 I welcome everyone to this. The 16th meeting of the Public Audit Committee in 2023. We've got apologies this morning from Colin Beattie and Bill Kidd. I'm pleased to welcome our substitute Good Morning Bill. The first item on our agenda is for the committee to consider whether or not to agree to take agenda items 3, 4 and 5 and 6 in private, how we all agreed. Then we'll turn to the main business that we have this morning, and that's agenda item 2, which is consideration of the 2021-22 audit of Ferguson Marine Port Glasgow Holdings Limited. We are, this morning, joined by four witnesses who will give us evidence on their perspectives on the report and will answer the questions that we've got about it. So I'm very pleased to welcome this morning the chief executive officer of FMPG, David Tideman. Alongside Mr Tideman is Andrew Miller, who is the chair of the board of FMPG Holdings Limited. From the Scottish Government we're joined by the director general economy, Gregor Irwin, and alongside Mr Irwin is Colin Cook, who's the director of economic development in the Scottish Government. We've got quite a number of questions to put to you, but before we get to our questions I'd like to give you the opportunity to make short opening statements. First of all, I will invite David Tideman to give us a short statement. Mr Tideman. Good morning, convener, and committee. Thank you for the opportunity to come here today to bring you up to date on the activity at Ferguson Marine and to take any questions you might have for me or our chairman, Andrew Miller. Andrew and I are both aware that since your invitation to this committee Audit Scotland have issued an amendment to their section 22 report correcting timings of decisions made by FMPG remuneration committee in 21, which we welcome. When I started with Ferguson Marine in February 22, the board tasked me with three issues. Restoring confidence, delivering Glen Sanex and Hull 802 and securing a future for the yard. It was very clear to me that the delivery dates in 22 and 23 for the Glen Sanex and Hull 802 were not achievable and that relationships with Seamelt had broken down. I'm sure you will remember your committee's visit to the yard last autumn and I confirm for the record that the views I set out to you just before Christmas on the reasons for the delays and cost increases for the two vessels remain the same. I remain firmly of the view that management mistakes were made in the recovery from administration by FML in 2015-16 and by FMPG in 2019-20. Between them, these mistakes embedded unrecoverable delays into the programmes. The mistakes mainly related to design management, build sequencing and contracting strategies. I also set out to you that the rest of the overall increase had come from pricing, inflation, design and specification costs and from time related costs, recognising that the ferry's budget will by the handover of 802 have covered the yard overhead costs across a 10-year programme. In summary, my view remains that the increases came from four almost equal parts, mistakes by FML, mistakes by FMPG and from the pricing and time impacts. As discussed in your visit, Seamelt and Ferguson are now working well together with a senior member of Seamelt's management, seconded into my leadership team at my request since March last year. As you know, the announcement by the cabinet secretary two weeks ago finally closed the due diligence process that the Scottish Government has run on the costs we presented to them last September and the delivery dates we set out in March this year. To confirm, we may infirmly target it on delivering Glen Sannocks before the end of this year and 802 before the end of next year. Covena, I began my career in the govern shipyards more than 40 years ago and the current UK shipbuilding market is the most boeint I have ever seen. Demand is exceeding capacity. There is more than 250 million of suitable work for Ferguson over the next five years from BAE and the Seamelt small ferry programme and this combination creates a really positive opportunity for us to get back on track and to be competitive. I'm very pleased to advise that work has started with BAE at the Ferguson shipyard and this is making a big difference to morale on site. We're happy to take questions. Thank you. Thank you very much indeed and we will come to questions shortly but before I do that, can I invite Gregor Irwin to give us a short opening statement as well, Mr Irwin? Thank you convener and thank you for the opportunity to give evidence to the committee today. I joined the Scottish Government as DG economy relatively recently but I'm very clear about the significance of my role as the accountable officer for the Scottish Government's investment in Ferguson Marine and Port Glasgow. Objectives of Scottish ministers have been clear and consistent since the yard was taken into public ownership to provide two high quality ferries to support our island communities, to support a highly skilled workforce and to retain commercial shipbuilding on the Clyde with all the historical significance and future opportunities for employment and skills that that provides. That requires my team to ensure robust governance and to act in an open and transparent way that welcomes and responds positively to scrutiny and challenge. In that respect, I'd like to thank the external auditors for their work with FBMG and the unqualified opinion that they were able to provide on the company's accounts for the financial year 2021-22. I'd also like to thank the Auditor General for the clarity and constructive nature of the recent section 22 reports and the way in which he and his team have worked and continue to work constructively with FBMG and ourselves. In his reports and in the evidence that he gave recently to this committee, the Auditor General raised questions about the future costs of the vessels and the funding provided by the Scottish Government. Since that time, we have completed an extensive process of due diligence on the cost estimates provided by FMPG and have been able to provide advice to Scottish ministers based on both value for money and the wider social and economic benefits of these proposals. It was this work that enabled the Cabinet Secretary for Economy, Fair Work and Energy to make a statement in the Parliament on 16 May, in which he set out his reasons for issuing a written authority to complete vessel 802 and reaffirmed the Government's continuing commitment to delivering lifeline ferries and ensuring a sustainable future for the yard. This committee spent some time examining the history of the Scottish Government's involvement with Ferguson's. I recognise that we have made mistakes in the past. With the support of this committee, Audit Scotland and others, we have learned and continue to learn lessons that we are building into the way in which we ensure good governance, provide a robust challenge and assurance in our relationship with the yard. This work is now being led by the Strategic Commercial Assets Division, which was established last summer to pull our expertise to make best use of external commercial, legal and technical advice and to maintain an active, challenging and constructive relationship with FPMG and its leadership team. I have here today Colin Cook, director of economic development, whose director includes the Strategic Commercial Assets Division and we will, of course, look to answer any questions that you might have about our approach to the sponsorship of FPMG. You mentioned written authority in the statement to Parliament recently and we are going to start with questions around that to which the deputy convener Sharon Dowey has got. Can you say out the sequence of events that led to your decision to request a written authority following receipt of the due diligence work? Yes. Due diligence was undertaken on the revised cost estimates that were announced by the CEO in September last year. As accountable officer for the relationship with investment in Ferguson Marine, I am required under the PFA Act to assess the regularity, propriety and value for money for any such funding proposal, as was implied by the revised cost increases at that time. We commissioned due diligence on those cost increases. It is a complex piece of work. We commissioned tenial, an external adviser, to produce that due diligence. That process took a number of months. As you can imagine, we were very careful to ensure that there was a full and proper interrogation of that analysis to make sure that we were conducting that due diligence in a rigorous and systematic manner. By the end of that process and in advance of the funding payment that was made in the middle of this month, I undertook an AO assessment based on that due diligence produced by Tenial and the analysis of my team in the Scottish Government. It was on the basis of that value for money assessment that we concluded that I could not gain sufficient assurance that continuing with Veselato 2 offered value for money. In the letter that I wrote seeking that written authority, you will see that I refer to this being a narrow value for money assessment. Of course ministers quite legitimately should take into account wider strategic and economic considerations when deciding whether to continue with funding, and indeed those are set out in the response by the cabinet secretary granting written authority. In paragraph 3 in the letter sent to you by Neil Gray MSP, it talks about your duty set out. As you mentioned, the duty set out in the Public Finance and Accountability Scotland Act 2000 in particular section 