Ferguson Marine bosses rake in £87,000 bonuses despite ongoing ferry delivery uncertainty
A report from the Auditor General raises fresh concern about the final costs and completion dates for the two ferries under construction
Concerns have been raised about the level of bonuses which have been paid to bosses at Ferguson Marine, despite continued uncertainty on the delivery of two long-delayed and over-budget ferries.
A report from the Auditor General found six managers at the Port Glasgow shipyard had been handed a total of £87,000 in bonuses for 2021-22, without the Scottish Government being informed or asked for approval.
The firm has been mired in controversy since it was nationalised in 2019 - when problems with the Glen Sannox and as-yet-unnamed hull 802 were discovered.
The two vessels are years late and millions of pounds over budget
Originally due to cost £97 million, the two ferries are now estimated to cost at least £293 million and could rise by a further £9 million, according to Stephen Boyle’s report, which found: "There was a lack of transparency and good governance around the assessment and approval of these payments. FMPG was unable to evidence the evaluation over the discretionary element of this payment.
"The Scottish Government was not made aware of these bonus payments, and they were not subject to approval by the sponsor department.
"I would consider it as a matter of good practice and governance for FMPG to have sought advice and approval from the Scottish Government in this case."
The final cost of the ferries, the report added, remains "uncertain", with another £9.5 million potentially needed for the completion of the vessels, due to be finished in May of this year and March of next.
Continued uncertainty about the yard's future
Uncertainties also remain in the future viability of the yard, with its only income coming from the government to complete the two ferries and the secondment of 18 of its employees to the Govan-based shipyard of defence giant BAE.
"It is deeply concerning that the costs to complete these ferries have continued to escalate, whilst the island communities these boats are meant to serve remain significantly impacted," the Auditor General said.
A spokesman for the Scottish Government said: "The Scottish Government is committed to helping Ferguson Marine Port Glasgow (FMPG) secure a long-term sustainable future for the yard.
"We expect the company to provide a strategic business plan to ministers in due course for comment and agreement.
"It is a concern that FMPG did not inform or seek approval from the Scottish Government before bonus payments were paid to senior managers. This should be done as a matter of good governance.
"However, the new senior management team is committed to consulting with the Scottish Government as required on this issue in the future. Significant progress has been made by the Chief Executive and Chair of the Board on the governance structure at the shipyard over the last 12 months.”
"Widespread failure" has been "handsomely rewarded"
Scottish Tory transport spokesman Graeme Simpson said islanders would be wondering "when this SNP ferry fiasco will ever end".
He added: "It is also deeply concerning that widespread failure has been so handsomely rewarded with management receiving near six-figure bonuses, even without SNP government approval.
"The SNP's ferry scandal demands an independent inquiry to find out the whole truth of this appalling saga."
David Tydeman, CEO of Ferguson Marine said the current board of directors and the Remuneration Committee have accepted the feedback from the Auditor General of Scotland with regard to performance incentives paid to senior managers for the financial year to end March 2022.
“We have taken on board the remarks from the Auditor General for Scotland. The Ferguson Marine board has already introduced greater transparency and governance in terms of future retention incentives. Scottish Ministers appointed a new chair, Andrew Miller, in January 2023 and we now have in place a framework that will improve the governance of future performance-related payments.”
"We believe there is a strong future for the yard"
He added: “We appreciate the points Mr Boyle is making regarding the completion of the ferries/funding gap, given that the shipyard is funded by public money. However, it is important to understand that the gap he identifies is largely to cover increased contingency expenditure – recommended by independent experts appointed by the Scottish Government, as well as funding for additional warranty spend that may arise in the 12 months after we hand over the vessels. I would stress that the construction costs to build both vessels are not a major contributing factor to this funding gap. FMPG is largely holding to the budget submitted in September 2022 to complete construction.
“Looking ahead, post-delivery of the two LNG hulls, we believe there is a strong future for the yard based on two visible pipelines: winning further shipbuilding contracts from CMAL as well as contracts for BAE to support its T26 frigate programme by building modules within the yard ready for assembly at its Govan shipyard. We already have some FMPG staff seconded to Govan and the arrangement is working well.”