Meeting of the Parliament [Draft]

Meeting date: Wednesday, March 27, 2024

Official Report 1037KB pdf

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Urgent Question

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Ferguson Marine (Chief Executive)

To ask the Scottish Government for what reason the chief executive of Ferguson Marine had his contract of employment terminated yesterday.

The termination of the former chief executive officer’s contract is a matter for the board, which is appointed by ministers to provide strategic direction at Ferguson Marine (Port Glasgow) Ltd. The chair of Ferguson Marine stated that the action was necessary to ensure strong leadership, amid what a spokesperson for the board has called “concerns around performance”.

My focus, and the Scottish Government’s focus, is—as ever—on the completion of the Glen Sannox and hull 802, and on helping to improve the commercial viability of Ferguson Marine and supporting the skilled workforce.

David Tydeman was brutally sacked yesterday. He was the man with the impossible job of turning things around where the previous turnaround director had failed. In fact, to show what he was up against, last October, he told the Net Zero, Energy and Transport Committee that the design of the Glen Sannox was

“more complex than a type 26”—[Official Report, Net Zero, Energy and Transport Committee, 24 October 2023; c 4]

Yesterday was disgraceful. David Tydeman had been in post for only two years. His sacking has sent shock waves through the yard and the industry. Màiri McAllan said that it was a board decision, but Ferguson Marine is owned by the Scottish Government, so there is no way that that would have happened without her approval—the buck stops with her. I think that he was sacked for being too honest about the problems, and I think that he was sacked for demanding answers from the Government about future investment in the yard, but we were told that Mr Tydeman was sacked for performance issues. What were those performance issues? When did the cabinet secretary first become concerned about his performance? Did her predecessor share her concerns? Will David Tydeman be getting a payoff, or does he leave with nothing?

David Tydeman leaves with the contractual matters that he was due. Graham Simpson can theorise on this matter as much as he likes, but the facts are that this has been a decision for the board of Ferguson Marine, which is in place to provide strategic direction and to hold the executive team to account on performance. The board is, of course, aware of the importance that I—and the Government—place on delivery, accountability, and the prudent spending of public money. Nonetheless, this is, on its four corners, a decision for the board.

In respect of Graham Simpson’s characterisation of matters creating shock waves within the Ferguson Marine yard, I would point to comments from the GMB representative, John McMunagle, on “Good Morning Scotland” this morning, where he talked of the newly appointed CEO, John Petticrew. He said:

“John’s obviously a shipyard man. He served his time in the local shipyard in Greenock before moving ... We met with him yesterday. We’ve had meetings with him over the past five or six weeks. We’re now going to throw our weight behind John”.

Well, of course the union will work with whoever the boss is. At least the union had the guts to turn up on GMS this morning, unlike the cabinet secretary.

The new interim CEO is apparently based in Canada. I hope that he is in British Columbia, where they have an excellent ferry service that we could learn from. How is that arrangement actually going to work?

The cabinet secretary has said that there will be further delays to the delivery of the Glen Sannox. How long will they be? What is the cause of those delays? What is the extra cost? Also, now that she has wielded the axe, blaming the board, is the cabinet secretary personally prepared to commit to a date for the Glen Sannox and the Glen Rosa to be completed?

On the incoming CEO, John Petticrew has 40 years plus experience in shipbuilding. He is a resident of Canada; he will be temporarily relocating to the United Kingdom. He knows the business well. He has been a non-executive board member of Ferguson Marine (Port Glasgow) since 2022. I will certainly take the opportunity to meet him as soon as I can, to make clear ministers’ expectations around delivery of the vessels and support for the workforce.

On further delays, I updated Parliament recently with a statement on the delays that were put on the record by the management team. I was made aware on Monday of the board’s expectation that there could be further risks. I have no more detail that I am able to put on the record about that so far, except to say that it is very much my expectation that the newly appointed members of the board will interrogate that and will seek to minimise risk and cost at all opportunities.

Before we move on to supplementaries, I say that there is a very high level of interest in them. In order to get through as many as possible and to include as many members as possible, I would be grateful for concise questions and responses.

I want to thank David Tydeman for his time at the yard, but I also believe that it is time for a fresh set of eyes. More generally, I am sorry about some of the rhetoric that we have heard from Mr Simpson this afternoon. It does the yard and the workforce no service whatsoever.

Can the cabinet secretary provide an update on any future work for the yard, particularly with regard to the small vessel replacement programme and the direct award? The new interim chief executive will require all the assistance that he can possibly get from the Scottish Government; he will certainly have that assistance from the shop stewards and the workforce.

I agree with Stuart McMillan’s comments on the tone of the question and the need for a respectful tone. I do not need to repeat them, but I agree with them. I also thank Stuart McMillan for his on-going support of the yard.

On the small vessel replacement programme, ministers are considering the outline business case for it. It is an important issue and an update will be provided once a decision has been taken. However, as I said very recently in the chamber, a direct award of public contracts is possible only in strictly limited circumstances under public procurement rules. As I said, ministers are currently considering future vessel contracts from public agencies, including the SVRP.

We are rightly critical of the scandal that is costing the taxpayer £400 million, but the people who are paying the biggest price for the latest delay are the islanders who will endure yet another summer of chaos and disruption. That, alongside ferry breakdowns, is not simply an inconvenience—it will be the difference between a business surviving or folding, and between employers hiring or releasing employees this summer. What support and compensation will the Government make available to save businesses and jobs on Scotland’s islands?