15, and is further covered in the Scottish Public Finance Manual. Given the high profile issues that we have had with the ferries, why is it taking so long for this scrutiny work and projected costs to be carried out? The role of an accountable officer is to conduct scrutiny on any significant funding request to ensure regularity, propriety and value for money, and indeed feasibility of that funding proposal. In this case, if you go back to September, the increase in the cost estimate was a very substantial one, so it was appropriate at that time for due diligence to be commissioned, external, independent, expert due diligence to be commissioned. It is by its nature quite a complex calculation that we are making, because we wanted to differentiate between the cost of completing 801 and the cost of completing 802. In September last year, that was at a moment when inflation was very high and there was considerable economic uncertainty. There were challenges in supply chains internationally, which were adding to that uncertainty. We wanted to make sure that in the estimates that formed part of the value for money calculation that we had adequate contingencies and that those who were really robust estimates that we were making the best possible informed decision. Of course, it is my duty as a senior civil servant, as accountable officer, to satisfy myself that the analysis that we are getting, even if it is independent external analysis, is robust and to test the assumptions that it contains. The one thing that I reassure the committee about is that we took this to its logical conclusion and reached the decision in advance of the payment that was made in the middle of this month, which essentially required that that judgment be made and that written authority was sought in good time before that occurred. We have been talking quite a while in the committee about whether or not a blank check was being issued for it, so do you not think that the scrutiny work should have taken place before that a little earlier? The process of scrutiny is a continuous one and it has to happen each and every stage in the process. The trigger for a more detailed scrutiny was the increase in costs estimates that were provided in September last year, but the process of scrutiny is a continuous one. There is in no sense any decrease in the level of scrutiny of costs for the completion of either vessel. Indeed, if you look at the letter written by the cabinet secretary granting written authority, that is very explicit about the need for Scottish Government officials to double down on our scrutiny of costs and on progressive vessels against the milestones for delivery. Scrutiny is continuous and we will intensify it at those moments when that is necessary and there is no letter up in terms of scrutiny of either costs or delivery against milestones. Mr Gray has accepted your judgment around the narrow value-for-money case for continuing to build vessel 802 at FMPG. Having not seen the report, is your advice to continue to build 802 or was it to go immediately to re-procure? Perhaps I can explain what is meant by that narrow value-for-money case and what it was that I was seeking authority for. As I have mentioned, the PF Act sets out clearly that I need to be assured of value-for-money of any funding proposal. The Scottish Public Finance Manual and the Green Book provide some guidance on that. It is very clear in some areas, perhaps less so in others. For example, when doing that calculation, you can take into account direct economic benefits. It is a bit ambiguous about whether you can take into account indirect and induced economic benefits and indeed we did not do that in this case. That is one reason why we refer to this as being a narrow value-for-money calculation. There is a second reason to make that calculation tractable. Our advisers are essentially compared to stark choice between completing 802 and the alternative of re-procurement, which means essentially being neutral or silent on the question of the future of the yards. Of course, ensuring a sustainable, vibrant commercial future for the yards has been a long-standing objective of ministers. Completing 802 is the only feasible path to that outcome. There is a sense in which to make that exercise tractable. We did spend quite a bit of time with our advisers working that through and deciding what the best way to do that analysis was. In the end, we decided that the only way in which we could do that was to be silent or neutral on that question about the future of the yards. The calculation is quite narrow in that second sense as well. In my letter seeking written authority, I note that it is a narrow value-for-money calculation. I note that the PFA Act itself and the SPFM, the Scottish Public Finance Manual, recognises that ministers can take into account wider social and economic benefits and the wider strategic case for continuing with a particular proposal. Indeed, when the cabinet secretary replied, he made that case. That is the basis on which the written authority was given. My role was to assess value-for-money. The language that I used was quite deliberate. I could not be sufficiently assured of value-for-money in this case based on the analysis that we did. The value-for-money assessment concludes that it would be cheaper to procure a new vessel. Did you come up with a new updated figure on the cost of the two ships and can you share that figure with us? As part of that analysis, we asked our external commercial advisers, Tenio, to really interrogate each cost line and to ensure that we were building inadequate contingencies into our forecasts. They have done that. We have satisfied that we have a good external independent opinion on what those costs are likely to be. The question of who provides evidence and a formal opinion to Parliament on costs to complete the vessel is something that the CEO does on a regular basis each quarter, if he remembers correctly, to the net zero energy and transport committees. Of course, the relevant findings will be shared with the senior leadership team at Ferguson's. The CEO will have the opportunity, at the usual time, to inform Parliament if he judges that any subsequent changes to the estimated cost to complete will be required. We do not have a figure that you can share with the committee then? I suggest that it would be appropriate for the CEO to inform the net zero energy and transport committee of any changes that he would make to the estimated cost to complete the vessels. Mr Gray's letter references forecasts total cost to complete vessels 801 and 802 since the point of public ownership. Is there a final cost on the cost of the vessels prior to public ownership? The CEO may have a better recollection of that information than I do. My understanding is that the cost of the build of the vessels prior to public ownership was £83.25 million. Do you agree with the current cost projections—not that we know what the current cost projection is, because it has not been shared—and the delivery date for vessel 802? Can you confirm the date that you currently expect to deliver 802? We are working for late summer 24, with a fallback date of the end of December 24. That is the delivery date for the second ship, 802, that we are committed to. The budget that the cabinet secretary published was £105 million, that is £105.1 million, including the small contingency. That is the figures that we set out last September and we are still working to that figure. The Cabinet Secretary for Wellbeing, Economy and Fair Work and Energy is responsible for Government investments, including Ferguson's. The Cabinet Secretary for Finance is responsible for the Scottish budget, which includes public sector productivity. The Minister for Transport is responsible for ferry services and maritime policy and supports the Cabinet Secretary for Net Zero and Just Transition. Why is the written authority sought from the Cabinet Secretary for Wellbeing, Economy and Fair Work and Energy, rather than the Cabinet Secretary for Finance, the Minister for Transport or the Cabinet Secretary for Net Zero and Just Transition? That is directed to me. Cabinet procedures with regard to seeking written authority require that any written authority from ministers must be provided by the relevant Cabinet Secretary, but also be cleared by the Deputy First Minister and the First Minister. The Deputy First Minister is also the finance secretary and the First Minister is also involved in the process. In this case, the judgment, given that the sponsorship of the yard sits within the portfolio of the Cabinet Secretary for Wellbeing, Economy, Energy and Net Zero, has my terminology wrong there. Mr Gray, given that it sits within his portfolio, he was the appropriate Cabinet Secretary from whom to seek written authority. We are pleased to see the written authority coming through. The Scottish Government has also confirmed that it will publish confirmation of any written authorisations on its website. Can you confirm whether the intention is for the Government to publish all instances of written authority provided to date on the Scottish Government's website in one place, so that this information is transparent for anyone wishing to access that information? The PFA act is quite clear on that point. If a written authority has been sought and granted, that information needs to be disclosed to this committee. If I remember correctly, the language is that it should be done so in good time, relatively early in the process. If I remember correctly, as well as the Auditor General, the