Shipyard chairman defends bonuses to senior staff as ‘retention payments’

The chairman of the shipyard building two new lifeline ferries that are years late and three times overbudget has defended bonus payments to senior staff.

Andrew Miller, chairman at Ferguson Marine Port Glasgow (FMPG), described the bonuses – which saw six senior members of staff awarded a total of £87,000 in 2021-22 – as “retention payments”.

Questioned by MSPs investigating why the building of the two new CalMac ferries at the shipyard has gone over time and over budget, he claimed that without such payments “the future of Ferguson Marine yard is at risk”.

The two vessels, the Glen Sannox and the as-yet-unnamed hull 802, are now not due to be completed until the end of 2023 and the end of 2024 respectively.

Build costs for the ferries, which CalMac plans to use on its Clyde and Hebridean services, have risen from £97 million to about £300 million.

Then deputy first minister John Swinney branded the bonus payments – which were made without Scottish Government knowledge despite ministers having taken the yard into public ownership in 2019 – as “reprehensible”.

And in April Humza Yousaf said he had “made it clear there should be no bonuses paid” in relation to the two vessels still being built.

The First Minister added it was “his expectation” that bonuses should not be paid for the 2023-24 financial year.

But Mr Miller defended the payments when he appeared before MSPs on Holyrood’s Public Audit Committee on Thursday.

With the shipyard operating in a “highly competitive market”, the chairman said: “It’s very important we find the talent for the senior management, it is also very important we retain the talent for the senior management, in terms of completing our journey towards eventual profitability in our five-year plan. That is all very important to achieve.

“We’ve got to be competitive.

“I don’t understand the narrative around the word bonus. These are retention payments.

Mr Miller insisted he has “due regard to the public money that has been invested in the yard”.

Committee chairman Richard Leonard pressed him on the issue, saying the ferries are now “five years late and counting and three-and-a-half times over budget”.

He added: “It beggars belief that these bonus payments are being paid.”

SNP committee member Willie Coffey said: “There’s a reasonable expectation that bonuses or incentives would be somehow connected to performance and delivery, rather than to competitiveness and retention of staff.”

Mr Miller told the committee the yard is “accountable”, but he went on to insist: “The business has got to remain competitive in the open market.

“Being competitive is having the right people that can deliver in terms of the future growth of the business.”

Senior Scottish Government official Gregor Irwin said there is a need to “provide clarity” around the issue of bonuses.

Mr Irwin, the director-general for economy within the Scottish Government, told the committee: “We need to ensure that when anything to do with pay policy which is proposed by the renumeration committee at FPMG, that the Scottish Government is consulted on that and is asked to approve it before actually any contractual arrangements are made.”

With a review taking place, he said the Government will “seek to provide clarity in this area”.

Afterwards Conservative transport spokesman Graham Simpson said the comments from FMPG’s chairman “makes it obvious that Humza Yousaf was simply wrong to say there would be no more bonuses at Ferguson Marine and that his SNP Government isn’t exercising even the most basic control over the yard they nationalised”.

Mr Simpson added: “Scottish taxpayers are picking up the bill for the SNP-Green Government’s catastrophic mishandling of the ferries fiasco, which is devastating islanders’ lives while failures are being rewarded with huge sums.”

Liberal Democrat economy spokesperson Willie Rennie said the paying of bonuses was “an outrageous policy, and it flies in the face of the assurances that Humza Yousaf gave about expecting for bonuses to be discontinued in this financial year”.

Mr Rennie added: “The Scottish Government are at it. Where are the ‘bonuses’ for islanders whose lives and livelihoods have been thrown into disarray by SNP mismanagement?”