Skip to main content
Loading…

Seòmar agus comataidhean

Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

Criathragan Hide all filters

Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 4 May 2021
  6. Session 6: 13 May 2021 to 25 March 2026
Select which types of business to include


Select level of detail in results

Displaying 133 contributions

|

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

No. I believe that the information that is published will show you that, because it shows, in a lot of detail, the different options that the Scottish Government looked at very rigorously. Project Kildonan looked at the different contingency options that were there. There was a lengthy period of time, so it is completely wrong to jump from May 2017 to nationalisation, and not to take proper account of all that happened in between, not least the loan provisions that the Scottish Government made, which I am sure that you may want to come on to later—

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

I am being as open as I can be. I deal with several things on a daily basis, and this was some years ago.

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

I think that it would be fair to say—I do not know whether it would always be expressed as explicitly as this—that, certainly in the months leading up to the decision around public ownership, there would of course have been concern that that was a possibility. Some months previously, FMEL had had a redundancy programme at the yard, and there were clearly very significant financial and cash-flow problems there, so of course that would have been a concern.

Just as FMEL signed up to the terms of the contract for the vessels, so did CMAL, so it was always—understandably—restricted in what it could do by the terms of the contract. CMAL’s view is that simply paying a lot more to FMEL at that time, in line with the claim that FMEL had made, would not have been within the terms of the contract, because there were not unforeseen problems. The contract had terms for modifications within it, but FMEL was not seeking to use those. If CMAL had acceded to those claims, it would have opened itself up to legal challenge from unsuccessful bidders. CMAL was at all times seeking—rightly—to operate within the terms of the contract.

As you know, the Scottish Government asked an independent Queen’s counsel to look at the claim, and that is what led to the conclusion that there was no legal basis for CMAL to make the additional payment that FMEL was requesting. CMAL’s view was that, if FMEL felt that that claim was justified, it should take it through the court process. I say again that FMEL always had that option and it chose not to do that.

The Government was looking at ways in which we could help to get the vessels completed, and to protect the yard and employment there if it was appropriate and possible to do so, over and above the contract terms. That is where the loans came in, and the options that were looked at in project Kildonan: how do we get the vessels completed but also protect the longer-term economic interests? Of course, keeping the yard open was pretty essential to getting the vessels completed. Those were the considerations that led to the decisions that the Government took.

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

Well, in answer to the last part of your question, I think I have referenced that the latest cost assessment by the current management of Ferguson’s is being scrutinised by the Government. I am not able to give you the outcome of that process, because it is not concluded yet. The current Scottish Government-endorsed estimate from March 2022, in terms of completing the vessels, is known. If there are any increases on that as a result of the latest assessment, that will be properly notified to Parliament in the normal way, but that process is under way and is not complete. I will undertake to go away and come back to you with the costs around things such as Tim Hair’s salary. Obviously, we want not only to complete the vessels—although that is the immediate priority—but the shipyard to have a good, sustainable and successful future. I make no apology for the Government continuing to behave and act in a way that supports that objective.

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

I think that the political scrutiny of the issue is absolutely 100 per cent justified. It is the understatement of the decade for me to say that the contract has not gone as the Government would have expected or hoped, so I do not complain about the scrutiny and the pressure, or the fact that I am sitting here now having these discussions. That is entirely legitimate and understood.

However, I repeat what I said earlier. Whoever deserves to be under that scrutiny and to take responsibility, or a share of it, for what has happened, that is not the workforce. As Kevin Hobbs told the committee, there is no question about the quality of the work. I have been into Ferguson’s shipyard on many occasions. Obviously, the workforce will change, and people will come and go, but there will be a core workforce that has been there for a long time.

Those workers are skilled shipbuilders and do a fantastic job; they do not deserve and should not get any of the criticism that is, rightly, directed at others—including, on some aspects of this, the Scottish Government. Assuming that they get the right support and the right project management, and that everybody else does their job in the way that we would want and expect, I have every confidence in their ability to build those vessels—and, hopefully, many vessels, long into the future—at that shipyard.