requirement is that we inform the Auditor General of any request for written authority at the earliest opportunity. We did that in this case. If a request for written authority is made under the terms of the act, then that information has to be made known and made public and very soon after the act. Can I just pick up on this issue? We are very interested in written authority, because we have not seen one since 2007. You will understand why we are interrogating the procedure and who was involved and what steps were taken. You have confirmed that the First Minister and the Deputy First Minister are the finance secretary. Do you speak to the permanent secretary about those decisions? Yes. The permanent secretary is the principal accountable officer. He is very much part of the process and is involved in both ensuring that the process is a signed one and that we are following our obligations as accountable officers and the terms of the PFA act complying with the Scottish Public Finance Manual. The permanent secretary was involved in providing advice and would have been very much cited on relevant communication about that. Under the Public Finance Manual, you are obliged to speak up if you think that something is not value for money, which you did. Do you not think that you have blurred the lines a little bit between your role as an impartial civil servant and the justification that appears in your letter to Neil Gray, which we have a site of, around Government policy objectives and ministerial decisions? You stray into that territory. Why did you feel that it was necessary to do that? I am very clear about my obligations under the PFA act. I am required to take a view on value for money. If I judge that I cannot be assured of value for money in the case of any particular funding proposal, I need to seek written authority equally. I am accountable to this Parliament in respect of my role as an accountable officer. That is a direct accountability to this Parliament. Equally, the PFA act recognises that ministers may have wider considerations that they wish to take into account. As a senior official, we provide advice to ministers to help them to implement their policies and ministers' objectives. If MPG has been clearly stated that its long-standing objectives have not been significantly altered over the course of time, the civil service also has an obligation to Scottish Government ministers to provide them with advice that allows them to implement their policies. I guess that my question is—again, forgive me, because these are steps taken by a minister that we have not seen for a very long time. Rather than simply saying that you do not think that this represents value for money full stop, you then go on to elaborate about there being entirely legitimate and important factors that ministers can take into account. Do you not think that that is straying into territory, which is about governmental policy? Is not your job simply to say whether or not this meets the test of propriety, regularity and value for money? It is certainly essential that I do what you have just described. The letter seeking written authority is clear on that point about regularity, propriety and value for money. As an accountable officer, I am accountable to this Parliament for the exercise of my obligations under the PFA Act. At the same time, we are accountable to our ministers and we provide them with advice that allows them to implement their policies. The letter recognises that, as the PFA act does itself, there may be wider considerations that ministers wish to take into account when deciding to proceed with a particular funding proposal. That is what has been done in this case. However, it is a very much on the one hand and on the other piece of advice that you are giving, which I find an interesting approach. Can I move on to something else around the written authority decision? You have mentioned in answers to Sharon Dowey about external commercial advisers. Are you prepared to share the workings of those commercial advisers with the committee? The Government absolutely remains committed to an open and transparent approach to our decision making. That is going to be a yes, then, is it? Discuss with the Auditor General and his team what we will be able to share in regard to the AO assessment and what additional information we can provide to Parliament. There are commercial sensitivities involved in this type of assessment, and that will place constraints on what we can put into the public domain, but our commitment is to be as transparent as we can be, and we will work that through. As I said, we are in discussion with the Auditor General and his team, but there are commercial sensitivities, and that will place limits on what we can share. We understand that. We have stated as a committee on numerous occasions that we are fully behind the success of FMPG in that yard, winning more work and being successful. You have mentioned a few times the Scottish Public Finance Manual. There is a section in the Public Finance Manual about this committee and about your accountability, not just to Parliament, but to this committee in particular. It says in the advice to you as the Accountable Officer in that finance manual, you may also be called to satisfy the committee that all relevant financial considerations were brought to the attention of ministers. With that in mind, would you be prepared to share that information with us? I can provide you with assurance that all relevant financial matters have been brought to the attention of ministers. That is the nature of the process that we have gone through in commissioning due diligence, interrogating that, producing a detailed value for money assessment and then reaching the conclusion that it cannot gain sufficient assurance that value for money for the completion of 802 is sufficiently assured. It was on that basis that I sought written authority. We have provided ministers with the information that they require and the assurance that they need. I go back to my earlier question. Are you prepared to share that with this committee? Will you understand entirely that there may be some elements of the work that you do in relation to FMPG that contain matters that are commercially sensitive? Presumably, there is a way of supplying that information to us that could be done in such a way that it would not compromise commercial and confidential information. As you have acknowledged, we all have a shared interest in ensuring the commercial success of the yards. The competitive position of the yards is absolutely central to that. We need to be careful that we do not share information that is commercially sensitive or that we do not put that into the public domain. What we are doing and will work through with the Auditor General and his team is to see what we can do by way of sharing additional information. That process is ongoing. It is not yet complete. We absolutely need to get it right because we are committed to transparency. We want to ensure that we are working as much as we can, but, while respecting that constraint, there is some commercially sensitive information. We need to be careful that that is not placed into the public domain intentionally or inadvertently. We just need to make sure that we get that right. We will take advice from the Auditor General and his team in that regard. Can you give us this morning a timescale for when you will make decisions about what can and cannot be released? I do not have a firm timescale for that. Roughly? I would imagine that it would be a matter of weeks rather than months. It is important that we get that right. All matters of sharing information that potentially impacts on the commercial viability of the yard, we absolutely need to make sure that we get that. We make those judgments in the right way. We do our best to be as transparent as we can be, but we will work through that process as diligently and as promptly as we can while making sure that we make those judgments in the right way. I will turn to something else that will put under scrutiny your commitment to openness and transparency. That is the first marine international report. Can you explain to us why you are not prepared to release that into the public domain? As I have said already, we remain committed to transparency. The first marine international report is an important piece of work. It was commissioned in the summer of last year and the report was produced in January this year. It provides a detailed assessment of what it would take to bring the productivity of the yards up to the standards that are required of a typical Northern European shipyard so that the yard is fully able to seize the opportunities that the CEO has already alluded to and so that we can do everything possible to ensure that the yard enjoys a strong commercial future. That piece of work by its very nature goes into detail about where the yard is currently performing well and where the productivity challenges are greatest and what needs to be done in order to address those. That information is inherently commercially sensitive. That is an area where freedom of information legislation provides exemptions so that information that is commercially sensitive, which, if released into the public domain, could impact on the competitiveness, the ability to compete and win new business, the legislation provides a basis upon which the commercial sensitivity of that information can be protected. That would be appropriate in this case. According to your letter to me, when I add in the VAT, a quarter of a million pounds