majority shareholder in BiFab. The situation at BiFab is a culmination of a number of issues, the main one being the unwillingness of the parent company and majority shareholder, JV Driver, to provide working capital investment or guarantees for the company.
As a minority shareholder, we have been exhaustive in our consideration of the options that are available to us to financially support BiFab. As requested, we have worked collaboratively with the United Kingdom Government to explore what investment was possible in terms of working capital and guarantees, but we have not identified a legally compliant way to support the business.
Speaking this morning to the Parliament’s Economy, Energy and Fair Work Committee, DF Barnes’s president confirmed again that the deal that was struck in 2018 made the Scottish Government the main financier of BiFab and that the company offered to make the Scottish Government the majority shareholder of BiFab at no additional cost, but that was turned down. Was the Scottish Government aware of that financing commitment when it agreed the deal with DF Barnes? Did it understand the need for guarantees to secure contracts? Why did it turn down the opportunity to become the majority shareholder some time ago?
There are a number of very important points in that question. Clearly, one of the original issues with BiFab was concerns around the Beatrice contract. Indeed, the Scottish Government took on the main responsibility for financing that contract. We then converted our loan into equity to support the newly acquired BiFab acquisition by JV Driver. The business plan for the original agreement had a number of factors, including a commitment from JV Driver to provide working capital investment and guarantees, and to use its parent company for acquisition of bonds and assurances. That answers the point about the original aspects of the agreement.
The second point is about shares and whether the transfer of shares would have provided an opportunity for legally compliant investment. On a number of occasions, we have examined and exhausted many different ways of providing investment for the company, including state ownership, which would obviously mean the transfer of shares to the Scottish Government. Even that would not allow us to invest further in the company. The idea that somehow that would have provided the Scottish Government with more flexibility to invest further capital in the company is not the case.
On 17 April 2018, the then Cabinet Secretary for Economy, Jobs and Fair Work, Keith Brown, told the chamber:
“we are confident that BiFab has a bright future”.
He also said that the
“agreement gives the workforce, the company and the Government the best possible chance of securing a vibrant future for the yards.”—[
, 17 April 2018; c 80, 72.]
It is understandable that the workforce and communities in Fife and Lewis feel bitterly let down by the most recent betrayal by both Governments. The GMB union has said that there is a clear lack of political will when it comes to creating jobs in the renewables supply chain. How does the Scottish Government intend to rebuild confidence? What will it do to secure the much-needed jobs at the BiFab yards in Methil, Burntisland and Arnish?
I would say to the workforce that we want to make sure that there will be jobs for them but that has to be built on a firm foundation, with a company that is prepared to provide the working capital and investment and, importantly—as we know from contracts for renewables—the assurances that are needed.
The political will is absolutely there. I am personally committed. When you look at the statements that have been made previously, you can certainly see that there were initial contracts that could have been assured. Indeed, even as recently as this time last year, there was a prospect of Seagreen and Neart na Gaoithe contracts.
In my first answer to Mark Ruskell, I talked about the combination of factors. Obviously, the delay with a number of contracts, including Seagreen and NnG, compounded the cash-flow issues for the company, which is why, back in April, discussions took place to extend the working capital provided by the Scottish Government to £15 million, which was secured in May.
On where we go from here, we need to make sure that changes are made to procurement. The UK Government is consulting on the contract for difference, which is its responsibility. I have talked previously about how we cannot allow that to be a race to the bottom, in which we can be undercut by cheap labour from other countries.
I also have agreement from the UK Government to establish a working group. My view is that the trade unions should be part of that and that one of its terms of reference should be to look at the supply chain, not just across Fife and in Arnish but in other areas, to make sure that the opportunities are there for blade work and other aspects of renewables.
There are opportunities, and we want to secure them, but everybody has to step up to the mark. That includes the companies that are doing the procuring, on which the powers still lie with the UK Government.
I have already raised all those issues with the UK Government in relation to establishing the working group. We must have jobs in renewables. I am committed to making sure that we can do that and I will make sure that we use every part of that partnership, including working with the trade unions, to achieve it.
Since 2017, the majority shareholder, JV Driver, has failed to make any investment in the company, despite robust support and investment in excess of £50 million by the Scottish Government. Does the cabinet secretary agree that a failure of JV Driver to provide any working capital investment or guarantees for the company has proved a major obstacle in securing a bright future for BiFab, and that it should step aside to make way for someone who is willing to invest in the company?
Decisions on the future of the business, including its strategy, operations and management, are for the board of directors. Clearly, however, what we want for the yard and the workforce is a way forward to ensure that the required investment and working capital can be delivered.
I have some sympathy with the points about investment. Our perspective is that the majority shareholder would provide for some of that, particularly for working capital. Some of the issues, particularly over the past few months, have been to do with the precarious nature of the cash flow. Our concern is that decisions on further Scottish Government investment, when it came to assurances, had to be made when there were obviously severe concerns about the working capital cash-flow investment position of the company.
The Presiding Officer:
I am conscious that quite a few members wished to ask a supplementary question, but that session took a bit longer than I had planned. A debate is coming up tomorrow, if members wish to ask further questions.