Nicola Sturgeon today defended her disastrous ferries contract, despite claiming she wouldn’t sign the same deal again.
Under pressure from Douglas Ross at First Minister’s Questions, Sturgeon refused to guarantee that costs for the ferries will remain at £250 million, which is already two-and-a-half times over budget.
Former Scottish Government shipbuilding adviser, Luke van Beek, said the final cost could rise to between £350 and £400 million.
The Scottish Conservative Leader also pointed out that the decision to go ahead with the ferries contract without the usual safeguards went against international guidelines.
Guidelines by shipping association BIMCO say that a refund guarantee is the “financial cornerstone” of a shipbuilding project. They state that “it is unlikely that any shipbuilding contract would be signed if there was no such guarantee”.
Audit Scotland’s report said that CMAL have stated they will not award a similar contract again “regardless of the views of Scottish ministers”.
Scottish Conservative Leader Douglas Ross said: “This is so important because people need these ferries to live and work. It’s essential for their livelihoods.
“But Nicola Sturgeon is lost at sea. The First Minister is somehow trying to claim her government were right to sign this deal - while accepting she wouldn’t agree to it again.
“She is in denial about how badly wrong her government got this contract, even though CMAL, a company owned by the Scottish Government, have made it clear they are prepared to ignore the views of Scottish ministers in the future.
“Nicola Sturgeon signed a contract against the advice of experts. She started building ferries without agreeing a final design. She threw good money after bad and has run up a £250 million bill. Worst of all, she removed the essential safeguard that would have protected Scottish taxpayers.
“The public is going to be left picking up the tab for Nicola Sturgeon’s mistakes - and we don’t even know how big that bill will eventually become.
“Nicola Sturgeon refused to guarantee that costs will stay below £350 million. The final bill here could still spiral out of control further.
“The Deputy First Minister John Swinney said in 2014 that the SNP would replace 12 ferries for £250 million. They haven’t even built one for that.
“The deal that the First Minister is so proud of has become a disaster and a sign of this government’s incompetence.
“The only lesson this government seems to have learned is how to send ferry contracts abroad to Turkey and Romania.”
Notes
Luke van Beek, former Scottish Government shipbuilding adviser, said the costs of Hull 801 and 802 could spiral to £400m. Van Beek said of Glen Sannox and Hull 802: “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.” (Sunday Post, 20 March 2022, link).
The refund guarantee guidelines are here: https://www.bimco.org/contracts-and-clauses/bimco-contracts/refund-guarantee-for-shipbuilding-contracts
Page 61 of the Audit Scotland report last week said: “CMAL has stated that, as per its previous practice, it will ensure that only shipbuilders who agree to provide a full refund guarantee can qualify as a preferred bidder. In addition, if a preferred bidder subsequently retracts the offer of a full refund guarantee, CMAL states that it will not award it the contract, regardless of the views of Scottish ministers.” Source: https://www.audit-scotland.gov.uk/uploads/docs/report/2022/nr_220323_vessels.pdf
John Swinney’s quote on building 12 ferries for £250 million is here: http://archive2021.parliament.scot/parliamentarybusiness/report.aspx?r=9497&mode=pdf