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File:Glen Sannox launch.jpg

Glen Sannox.

The ferry fiasco is an ongoing Scottish political scandal relating to the construction of two ferries (Hull 801 and Hull 802) by the Ferguson Marine Ltd, for the state-owned ferry operator Caledonian MacBrayne under direction of a public infrastructure authority, Caledonian Maritime Assets Ltd (CMAL), and the Scottish Government, headed at the time by First Minister Nicola Sturgeon of the Scottish National Party.

In addition to major delays and cost overruns, the main contractor Ferguson Marine was nationalised.

Background

Caledonian MacBrayne (CalMac) have an effective monopoly over ferry services to Scotland's numerous islands, which are homes to approximately 45,000 people. They provide "lifeline services" to 22 of the bigger islands and on average its 34 vessels complete 466 crossings a day. Delays and cancellations in recent years have been blamed by CalMac on aging ferries. The average age for each ferry is 24 years old, of the 10 largest ferries, four are over 30 years old, which is beyond their expected operational life and the MV Isle of Arran 39 years old. Research shows the replacement of ferries fell from one every 14 months from 1993 to 2007 (with 33,350 tonnes launched), to one every 36.1 months from 2007 to 2021 (with 16,188 tonnes launched).

Procurement Process

The source of the scandal starts in the summer of 2014 when the last shipyard on the lower clyde, Ferguson Marine Ltd went into administration. In August of that year, and a month before the Scottish Independence Referendum Alex Salmond brokered a deal to allow industrialist and prominent supporter of Scottish Independence Jim McColl to step in and buy the business. Shipbuilding is an emotive issue, and the deal allowed Alex Salmond to promise "the reindustrialisation of Scotland" during the campaign. A year later the business was awarded a £97 million contract to build two ferries, one to serve on the Isle of Arran and replace the MV Isle of Arran, and the second to sail between Skye, North Uist and Harris. Inverclyde SNP MP Ronnie Cowan described this decision as "just reward" for the investment McColl had made in Ferguson Marine.

At the time that contract was awarded there were concerns that Ferguson Marine had not built any ferries of this size in the recent past. The management team had recently been installed, and had no experience of building a ferry of this size. The finances of Ferguson Marine were so tight that they told the Scottish Government they could not provide the financial guarantees that were stipulated in the contract. Out of the six shipyards that tendered to build the ferries, Ferguson Marine put forward the most expensive bid. As contract negotiations between CMAL and FMEL were concluding in September 2015, the chairman of CMAL, Erik Ostergard, wrote in an email "The issue is that the level of refund guarantee is not sufficient. At present the bulk of the possible engagement with a newly established shipyard with no track record at all of building ferries of this size is an unsecured risk... Equal to about £60 million which is totally off the track for what is normal practise for the shipping industry". Ostergard requested, and was granted, a letter from Scottish Ministers absolving his organisation of blame should the deal go bad.

The Scottish Government announced they were signing the contract with FMEL on the first day of the Scottish National Party Conference. The announcement was made by Derek Mackay who was then the Minister for Transport and Islands.

Design and build

The Ferries would be a new design, and use both marine diesel and liquified natural gas, which would allow the ferries to have lower emissions and allow operators flexibility over fuel sourcing and fuel costs. Another requirement was that the ferries would need larger bow thrusters and a stern thruster to make them more manoeuvrable in dock. Liquefied Natural Gas needs to be stored at -162°C and the required tanks and bow thrusters meant each ferry being 200 tonnes heavier than an equivalent vessel.

Steel was cut on the on 7 April 2016 and the MV Glen Sannox (2017) was launched in November 2017 by first minister Nicola Sturgeon and supposed to be in service by mid-2018. It emerged that windows had been painted on, the bulbous bow was made from flat sheet steel and the funnel not operational. These had been fitted so that the builder could claim a "milestone payment" from the Scottish Government. There were 15 milestone payments which would culminate in the final payment of £97 million and the delivery of the ferries. It transpired that parts of the ferry such as the bulbous nose and the rear mooring sections were put onto the ferry, even though they were ineffective, simply to trigger milestone payments. Three months before launch the bulbous bow as rejected by an inspector from Lloyd's Register, and would need to be "renewed in entirety".

Nationalisation and ongoing issues

In 2019 Ferguson Marine went into administration for a second time, and was then nationalised by the Scottish Government. Letting the yard go and the two ferries lost was "not an option considered". By March 2022, neither ferry had been delivered and Audit Scotland found the total cost to have risen to £240 million. Audit Scotland also fund "insufficient evidence to explain why Scottish Ministers made this decision" to award the contract to Ferguson Marine. The Auditor General, Stephen Boyle, described his "frustration" at not being able to review all the documentation relating to the awarding of the contract for the two ferries. Boyle went on to say, "Our judgment is not that evidence has been withheld from us during the course of our audit work". Following the report, the Scottish Parliament's Public Audit Committee undertook a series of meetings to consider the findings of the report. Just before a Parliamentary debate on the contract, Jenny Gilruth, Scotland's transport minister, produced an email to show that the contract was ultimately approved by Derek Mackay, then the minister for Transport and the Isles. Mackay had left the government in 2020 having been exposed by a tabloid for grooming a schoolboy. John Swinney was identified as providing " budget approval" for the contract, but denied responsibility for the contract itself. In a written response to the Public Audit Committee Mackay said that he had "confidence" in the recommendation, and that there was expectation the contract would receive "sufficient monitoring and oversight". Scottish Conservatives transport spokesman Graham Simpson called for a public inquiry into the fiasco. Nicola Sturgeon, told the Scottish Parliament, the "buck stops with me", claiming "lessons will be learned". She promised a full review but stopped short of a public inquiry.

It emerged that the Scottish Government had paid a further £49 million from Covid Support Funds to Ferguson Marine. A further issue is that the engines bought for the vessels had been sat idle for six years, and Dr Spyros Hirdaris, a professor of maritime safety from Helisinki where the engine manufacturer Wartsila is based, stated that there was a "high possiblity that the ferry engines won't work".

The first vessel, Hull 801 now named Glen Sannox is expected to be delivered between March and May 2023, with its unnamed sister ship Hull 802 delivered later on that year.