of public money has been spent on commissioning that FMI report. You are saying that there is nothing about it that can be published? It is a very important piece of work. It is absolutely right that we commissioned first-class external independent technical advice that allows us to understand in detail what it would take to bring the productivity of the yards up to the average standard for a Northern European shipyard so that FPMGs are well placed to win new orders and to get on that path to a sustainable commercial future. That advice may not come cheaply, but it is very important. It is absolutely integral to the work that is under way in the yard at the moment to develop a long-term business plan. It is still on-going, but that work is really important. This is what it takes. This is one of the things that is necessary in order to make sure that the right decisions are taken to put the yard on to that pathway towards a sustainable future. Why is the report covered by a non-disclosure agreement? There is no non-disclosure agreement between the Scottish Government and FMI when the report was commissioned. I should add that there was an open procurement exercise in competition before FMI was appointed to do that work. At the point when FMI was appointed to do the work, there was a discussion about whether a non-disclosure agreement between the Scottish Government and FMI was needed. The view of officials at that point was that it was not because the freedom of information legislation provided adequate protection for commercially sensitive information. In this case, it clearly would be commercially sensitive information, so we felt that adequate protection was provided to them. Separately, the CEO may wish to speak to that point. The yards entered into a non-disclosure agreement with FMI, but I might pass to David Tideman to speak to that point. Yes, Mr Tideman. Because the contract was between FMI and the Scottish Government Direct, there were terms of confidentiality, I understand, in that contract between the two parties. It is entirely appropriate that, before FMI released information to us and FMPG back to FMI, we needed an NDA between us because we were not party to the actual contract terms of the engagement. Okay, so whose name is at the bottom of that contract with FMI? Is it the Scottish Government or is it FMPT? It's direct between FMI and Scottish Government. We had to share information with FMI, and FMI have intellectual property in the way in which they compare shipyards across the world, and that's something that was important to them in their terms and conditions that they protect that IP, the way in which they develop the algorithms. When I look at the FMI website, they say that we act with integrity and transparency, holding ourselves to the highest standards. As I read reports about this, it was FMI who instigated the non-disclosure agreement. It wasn't the client who was buying the services of FMI, it was the contract to themselves. It was mutual between the senior director in FMI and me where we were about to share information that was sensitive and, as I said, it was outside of the contract between FMI and Scottish Government. So, it was entirely appropriate to have a commercial NDA in those circumstances of sharing information. But again, you understand, Mr Tydman, that a quarter of a million pounds of public money has been spent on this piece of work and we're being told that we can't have any sight of it whatsoever. I do understand that the document is the property of Scottish Government made available to me, but it's a Scottish Government's decision. It's Mr Irwin's door that we should be knocking on. I mean, just finally on this point, presumably one of the principal recommendations was about productivity and you've mentioned other Northern European yard comparisons and so on. But if I look at the minute of the FMPG board, which Mr Miller I think you would be chairing, on 2 February 2023 and I think Mr Cook you were in attendance at that board meeting, there is a part of the minute which says CM, which I understand is Chris Mackay, who's a non-executive director, noted that the FME report or reports it says, and we'll come to whether there was one report or two, is saying the yard needs to be three times more productive. So, some of the information of the FMI report is out there in the public domain. Yes, if I can comment on that, there are two reports. The first FMI report was done nearly two years ago, 18 months ago, direct between FMPG and FMI. That was effectively an audit at that time, post recovery from administration and during Covid times about where the yard is and the FMI study produces 10 or 11 different areas, anything from how we handle steel work, how we handle systems management processes and it was a snapshot in time an audit 18 months ago. Okay, I mean finally Mr Irwin, let me come back to you on this because in your letter to me dated the 19th of May, you say, the reason that you're not prepared to disclose any of the FMI report is because we need to protect their methodologies and intellectual property, but presumably any consultant hired by the Government has got a methodology and relies on a certain extent of intellectual property rights. So why on earth would any report ever by any consultant be published if that's the criteria that's been applied? So I think that there are particular elements of the technical approach that FMI take to doing this type of work, which David Tigman's already alluded to, which mean that they do have intellectual property that they want to protect. There is exposed if reports are published, detailed reports are published subsequently. Essentially their competitors can take and adapt their intellectual property if that is done. That is, as I understand it, that is what we have heard as Government officials. We have to respect what we have heard from them. That may be one of the reasons why the Yard had a conversation about an NDA. We concluded that we could provide sufficient protection for commercially sensitive information, whether it was the intellectual property of FMI or information that could potentially put the Yard at a competitive disadvantage if it went into the public domain without an NDA and instead using FOI exemptions. We understand that there are commercially sensitive pieces of information that would almost certainly be contained in that report, but I'm not quite sure that we accept your argument, Mr Irwin, that the methodology of the consultants needs to be protected. I'm going to turn to another area that we spoke to the Auditor General about when he was before the committee. That's around the overall framework agreement for pay. The Yard is nationalised towards the end of 2019. Why did it take until March 2022 before a framework agreement on pay and remuneration was agreed? The framework agreement is a broad document that sets out a range of expectations in the relationship between the Scottish Government and the Yards. It certainly covers pay, but it covers all aspects of the application of the Scottish Public Finance manual. The production of that agreement took time because it is an important document. It was important that we got it right. As the Auditor General noted in his evidence to this committee a few weeks ago, the FMPG has an unusual status in that it is both a non-departmental public body with all the obligations that that entails to apply the Scottish Public Finance manual. The CEO, as an accountable officer with responsibility to this Parliament, this committee for the funding that is provided with that on the one hand, but also the Yards requiring to act in a commercial manner and to be commercially competitive. That creates an unusual status and to some extensive tensions that need to be addressed in the framework agreement attempts to do that. Right from the start, at the point of nationalisation, when the Yard was brought into public ownership, the sponsorship team within the Scottish Government told the Yards that at that point they were obligated to comply with the terms of the Scottish Public Finance manual. At that time, advice was provided to the Yard about what that implied. Of course, that advice, there was a flow of advice over time, up until the point when that framework agreement was concluded in March last year, which in a sense then attempted to consolidate that into a single place. That framework agreement has now been in operation for 15 months and we have, during that time again, continued to offer subsequent updates to the Yards, including specifically on questions to do with public sector pay. For example, the Strategic Commercial Assets Division, the sponsor team within it, told FMPG in a letter on 9 February that Scottish Government officials would work with pay policy colleagues to provide advice to FMPG on pay proposals and to ensure that they comply with the terms of the Scottish Public Finance manual. The agreement itself says that, while FMPG is not required to comply with Scottish with public sector pay policy, there is an expectation that remuneration policies and decisions will be broadly consistent and that any significant deviations would require further approval. That has recognised within the framework agreement. I think that the also can see and it has been commented on in the committee that there is some ambiguity about what that means in practice. This is an example of one of those areas where, given that we are in the process of revising that framework agreement, we absolutely want to make sure that we can do everything that we can to provide