11:45  

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

If you read, as I have now done, the submission of 20 August to Keith Brown, seeking approval for the preferred bidder—and if memory serves me correctly—you will see that it was always intended that it would be publicly announced. The suggestion in that submission is that it would be the transport minister who did it. At some point after that, in the course of the process—which goes on literally every day in Government—of looking at the announcements that were coming up, judgments would have been made about whether the profile, subject matter and importance of the announcement meant that it should be a minister making the announcement or that it should be a First Ministerial announcement. That would have emerged as a result of the consideration that is what special advisers and communications officials do. They would have come to me to say, “There is a proposal that you should make this announcement,” and I would have said, “Yes, I will do that.”

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

I am happy to go and look at what came out of that meeting. From what I remember, I would have then asked officials to do certain things.

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

I was not advised on 20 August. As, I am sure, we will come on to discuss, 20 August was when the decision on FMEL being the preferred bidder was taken. That decision was taken by Keith Brown because Derek Mackay was on holiday at the time. I know that you have gone through all of that with Derek Mackay. I was not party to that decision, but I was, of course, briefed some days later, in the run-up ahead of the announcement of the preferred bidder.

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

I understand and have seen many of the submissions to ministers in the published documents. Forgive me if I sound as if I am explaining some basic things here, but there is a provision on Cabinet agendas called SCANCE—Scottish Cabinet analysis of news and current events—which I think was there for previous Administrations as well and through which ministers can report things to Cabinet without full papers that require decisions. Issues around those will usually be reported to Cabinet after the event, as decisions taken.

Procurement decisions are not made by Cabinet. We decide the policy and budget, but the Cabinet would not decide on the actual award of a contract—the Queensferry crossing is an example of that. There will not have been full papers and Cabinet decisions on all of the matters that you raise. The decisions will have been taken—

Public Audit Committee

Section 23 Report: “New vessels for the Clyde and Hebrides: Arrangements to deliver vessels 801 and 802”

Meeting date: 4 November 2022

Nicola Sturgeon

Again, there are different aspects to the issue. In relation to the original decision on how many milestones there should be and what percentage of the contract price should be attached to each of them, that was a negotiation between CMAL and FMEL. I think that Kevin Hobbs made the point to you when he was here that that is standard. There is nothing untoward or unusual about that. In fact, he made the point that there is often flexibility around that.

It has been commented that there would usually be five milestones. There were more in this contract, but as Kevin Hobbs said, projects that he has been involved in have had a range of different numbers of milestones. There was nothing untoward in that and, as I understand it, it is standard in how such contracts are structured.

That then puts an obligation on the contractor—in this case, it was CMAL—to make payments when particular milestones are reached. That would be what the legal advice was about. When it got to the point where steel was being cut, that triggered a milestone payment, which CMAL had no option but to pay. As I understand it, that is not peculiar to the contract. It is a standard part of shipbuilding contracts of the type that was used.

I think that there is an issue—although, again, as I understand it, it is not unique to the contract—in relation to the substance that needs to be evidenced about the progress on the contract before payments are made. That is one of the lessons on which we need to reflect. Should it be enough that the steel has been cut? Should it not be that that has led to progress on construction of the vessel? We need to reflect on that aspect—although, if changes to that took the approach that CMAL would use out of what is standard in shipbuilding generally, it would have implications for contracts, so that would have to be considered as well. However, that part of the matter is one of the lessons that we, and CMAL as part of that, need to reflect on.

The significant issue that ministers were involved in considering, not least because we had to give CMAL the budgetary approval to do it, was about changing the final milestone payment from 25 per cent to 10 per cent to allow, in effect, the acceleration of some of the contract price. From previous evidence and other published documentation, you will be familiar with the fact that CMAL attached particular conditions to that but Government gave the approval because we had to make funding available on a different schedule and in a different financial year from what was originally anticipated.