THE Clyde shipyard that caused the SNP government major problems was considered “virtually irreversible” 15 years ago, it has emerged.
Newly opened Scottish cabinet files reveal that at that time in 2005, the troubled Ferguson shipyard in Port Glasgow created headaches for the Scottish government.
Records show that, amid strict EU regulations on state aid and free competition, Labour First Minister Jack McConnell was trying to figure out if further public contracts could be awarded to the yard.
In 2014, the now-nationalized shipyard went bankrupt, was resurrected as Ferguson Marine by tycoon Jim McColl, fell back into administration in 2019 and is currently at the core of a financial crisis by the Scottish government.
In 2015, the company was awarded a £ 97 million contract to build two CalMac ferries financed by the government, but the work went catastrophically wrong and the ships would cost almost £ 200 million and are four years behind budget.
Some £45 million in loans from the Scottish government have also been written off to keep the shipyard afloat.
A Holyrood committee inquiry last month found that a “catastrophic failure,” was the management mechanism, with blame on both sides.
Now, Ferguson’s Cabinet minutes from mid-2005 reveal a long history of creating political pain over the award of publicly subsidized contracts.
They reveal that then-Liberal Democratic Environment Minister Ross Finnie briefed the Cabinet on contracts for two new Scottish fisheries conservation vessels and a CalMac ferry that could be awarded to the Remontowa shipyard in Poland, with the loss of Ferguson due to EU regulations.
The minutes state, ‘Mr. Finnie said the situation was very complicated.
“If the contracts were awarded to the Remontowa yard, there would be no further orders for the Clydeside yard, and since the launch of their last ship a month earlier, the yard had fallen into a state that was almost irreversible.”
In the debate, Scottish ministers said that there was “a growing perception that state aid rules are being interpreted by the UK government in a way that undermines the interests of UK and Scottish businesses.”
The Cabinet noted “with concern” the prospects for the shipyard and “agreed that further work should be undertaken to examine current state aid and procurement practices” in Scotland.
The Scottish government awarded the contract to the Polish shipyard two months later for one of the fishing boats, causing Fergusons to lay off 100 workers.
“it was difficult to explain to Scottish taxpayers why public money was being used to buy a ship in Poland and make redundancy payments to shipbuilders in Port Glasgow.”it was hard to explain to Scottish taxpayers why public money was used to buy a ship in Poland and to make redundancy payments to shipbuilders in Port Glasgow.
He also told colleagues that “although work is being done to ensure that Fergusons wins the contract for a second [fishing]vessel, there are important issues that the Executive needs to urgently address regarding the application of the tendering process.”
“In particular, he said the lack of coordination and consistency in the interpretation and application of EU procurement rules between the executive and other Scottish public bodies was unacceptable.”
The top civil servant of the government was ordered to apply “as a matter of urgency” proposals to “ensure consistency and professionalism in procurement advice used by the Executive and other public bodies in Scotland.”
It was also advised by the secretary of state to determine whether the U.K. In order to ensure that important national interests can be taken into account in the role of some domestic companies, the government and the European Commission should reconsider the application of EU procurement regulations.