the clarity that we all need in this relationship about what that should actually mean in practice. Mr Tideman or Mr Miller, do you have any reflections on the bonus payments? We are talking about this report produced by Audit Scotland, which drew particular attention to £87,000 paid out based on a 17.5 per cent bonus payment made to certain senior members of the team. The Auditor General's report has been useful in terms of giving us a checklist internally with the board and in terms of some of the issues to do with the framework that we have, some of the issues that need reviewed by the board at FMPG. FMPG is a commercial enterprise that works in a highly competitive market. It is very important that we find the talent for the senior management. It is also very important that we retain the talent for the senior management in terms of completing our journey towards the eventual profitability in a 25-year plan. That is all very important to achieve. We have got to be competitive. As David says, there is 250 million available work suitable for the Yard, and we must make sure that we have the right talent in the place to achieve that. I do not understand the narrative around the term bonus. These are retention payments. They are payments because some of the senior staff have parts of the remuneration at risk, and they have to achieve certain targets that are controlled by the REMCOM of the board in terms of the KPIs that we have. Those are reviewed regularly before any payments are made. Some of those payments are contractual from employee contracts that go way back over 10 years, and they are personal to the individuals. Any changes to those contracts that review the board is actually undertaking just now through the remuneration committee to make sure that the terms and conditions of these contracts are correct and proper as we try to maintain a competitive position in the marketplace. That review has currently been undertaken. We have to show good regard to employment contracts and employment law, and as I say, some of those people go way back to prior to the First Administration in terms of their employment contracts, which have got to be observed, and it would take individual negotiation between the people who do qualify to remove some of those elements. However, if those elements are removed without being competitive, the future of Ferguson Reign Yard is at risk. That is an interesting analysis, Mr Mill. What about having good regard to public accountability? In the end, we are talking about a project, a procurement for two vessels that are five years late and counting and three and a half times over budget. In that environment, I think that Mr Coffey said when the Auditor General was here that it begs belief that these bonus payments have been made. Incentive payments for performance. So just in terms of regard, I have good regard to the public money that has been invested in the yard and so do the board. We hold the management accountability. These incentive payments are paid across a wide range of issues. One of the issues is important, 801, 802, the other component part, David's ability to access the market for new work beyond the completion of these vessels is very, very important. Quite correctly, the new business is a component part of the overall programme of the CRAs, which David and his team have delivered in terms of new work from BAE, for instance. Therefore, against the KPIs and CRAs that are set, certain elements trigger performance payments because the salary elements are at risk in terms of the senior management. Hang on a minute, Mr Miller. This is not just an enterprise in which public money is being put in. It's owned by the Scottish Government. There's one shareholder, which is the Scottish Government. So as the chair of the board of that organisation, do you not see there being any need for there to be public accountability, for there to be public interest in the remuneration structure, not of the people building the ships but of the people that are at the top of the organisation? I understand that, and we are accountable. At the same time, as I've said, 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. Well, I think the people watching this will have a view about what's been delivered and what the performance has been like and what the outturns have been and whether that matches up to people getting a 17.5% incentive payment or bonus, as you wish. I think it will be something people will make their own mind up about. I've just got one final question, which I want to put to Mr Irwin, which is about something that was drawn out in the evidence that we had with the Auditor General, but also which is contained in the report. You mentioned earlier on about the sponsorship team arrangement. The Auditor General's view is that there is a good deal of ambiguity, is the word he uses, ambiguity about the relationship between the sponsorship team and FMPG, and how the oversight works? Actually, one of the catalysts for him drawing that conclusion is what happened with remuneration, where there was no clearance in advance of that system. Yes. The remuneration committee at FMPG decided on KPIs in November last year. That's correct. Thank you. The information about KPIs was communicated with the sponsorship team in February this year. By that stage, a contractual commitment to pay bonuses contingent upon performance had been made. When the sponsor team was informed about those KPIs, that was not a request for those to be approved. It was for information. We recognise that that is not how the process should work. We also recognise that the framework agreement—I've already read to you the relevant section of the framework agreement, so if it's acceptable, I won't read it again. There is some ambiguity in the language that is used in that section of the framework agreement. That is an area that we need to provide clarity. We need to ensure that when anything to do with pay policy, which is proposed by the remuneration committee at FMPG, that the Scottish Government is consulted upon that and is asked to approve it before any contractual obligations are made. We will seek to, as part of the review of the framework agreement that is under way in which we hope will be concluded by the end of this month, we will seek to provide clarity in this specific area as well as in other areas. Okay, thank you. I'm going to move along now and invite Willie Coffey to put some questions to you. Thank you very much, convener. Just briefly on the beggaring of the belief issue that you mentioned earlier, I think that the point that the committee and perhaps the public were making, Mr Miller, is that 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. I think that that's the point that we were making and we were genuinely surprised to learn as the Government was surprised to learn that that system was not connected to performance and delivery, because it's clearly five years later than well over budget. So it's difficult for us to understand and I'm sure the public to understand how that could continue to be maintained, but we did dwell on it a moment ago and I would probably leave it at that if that's okay, convener, and Mr Miller. I wanted to just start before I ask a couple of questions to Mr Tiedman, and it's good to see you here again in front of the committee in your chance to give us your view on how this project has ffaird since the beginning. You outlined in your opening remarks, David, that there's a number of reasons that lay behind the delays and the cost overruns, and you specifically mentioned 2015 and 2019 and events that ultimately meant that the timely completion of the vessel was unrecoverable was the word that you used and you talked about design, built sequencing and contractual strategies. I wonder because the public are so interested in this project, could you expand a little on what you meant by that and what were those issues that in your opinion meant that the project, even at that stage, was unrecoverable? I think it's important to reflect on the circumstances of Ferguson in 2014. It went into administration with only 70 staff, and the Glen Sannocks and 802 are the most complex and the largest vessels that the ardor ever built, and to place those contracts in 2015 needed a careful start to make sure that you had a robust design and a robust plan, and from what I've been able to read back on, there was quite a lot of debate over the first year with CML and FML on finalising the design as they started construction. As I showed you the committee when you came on site, they chose a build strategy at that time, which was unconventional in not putting as much outfitting into the steelwork blocks before you weld them together and largely building an empty ship, and that meant that the costs of installing pipework and other internal components was more expensive than if you were doing it in the blocks in the shed. So there were some embedded costs made by the decisions in 2015 in building the steelwork fast and a largely empty ship. Similarly, when the recovery from administration in 2019-20, the principal electrical contractor had terminated their contract, they had rights to do that. The design contractors also had termination clauses, so my predecessor had to renegotiate the main electrical contracts, had to start again with design contractors and that learning curve also then embedded time and costs. We have at this committee over many years examined a number of projects and I think it would be reasonable to say that our view of the mistakes that are made at the outset, if there