 alone - with costs totalling £131m was said to be in the main due to huge slump in the value of the two fiasco ferries being built there. There was a further £9m overspend caused by further works needing done to the ferries and a £3m overspend over crew costs for the Glen Sannox. Glen Rosa and its sister ship Glen Sannox were both due to be online within first seven months of 2018, to serve Arran. It emerged last week that Glen Rosa is not expected to be delivered until the summer of next year - between April and July while total forecast costs for that ship alone rose by £35m. Ferguson Marine (Image: Newsquest) The costs of Ferguson Marine has soared from £17m in the first year of nationalisation in 2019/20 to £131m in each of the 2022/23 and 2023/24 financial years. Read more from Martin Williams When the contract was agreed in October, 2015, both ferries were due to cost a total of just £97m - and were to be paid for by CMAL by repaying a ministers' loan over 25 years through using revenue it generates from the fees it gets from the lease of vessels like operator CalMac's ferry fleet and harbour access fees. But part of the Scottish Government's special deal to allow then independence-supporting tycoon Jim McColl's Ferguson Marine to win the contract in the wake of CMAL's concerns over a lack of financial guarantees, meant that loan was wiped out. The £83.25m that was drawn down to pay for the construction of the vessels was said at the time to have been "eliminated" after Ferguson Marine under Jim McColl fell into financial trouble. The Scottish Government had previously pumped in £45m in taxpayer-backed loans into Mr McColl's firm which was mostly lost when it fell into administration. It managed to recover just £7.5m from that through the purchase of the Ferguson Marine assets. While then finance secretary Derek Mackay was telling the public one £30m of the £45m loan was 'to further diversify their business", internal documents state the real reason was that FMEL was in financial trouble and at risk of falling into administration. And ministers sought to ensure there was a 'right to buy' of Ferguson Marine when it provided the £30m loan knowing it was creating a path to a controversial state ownership. Highland and islands region MSP Edward Mountain, said: 'The mismanagement of the ferries contract and the nationalisation of Ferguson Marine has cost Scotland dear. Edward Mountain at Ferguson Marine (Image: George Munro) 'This cost is not just financial – we must not forget the islanders, who have had to pay with restrictions on their ability to travel. 'I know that the Scottish Government will argue that it was important to keep Ferguson Marine open, but frankly they could have given a million pounds to every worker there and still had two ferries built in Turkey in half the time." Concerns have heightened over the future of taxpayer-funded Ferguson Marine, after CMAL rejected its bid for a crucial £175m contract to build seven loch-class electric ferries. The contract has ended up with Remontowa Shipbuilding in Gdansk. The board of the loss-making now Scottish Government-owned shipyard firm has previously admitted that questions over further financial support from ministers was casting a "significant doubt" on its ability to continue operations and that the contract for the seven ferries was crucial. Ferguson Marine's contract loss to Poland came after the Scottish Government-owned procurer previously awarded two other ferry contracts to Turkey - with the Scottish Government-owned firm again losing out. Supporters had been campaigning for a direct award of the contract to ensure its future. But ministers decided a direct award could be subject to legal challenge, leading to uncertainty and delay and decided instead to go out to tender. West of Scotland MSP Katy Clark said: "Passengers have been woefully let down by the abysmal and extremely expensive failure to deliver the two lifeline ferries. "Island communities and businesses have been left with nothing whatsoever to show for this gross mismanagement. "There has been a complete absence of leadership from the Scottish Government and successive SNP First Ministers who have presided over this fiasco. "John Swinney must urgently take personal charge of ensuring that the long delayed ferries are delivered by the end of this summer." A ferry user group official said that a public inquiry was needed to investigate whether the public were getting value for money from "propping" up the shipyard. "Islanders just want to see an end to all this," he said. "It seems that every month there are extra costs and extra delays to these ferries and all we want is to see them actually delivered. "The costs of Ferguson Marine are truly unthinkable when you consider how much it is costing to produce ferries for Scotland in Turkey. "The majority, I think, would like to see a thriving Scottish shipyard producing the ferries that Scotland needs, but the reality is that it has been so fundamentally mismanaged by managers and politicians and allowed to be, that you really do wonder if it ever had a future, and whether throwing good public money after bad was ever the wisest route to take." A Scottish Government spokesman said: 'When the Scottish Government intervened to save Ferguson Marine, we did so with a goal of securing a sustainable future for the last commercial shipyard on the Clyde and its skilled workforce. 'Scottish ministers have been clear that a further delay and increased estimated cost to deliver the Glen Rosa are unacceptable and that taxpayers, and the communities which depend on the island ferries service, deserve better. Ferguson Marine's leadership must take immediate and sustained action to restore trust, enforce delivery discipline, and bring this project under control.'