I agree with Rhoda Grant, and the islanders are uppermost in my mind. That is why I have been clear that delays are entirely unacceptable. I understand the call for support for island communities, and I know that the Cabinet Secretary for Transport has been involved in that. From my perspective, I point to the relief that was granted in the most recent budget in the form of non-domestic rates relief for island businesses.

In short, I understand entirely how frustrating the delays are. I will continue to impress on the board that they are unacceptable, and ministers will continue to consider how we support our island communities, short of delivery of the boats.

To be clear, we are getting a new turnaround chief at the yard, who is replacing the existing turnaround chief, who was brought in to turn around the work of the previous turnaround chief—all at a cost of about £2 million or £3 million in taxpayers’ money. I have not heard any answers to the real questions, which are these. Why was Mr Tydeman fired? If he was fired, why is he getting a pay-off? How much was he paid off on his departure? More importantly, has he signed any non-disclosure agreements?

The decision to terminate the former CEO’s contract was a matter for the board. As I said in my opening response to Graham Simpson, the chair of the board has said that the action was necessary in order to ensure strong leadership amid what a spokesperson for the board has been quoted as calling concerns around performance. Equally, I have already answered the point about payment. Mr Tydeman is entitled to contractual payments, which he will receive, and nothing more.

In a previous response, the cabinet secretary chose to selectively quote John McMunagle, the co-convener of the GMB union at the yard. He also said that David Tydeman had

“inherited an almost impossible job”

and that

“arguably out of the six or seven CEOs that we have had, David has been the best of them”.

When is the cabinet secretary going to meet GMB representatives, as well as the workers at the yard that they represent, to hear what they have to say and to listen carefully to their concerns? Will she respond to their ask for direct awards to be made in order to ensure that we keep the yard viable and supporting the economy of Inverclyde and Port Glasgow?

I recently met representatives of the GMB in my office in the Parliament, and I will do so soon. I will shortly meet the new CEO and impress on him the minister’s objectives—the completion of the boats, the driving down of costs and the securing of a sustainable future for the yard.

The cabinet secretary dares to lecture us about respect, but where is the respect for the taxpayers who have had to bail out the ferry disaster to the tune of hundreds of millions of pounds, or for the islanders who have had to put up with endless delays, or for the workers who have been embarrassed by the shocking leadership of this Government? Did the cabinet secretary know in advance about the sacking? Did she know about the appointment of the successor? Does she know why that had to be done in a hurry, such that an interim director had to be appointed? When will somebody in the Government carry the can for the ferry disaster?

Once again, this was a decision for the board and not for ministers. I was made aware on 28 February that the board was considering taking action to address performance-related issues in relation to Mr Tydeman’s tenure. I was informed on 18 March that it intended the contract termination to take place in the week commencing 25 March.

I assume that, tomorrow, the Net Zero, Energy and Transport Committee will get an update from the yard on what is happening. In advance of that, I ask the cabinet secretary, what is the actual delay to vessel 801 and what are the actual extra costs? What are the delays to vessel 802 and the extra costs there? She must know, because she said that they are unacceptable. Can she tell us?

Please respond with regard to the substantive question, cabinet secretary.

I gave a statement to Parliament in respect of the most recently formally confirmed costs and expected completion dates. I do not have sufficient information to update Parliament with the specificity that I would want to bring to the chamber. I was formally notified on Monday of potential delays crystallising. The new executive team and the board will now interrogate those, they will update me and they will update Parliament in the normal way.

There should have been a full ministerial statement on this matter. The Scottish Government is ultimately responsible for this fiasco, yet not one of the countless ministers on the ministerial merry-go-round has taken responsibility. The GMB has been mentioned, and it has been clear that the key change that the yard needs is investment in facilities and a pipeline of future work. There is cross-party support for that, and that needs to happen now.

Does the minister accept that, if the yard does not get the investment and the small vessel contract that it needs, that is setting up the new management, the new leadership and, crucially, the workforce to fail?

I have been clear that ministers will leave no stone unturned when it comes to securing a sustainable, successful future for Ferguson Marine. The best way to secure that future, as I think everybody involved knows, is via improved competitiveness. As I updated Parliament during a statement in recent weeks, we are working with Ferguson Marine (Port Glasgow) Ltd on an updated business case, which I expect to receive at the end of this month. I will consider it and I will update Parliament thereafter.

This question was asked earlier, but I could perhaps ask again. Has David Tydeman been forced to sign a non-disclosure agreement as part of his pay-off from Ferguson Marine? Yes or no?

Not as far as I am aware.

Mr Tydeman was clear that investment was needed for structural changes at the yard, to put it on a firm footing for future orders. In fact, he said that that was required by last Christmas. Is the cabinet secretary still considering those representations?

That question, which Katy Clark is quite right to put, pertains directly to the issue of the business case. I mentioned in a previous answer that we are working with Ferguson Marine on that, we expect it at the end of the month and it will be closely considered.

A revised business plan has been prepared, and I believe that it is due to be signed off by the board of FMPG tomorrow, but the fundamental issue remains that the yard needs an order book that justifies investment. That fundamental contradiction is not being addressed by the Scottish ministers. Therefore, the new managing director is doomed to fail unless the Government can commit to investment and a forward programme of orders. That is the fundamental problem, and no litany of managing directors will solve that. Will the cabinet secretary please respond to that?

That pertains directly to matters that I have already answered. Decisions on what contracts to pursue are ultimately a decision for Ferguson Marine. I have updated members today on the small vessel replacement programme, and I understand the centrality of that, in many people’s minds, to the future of the yard. However, as I have said, direct award is possible only in strictly limited circumstances. I have also updated the Parliament in respect of the business case.

That concludes the urgent question.