are any made at the outset, usually mean that there is no successful conclusion at the end of it, either on time or on budget. We have seen a number of examples that fit that category. If you do not get it right at the beginning, you are hardly likely to get it right at the end. Would you say that that is a fair description of this entire process? Yes, I do think that it is a fair description. The embedded decisions that I talked about a moment ago caused extra manhours, caused time delays and, as I said in my opening statement, time cost money. As we have gone over a 10-year programme rather than the original four-year programme, we have had inflation and other pricing impacts as well. Just running forward to the present and just following up on my colleague Sharon Davies' questions on costs, what is the biggest contributory factor to the cost overrun for EO2? What is the biggest? It is two aspects. The build strategy, building an empty ship, as mentioned earlier, and 802 was put together, the majority of it before FMPG was set up. The build strategy was inherited by FMPG. The change of design contractor probably was the other major contributing factor. The convener was doing his level best to glean from everyone more detail about the analysis and the decisions that were reached. Inflation and cost of materials was mentioned that has that been a significant issue in the final cost estimate for 802? As I said in my opening statement, I think that it is a quarter of the impact. There is another quarter that comes from time-related costs. You could ask the same question to you, Gregor. Do you, the Scottish Government, feel the biggest elements for the cost overrun for EO2? I would defer to the CEO for his analysis on this point. We also use CMAL as technical advisers on those questions, so we do not just take FMPG's analysis of those points uncritically. We do cross-check it, but the CEO is absolutely summarised the position that we would recognise. In terms of this section 22 report, could you just ask both the Scottish Government and Ferguson's to accept the findings of the section 22 report to the Government to accept the findings and does Ferguson accept the findings? Yes, we accept the findings of the section 22 report. As I said in my opening statement, we are grateful to the Auditor General and his team for the constructive way in which they have engaged with us and continued to engage with us. We do welcome scrutiny and advice on how we should be improving the way in which we provide oversight and assurance on the relationship with FMPG. The group of Ferguson Marine accept the report, and we have used it in terms of a package of work that we are working through the board with the management in terms of tightening up certain things like framework, employment contracts, etc. We are working to resolution all the issues that the Auditor General prepared. OK, that covers the second question. I was going to ask about progress with the recommendations. I wonder if I could just ask a final question of the Scottish Government officials that are here, Mr Irwin. If the Cabinet Secretary had accepted your conclusion on the value for money assessment for 802, had accepted your conclusion, what would be the practical consequences of that in terms of not completing it? What would have happened to the yard, to the jobs and what would have happened to you if you had accepted your advice? I would need to look for the exact language that he used, but I think that there was nothing in the response of the Cabinet Secretary, which suggests that he did not recognise that, based on a narrow VFM calculation, my conclusions were, in any way, incorrect. I think that the letter acknowledged and accepted those conclusions. However, what the Cabinet Secretary was able to do was to take into account the wider economic and social benefits from completing Vessel 802. I think that we can all see that, if Vessel 802 was not completed, then securing that path to a sustainable commercial future for the yard becomes so much harder. I think that it is very difficult to see that path. So there would be quite considerable implications of that decision, and the cabinet secretary concluded that he accepted my analysis but also recognised those wider economic and social benefits of completing 802 and therefore provided written authority to continue funding the completion of Vessel 802. If I may convene the other implication that I know the cabinet secretary will have taken into account is the delay that would have occurred from having to seek a replacement for 802 from another yard. That could have been two and a half years, and as you know, repeatedly stated, the Scottish Government's objective is to put those vessels and 802 into service in Arran and to provide services to our island communities. My question was quite specific. What would have happened to the yard and the jobs? What would have happened to that 802 hull that is actually in the yard? What would have happened if we had not completed it? I would say that 72% of the people in Fergus Marine live within a 10 mile radius of the yard and it would have had devastating consequences to the local community which has suffered long term in terms of the competitiveness and also the ability to retain skills, which was one of the key elements on the acquisition in the first place, retain the key skills so that Fergus Marine can be a player in the broader opportunities of the Scottish economy. What would have happened to the hull? There is machinery inside the hull, main engines that have a value, and the steelwork has a value, I guess, that would have been put to the market. Bill Kidd has got some questions to put to you. Thank you very much indeed, convener. I think that I will probably start off with Mr Tideman and Mr Miller. On the basis that, as far as we know and as far as the public is concerned, there remain uncertainties and risks about the future and viability of the yard. At this time, it seems that Fergus Marine's only other commercial income at the moment is from a contract with BAE relating to the secondment of 18 employees. As a yard that has to maintain and grow people's confidence, can I ask if there is any potential proportion other than those 18 seconded people that you might have for commercial income plans going forward? How has this changed over time? Previously, of course, Fergus Marine was very well known yard. He had a lot of work involved and drew potential contracts in because of that. How are you looking forward for future potential for commercial success? When I first joined, it was obvious to me that the delivery dates and the budgets needed to change on the two ferries, but it was also very obvious that the scheduling of work on those ferries meant that by the end of 2022 and into early 2023 we would have skills that were not required on either ship. In fact, today we finished the last module for 802 and on Monday that wheelhouse unit gets lifted onto the bow of 802. That means that for that team in the manufacturing sheds building the modules, their scope of work for the two ferries has finished. Progressively, as we move forward during the rest of the next 12 months, 18 months as we finish both ships, more and more skills start to become available that I can't keep fully occupied on 801 and 802. We've been anticipating that and planning for it for some time and have delighted that we were able to sign a framework agreement with BAE. We also had conversations with Babcock over at Roth Seith and they have, both those yards, have more work than they can actually do on their sites. As I said earlier, this is a very buoyant time in the shipbuilding market and they need supporting contractors. We have had dialogue with Babcock about the T31 programme, but the proximity to govern and BAE with the T26 programme makes that an obvious first choice. The framework agreement that we set up last autumn said that we will have empty sheds and we will have spare key resources and can we work together to keep a pipeline of work that gradually builds up enough to keep people busy? We've started that. We have two contracts at the moment within that, not only the secondment of labour, but we've started a small project to build three units for type 26 number three and that steelwork has arrived on site. The fabrication work is just starting. We'll complete that work by October this year and that's been called the pilot project because it's starting to take seconded labour into physical work at the Ferguson Yard and we'll probably pull back the seconded labour from govern soon as that work builds up. My hope is that we can get significant work out of the type 26 programme for ships four, five, six, seven and eight and because the accelerated programme that BAE are working on means that they have to have partners around the whole of the UK just as the carriers were built with components of those ships put together all around the country and then assembled in final locations. That's the preferred strategy of BAE and Babcock for both of those frigate programmes. We hope to be a strategic partner in the type 26 programme and to put it into some scale, the hull 802 is about 3,000 tonnes of weight when she launches later this year down the slipway and a Bow Block unit for ship four for type 26 that we're hoping to do with BAE will be about 900 tonnes so each of these components represents almost a third of a ferry that put it into context. Now that can keep a programme of work with BAE can use more than half the capacity of the yard. I hope we can complement that with the small