Cost of Ferguson shipyard ferry fiasco could hit £400m
The public finance watchdog says ‘major problems remain unresolved’ at the nationalised shipyard constructing two lifeline CalMac ferries.
Now four years late, one expert has estimated they will cost £400 million – four times over budget – and it would be cheaper to scrap them and start again.
Two years after the Scottish Government took control of Ferguson Marine Engineering Ltd (FMEL), Audit Scotland says ‘significant operational failures still need to be fully resolved and further remedial work on the vessels continues to be uncovered’.
‘The project to deliver Vessels 801 and 802 for the Clyde and Hebrides has been beset with delays and spiralling costs,’ it says. ‘The ferries are now almost four years late, with no certainty on when they will be complete.
‘The total cost of the project is currently estimated to be at least £240 million, around two and a half times the original contract price.
‘These issues have frustrated island communities and weakened resilience across Scotland’s ferry network.
‘Scottish ministers approved the contract award to FMEL in October 2015, despite significant risks caused by FMEL’s inability to provide mandatory refund guarantees and the severe misgivings of Caledonian Maritime Assets Limited (CMAL, CalMac’s owner).
‘There is insufficient evidence to explain why Scottish ministers made this decision.
‘As the project progressed, delays, costs, and a contract dispute between CMAL and FMEL, escalated. Despite CMAL and the Scottish Government intervening to support the project, FMEL entered administration in August 2019, with the Scottish Government bringing the shipyard into public ownership.’
Stephen Boyle, auditor general for Scotland, said: ‘The failure to deliver these two ferries, on time and on budget, exposes a multitude of failings.
‘A lack of transparent decision-making, a lack of project oversight, and no clear understanding of what significant sums of public money have achieved. And crucially, communities still don’t have the lifeline ferries they were promised years ago.
‘The focus now must be on overcoming significant challenges at the shipyard and completing the vessels as quickly as possible.
‘Thoughts must then turn to learning lessons to prevent a repeat of problems on future new vessel projects and other public sector infrastructure projects.’
However, according to a former Scottish Government shipbuilding adviser, the cost of completing the two ships, one to serve Arran, could be as high as £400 million.
Ex-commodore Luke van Beek, who has given evidence to the watchdog, said: ‘I assume the current estimate of cost is somewhere in the £350m to £400m bracket.
‘The cost of completing them is likely to exceed the cost of starting again, particularly if they were to start again on a simpler design better suited to the ferry routes.
‘The contract was let for £97m and I don’t think that was a realistic price. It is now evident this dual-fuel design and size of the ships was all wrong for what was required.
‘Some people have an awful lot to answer for, but the Scottish Government doesn’t want to be blamed. I believe there should be a public inquiry.’
The Scottish Government has accepted Audit Scotland’s recommendations.
Economy secretary Kate Forbes MSP said: ‘We knew the challenge we took on when the Scottish Government rescued Ferguson from administration in 2019 but it was a challenge worth taking on.
‘We saved hundreds of jobs and we stand by our commitment to the shipbuilding communities in Inverclyde, and our island communities that rely on the vessels.
‘There is still work to do to complete both the vessels and turn around the business.
‘Until those vessels are serving the communities for which they were built, we will not let up in our drive and determination to get them finished.’