Chamber and committees

Thank you very much, convener. I appreciate the opportunity to provide the committee with an update in relation to the written authority that I provided in May to secure the continued build of vessel 802 at Ferguson Marine Port Glasgow.

During the meeting of the committee on 1 June, when the director-general economy was in attendance—as well as in the recent Public Audit Committee debate on 8 June, which I responded to—it was clear from the outset that the committee was interested in the process of written authority, as the steps that a minister takes in that regard have not been taken in quite some time. The process is rare in Scotland, so I am of course more than happy to discuss the detail of it during this session.

As part of the process for providing written authority, I was satisfied that the accountable officer—in this case, the director-general—scrutinised and interrogated the projected costs that FMPG provided and assessed those costs against alternative options. That work followed an independent assessment of the assurance work to test the underlying assumptions and robustness of the data on the estimated cost to complete vessels 801 and 802.

To be clear, if the written authority to complete vessel 802 at Ferguson’s were not provided, we could be looking at a delay in deploying a new vessel to May 2027 at the earliest—four years from now and two and a half years after 802 is due to be delivered. As I advised at the time, I do not consider it acceptable to ask our island communities to wait that further period, and I continue to stand by that.

Although the impacts on our island communities and on our economy are not covered by the value-for-money assessment, they have guided the decisions that I have taken, which recognise the broader social and economic benefits of completing both ferries and ensuring that the yard continues to have a strong platform on which to progress and prosper. I remain committed to supporting a sustainable future for Ferguson Marine; providing written authority confirms the Scottish Government’s intention to deliver vessel 802 at the yard and provides a platform on which future success can be built.

As you have said, convener, I am joined by Colin Cook and Kate Hall, and we look to answer any questions that you have in your scrutiny of the process behind the latest written authority that I provided.

To be clear, I do not think that that characterises the director-general’s statement appropriately. We considered whether anything could be released, and it was decided that the report and its contents were commercially sensitive and that releasing the report would put the competitiveness of the yard at risk, so it would not be appropriate for us to release it.

Yes, I requested access to it to ensure that I was fully informed about the work that had been undertaken and to ensure that I was confident that it was a robust assessment of the costs and that the value-for-money assessment was robust and accurate. However, I stress again that that is a relatively narrow value-for-money assessment that does not take into account the wider considerations that I must take into account, as a minister, including the delay for island communities and the future of the yard, the workforce and the local economy in Inverclyde.

Yes.

A decision was taken in the Government, jointly by officials and ministers, that the commercial sensitivity of that information meant that it would not be appropriate to release the report. There is nothing in it to hide. There is no issue with the numbers—that is not the problem. The problem is the commercial sensitivity of the report and the fact that that report is the intellectual property of Teneo. That makes it difficult for us to release it. We do not want to put the competitiveness of the yard at risk. I think that you alluded to that, yourself, convener, in your letter. However, to put that in the public domain absolutely would put the competitiveness of the yard at risk and jeopardise its future.

I am happy to provide the full timeline of events in writing to ensure that I get the exact dates. The process that was undertaken led to the decision being taken on 14 May, when I gave the written authority. I was before Parliament on 16 May to ensure that I was informing it at the earliest possible opportunity, holding myself accountable to colleagues for the fact that I had taken that decision. I have a full list of the dates that run up to the decision, which I am happy to provide in writing so that the committee can see them.

It has been acknowledged by the committee that we proactively released and published more than 200 documents on the Government’s website in relation to the on-going process at Ferguson’s. We have offered ourselves—Gregor Irwin has been before the committee, and I, as cabinet secretary, and Mr Cook and Ms Hall are here today—and we have published as much as we can without putting the yard at a competitive disadvantage. We are going as far as we can to be transparent and to let people understand the decisions that we are taking and why we are taking them.

The narrow value-for-money case that I describe is in the direct comparison between completing vessel 802 and procuring elsewhere, with elements of economic consideration being part of that. In his letter to the convener and to me, Gregor Irwin sets out some of the uncertainty that there is within the market. The cost comparison meant that, in the value-for-money assessment that he has to carry out as an accountable officer, he was not able to conclude with confidence that there was a value-for-money case for completing vessel 802 at the yard.

The consideration that I feel that I am duty bound to take is much wider. It includes the cost to the islanders of a further delay in the vessels. We already know that our island communities have suffered significant disruption. As somebody who was born and brought up on an island, I know how difficult a time people in the islands will have been having, so I am acutely aware of the need to deliver the vessels as quickly as possible. That was at the forefront of my consideration.

Alongside that, there is also the consideration of the future of the yard. The narrow value-for-money assessment is neutral on whether the future of the yard rests on vessel 802 being completed at Ferguson’s or procured elsewhere. I felt duty bound not to consider that neutrally because I felt that, if vessel 802 was not completed at the yard, it would have been put at risk. That was part of my consideration, along with the workforce and the contribution that the yard makes to the local economy. I have heard directly from like likes of Stuart McMillan and Ronnie Cowan about their experience in the local community and about the discussions that they have with those from local businesses, who told them that, without the economic contribution that the yard makes, their businesses would not be viable.

I have to make a wider consideration that goes beyond what has been described as the narrow assessment, which is about the cost to complete at the yard versus reprocuring elsewhere and also elements of economic consideration beyond that. What I have to consider goes much wider, and that is why I made the decision that I did.

To be clear—I hope that I am not putting words in Mr Irwin’s mouth—I do not think that that was a decision that was requested because there was advice against proceeding in that direction from colleagues in the Government. The decision was made because Mr Irwin could not be satisfied, based on the economic uncertainty, inflation, the other elements of information that were available and the direct cost comparison between completing and procuring elsewhere, on that narrow value-for-money element.

Mr Irwin was satisfied on the other two elements—on the appropriateness of our proceeding—and I think that that has been set out to the committee. However, no, we are not able to release the report, as I have said. We hold very dear the future of the yard, and we want to ensure that that is protected, as I am sure that you understand, convener.

We have to publish them. The Scottish public finance manual sets out how the accountable officer must go through that process. I believe that the previous written authority was in 2007, but there have been numerous such decisions at a UK Government level during that time. I am happy to furnish the committee with more details in my correspondence with the convener on the timeline, which I spoke about earlier.

Such decisions are a rare occurrence in Scotland. I am pleased that that is the case, and I hope that they will not be required routinely, as they are elsewhere. Given that they are so rare, I understand the committee’s interest in how the written authority came about, which is why I am more than happy to be here today and to provide as much information as I can about the process that was gone through to arrive at that decision, so that the committee can have confidence in that regard.