ferry programme with email. Well thank you for that. That sounds very positive. One element which is mentioned in the auditor general's report says that your workforce is actually they are skilled and therefore of course they will be sought out by others in the meantime but they're aging in general and I was wondering about what work is going on with drawing out apprenticeships and building, if you'll pardon the pun, building a future for the yard and the area which Mr Miller mentioned earlier which has been an area which has had problems in terms of decline but as young people coming on board as well as that once again another pun but is that something that has been looked at as well? Very much so. We have had three years now of apprentices, 62 I think 63 apprentices across the three years. The third year is just graduating. I know a couple of them have just got their HND, HNC qualifications. They will become part of the normal workforce as they graduate this summer. We've had more than 500 applicants for 15 places for this September and we're in the process of narrowing that down to find the final 15. We're down to a short list of 30 at the moment and we'll select the 15 candidates to start at the end of August. That's a really positive indication that people want to join the industry and want to join Ferguson. I mean obviously you want to continue growing that and take on board even more young people and others who are skilled already but what sort of further investment is going to be needed in order to maintain a competitive building programme in order that you can look forward to a future at the yard? We're working on the roadmap that the FMI report we talked about earlier helps us guide. It sets out areas that we need to improve in the way we handle plating, the way we burn plates as it arrives, the flow of the yard, some of the cranage and we're working on that plan at the moment and we'll make that public in due course once it's approved. The two vessels which we've been talking about they would obviously and being completed would provide a positive aspect to build on. Are you seeing anyone, I don't know if you're going out looking for contracts at some point anyway but are you seeing people coming to you to say that they would like you to be involved in such projects? Yes indeed. We have a small commercial team that is tracking the market and we have proposals that we've been putting into a patrol craft market but I think the most significant one that is going to create 10 to 15 years of work in Scotland is the commitment by two major operators in the wind farm market to want to build some of their ships in Scotland and we have discussions going on, we have preliminary designs we're working on. The first of those ships could be built in 2027, it doesn't fill the immediate gap but the other operator has currently placed some contracts in Vietnam, some in Spain and they want to also build a few ships in Scotland and this is to support both UK wind farm and Scottish wind farm markets. That's a very significant opportunity for us in the future. That is a future route obviously. Thank you very much for that. I just ask Mr Irwin Scottish Government and Fergus Marine are working together to agree longer term plans. How about future investment by the Scottish Government because we actually believe that the yard was going to be aiming to be privatised again according to the minister, cabinet secretary? So as Mr Timons already noted, the FMI study is one of the pieces of evidence that we're using to work with FMPG as they develop their long-term business plan. Kepex investment will be needed as part of that. That process is still on going. We will ensure that there's rigorous due diligence of any Kepex proposal and indeed we've already commissioned our external advisers to help us in that process. Once we've got a finalised version of that long-term business plan and a clear investment case is made, we'll ensure that that is examined carefully. It is clear that to raise the productivity of the yard and ensure that we can take advantage of all of those commercial opportunities that further investment will be required. The question of the ownership of the yards, when the yard was in the process of being brought into public ownership in September 2019, the Scottish Government said that at all times it would remain open to discussions with any parties interested in securing a viable commercial future for the yards and indeed the cabinet secretary on the 10th of May noted, and I'm paraphrasing somewhat, that the better Ferguson's performance, the more likely it is to return to private ownership. If interested parties come forward, we'll do what we can to ensure that the yard has returned to private ownership as a going concern. Essentially, we have an open mind. The key objective for the yard has always been to secure shipbuilding on the Clyde, to ensure that we retain shipbuilding skills, that there's a strong sustainable commercial future for the yard investment, winning new orders, taking advantage of the commercial opportunities that Mr Tideman has identified. That's all part of that. The questions around future ownership structures, they follow from that. The key is to secure a commercial success for the yard. Just on that last point, does the First Marine international report contain any opinion on public ownership versus private ownership? Not that I'm aware of, no. So we've got a little bit more information for my report. I'm now going to invite Craig Hoy to ask us a round of questions. Craig. Thank you, convener, and good morning, gentlemen. Mr Tideman, when we visited the yard, you were very keen to give us a tour and gave us a briefing, and we also gave a briefing from some of the trade unionists and also some of the frontline staff who have been there for a considerable amount of time. One of the issues that you identified was a potential cash flow issue as you were bringing in potential new work, and you were going to make a cash call to the Scottish Government. Could you just give us an update, a snapshot, on the yard's cash flow position and your expectation or anticipation of having to make any further cash calls to the Scottish Government for the yard rather than for the vessels? I think that it breaks down into three parts. The construction of the two ferries is on a monthly reimbursable, so we don't really have a cash flow problem or cash flow issue on the ferries. Future work, there's two parts. The CAPEX programme that we need to rely on to upgrade the facilities, and that's work in progress, and we won't commit expenditure until we have approval to do so, so we won't have a cash issue in that respect. Similarly, the way in which we funded the BAE work, for example, is being to agree with the client appropriate payment terms so that we don't have a cash flow issue there, and we'll do that with each contract as appropriate. So there's no concerns about cash flow at the moment? No, we don't manage the business with a cash flow issue. Just on the broader issue when we were talking to some of the staff, they reflected quite negatively on the period that, prior to your appointment and the impression was given, I won't try and find what the maritime equivalent is or was, of a kind of gravy train running through the yard and people on big salaries, potentially big bonuses, are coming in and not necessarily contributing to the health and wellbeing of the yard. Can you say hand on heart that you think that gravy train culture has come to an end now? Yes, I'm very determined that it does come to an end, and I have reduced the payroll costs by about £3 million in the last 12 months. Okay. Mr Irwin, obviously the report from the Auditor General of the Section 22 report said that the size of the bonus payments made in 2021-22-23 were unacceptable. Is that something that you recognise? In what way was it unacceptable? Both the former Deputy First Minister and the current Deputy First Minister have made statements on this. On 16 March, the former Deputy First Minister addressed the question of bonus payments directly in Parliament, and he said then that the Scottish Government was working to ensure that such an eventuality didn't occur again. The current Deputy First Minister on 27 April wrote to the Net Zero, Energy and Transport Committee that she noted that Mr Miller, as chair, has started work to reform the remuneration arrangements, and Mr Miller has already referred to that work. We can all recognise that what has happened has not been what we wanted for a number of different reasons, including the flow of information between the leadership team at FMPG and the Scottish Government. There is work under way to ensure that we address that, and we will capture that in the revised framework agreement. The work that there is under way to reassess remuneration arrangements, I think that we can all see that this is difficult because it does reflect personal contracts, some of which were inherited from the former ownership structure of the yard that were tipped across. As Mr Miller has noted, we also need to ensure that the yards remain commercially competitive. Our ministers have set very clear expectations. It is right to incentivise good work, but it is not appropriate to reward work that is not met or agreed standards. We have listened carefully to the advice of the Auditor General in this regard, and we absolutely want to make sure that we get the balance right and that we address concerns around the current remuneration structure and that we capture that in the framework agreement as well. It is quite clear that this procurement and much of the bill has been botched and bungled in yet the last two financial years. £135,000 of taxpayers' money has gone in the form of bonuses. That was £87,000 in 2021-23. Mr Miller, do you have an indication as to what that figure might be for 2023-24 financial years? Not at the moment because we are revising and reviewing through the remuneration committee a sort of modified approach to remuneration, but bearing in mind the competitiveness and our ability to retain staff. Clearly, it is not in the best interest of the yards using public money to generate poor performance. It is not that we have in the past because the KPIs and KRAs are stated and reviewed every six months by the remuneration committee with David's input and personal performance reviews are conducted with individuals who qualify under some of these historical contracts. It is a work in progress and we understand the environmental tension around that and we hope to reach a conclusion with the support of the Scottish Government around about the end of July this year. It is powerfully reasonable to accept that there could be performance-related payments in this present financial year? Yes, it is because of the contractual. It is the points of law and they do exist. It is very difficult to say to Sandu that we are pulling that from your contract. I want to draw attention to the First Minister speaking on 27 April, who said in response to my colleague, Ducrus Ross, that the bonuses should not have been paid, that he agreed with that, and that he had made it clear that bonuses should not be paid in relation to vessels 801 and 802. He went on to say that it is my expectation and the Government's expectation and the chair of Ferguson Marine knows that there should not be bonuses in the current financial year, 23, 24, in relation to vessels 801 and 802. So what is the First Minister forcing your hand and asking you to break employment contracts? No, he is making a statement, but we have to pay due regard to the contractual obligations under the employment contracts that were set many, many years ago in some instances. As I say, we are reviewing the situation with the input from the senior management team to try and come to a conclusion, which is acceptable by both parties. So the First Minister and the Scottish Government are off the expectation that no bonuses will be paid, but unfortunately they have not looked into the contract sufficiently to realise that you are obligated to continue making bonus payments now into the future. Well, we have, you know, there was a general made a comment in section 22 report, although we will say prior to that we were looking at this issue, because I joined the board about four or five months ago and I realised it was a situation that had to be dealt with and reviewed. Are you feeling that you are coming under some political pressure to go and renegotiate the contracts? No, no, the board are independent, the people that are appointed on behalf of the Minister to govern the business and organise strategy and come to a ffiscally sound break-even position are not affected by the politics of the day and nor should they. Okay, Mr Tyman, forgive me for focusing on your individual position, but we are talking about taxpayers' money. I noted, I think, a freedom of information request on the 20th of January 2022 that your salary was £205,000 and that your predecessor's salary was something of the order of £790,000. So I think, you know, referring back to that issue of the gravy train is potentially showing that maybe things have been rained in, but what you wouldn't cooperate or what the yard wouldn't cooperate on in relation to that FOI request was any bonus or performance-related payments for you personally. But I did note earlier this year, you said that Ferguson Marine has already instituted greater transparency in governance relation to other issues. So just on the basis of transparency and good governance, would you be able to tell the committee what your own personal bonus and performance-related payments have been and might be into the future if you get any of your own personal GPIs? I think some of my on-target package is already in the public domain, so I'm prepared to make some answer here. The way I look at the contract that was offered to me is that 30% of my package is at risk, subject to performance, and the rest is drawn as a salary. I think that is appropriate at senior levels. It's not appropriate at lower levels to ask people to put a percentage of their package at risk. It is appropriate as you move up to senior levels and it reduces the salary level. That's the package that I accepted 15 months ago when I took this job, but that, as Andrew has just alluded to, the KPIs, the measurement, the process that the remuneration committee needs to go through has to be rigorous. I think the Auditor-General added some good points on how that framework needs to work, and although it's at risk, it also has to be earned. I will, if I may add, David. I know it's difficult for you to talk about your own personal circumstances. I accept that. It's quite difficult. I feel a degree of anxiety on David's behalf. I fully understand. In terms of process, in clarity of process, David's contract of appointment was approved through the relevant departments at the time, 40 months ago, and there's complete clarity around that. When would ministers have been made aware of the fact that these bonus packages were in place and that bonuses were made in the two years that I identified? In David's case, his contract was approved, and quite rightly approved, in terms of David's ability to work with the enterprise, reduce costs and secure future work. David's a great asset to the enterprise, and he has the full support that I would have. That's very good to hear, but we have to compare and contrast that to the First Minister's assertion that there would be no further bonus payments in relation to 801 and 802. I go back to my original point, which is the fact that these are issues under personal contracts, data protected, but there's no way you can amend people's contracts without their permission, and that's the process that we're going through just now. A few points. It's absolutely correct that the CEO's package was agreed following quite a robust market analysis to ensure that it was reasonable for a commercial appointment, and that happened before the appointment was made, and David joined as CEO of FMPG. When it comes to the question of the KPIs when they were set, the Scottish Government was not consulted when the KPIs were set in October last year. We were informed in February this year after the events. One of the things that we need to ensure happens in future is that the Scottish Government will be consulted and has to agree on KPIs in future, and that will be captured in the revised framework agreement. It's safe to say that historic arrangements cannot prevent payments being made. The expectation is that there will be further bonus payments made to senior management at the yard. As Andrew Millar said, there is a review process going on. The chair and the chief executive are fully aware of the views expressed by Scottish ministers and the views expressed in the Scottish Parliament about bonuses related to 801 and 802. That review process will, of course, take into account all the factors that the chair has talked about in terms of the competitiveness of the yard. It will also involve the staff that currently have those bonuses within their packages. We would expect the chair and the chief executive to have those discussions with the staff about the way in which their remuneration is structured going forward. We are waiting to see what the outcome of those proposals are. Mr Millar said that he would hopefully do that by the end of July. When we get that information, we will, of course, discuss that with the Scottish ministers and we will be able to come to a conclusion. We will deal with those in the open and transparent way that Mr Irwin has been talking about. In the interests of transparency, I should draw people's attention to my register of interests and my trade union affiliations. I will ask one final question, as we have all four of you here. That is to go back to that point about the sponsor team arrangements. I guess that my question is first and foremost to David Tiedman. How well supported do you think you are by the sponsorship team in the Scottish Government? I feel well supported and we have a good working relation with Colin's team and Gregor's team. It has been good to have you arrive in the last couple of months and add value to that process. We have a regular dialogue weekly calls with some of Colin's team and you attend the board meetings in observation role. It's a good dialogue. Mr Cook, any reflections from your perspective? I think I enjoy a very positive relationship both with the new chair and the chief executive. As David said, I attend the board or a member of my team attends the board as well in an observer capacity and we get a lot of value from that. There are a programme of formal meetings but there are also informal contacts and I think that's absolutely right and proper to get a real feel for what's happening in the yard. On that positive note, I am going to thank our witnesses this morning for giving us of your time and your contributions. It's been very useful to us. I thank Colin Cook, Gregor Irwin, David Tiedman and Andrew Miller for joining us this morning and I shall now move this morning's session out of public and into private.