In speaking to this motion for the Scottish Labour Party, I want to make clear that Scotland can and should be a key player in Europe and the world when it comes to the green energy revolution over the coming decades. We should be setting out the opportunities for high-skill, high-wage jobs. Our young people should be guaranteed a bright future through high-quality education, skills and training that gives them a secure and prosperous future in a Scotland that leads the way when it comes to tackling the greatest threat to their future—climate change.
For that to happen, politicians and Government need to have the political will, the determination and the willingness to stand up for Scotland. Sadly, on all fronts, the Scottish National Party Government is failing. Nowhere is that failure more exposed than in the sorry tale of BiFab. The SNP in Parliament has made a career out of blaming anyone and everyone to avoid taking responsibility for its failures. True to form, it is now blaming the Canadians who formed a partnership with it to rescue the Scottish yards.
Let us look at the facts. In 2017, JV Driver, at the invitation of the Scottish ministers, advised the Scottish Government during its financial intervention to save BiFab. That progressed into an acquisition discussion between the Scottish ministers and JV Driver that occurred over the course of several months. The company has stated publicly that, in the final purchase discussions and agreements, it was always envisaged that the Scottish Government would be the primary financer of the business as it recovered from the Beatrice wind farm project and pursued new contracts.
Therefore I suggest that it is a red herring for the cabinet secretary to blame the company for a lack of investment. It is equally a red herring to blame the company for the lack of a long-term business plan.
In relation to the proposals that were set out in the pre-acquisition business plan, does the member understand and appreciate that that plan indicated that the shareholders and majority shareholders would provide investment, working capital and assurances? Is he aware of the content of that business plan?
I am aware that, in evidence yesterday to the Economy, Energy and Fair Work Committee, the chief executive was very clear about the agreement that was made between the Scottish Government and the company.
BiFab has stated that it was always JV Driver’s intent to re-establish the business with a primary focus on United Kingdom domestic market renewable energy projects, and that that was openly discussed with the Scottish ministers and set out in the long-term business plan. That view correlates with the decision of the Scottish ministers to seek approval from the Finance and Constitution Committee, in November 2019, to provide a 100 per cent guarantee for the Neart na Gaoithe contract, including a 100 per cent guarantee in support of a performance bond from the Royal Bank of Scotland.
Yesterday, the Economy, Energy and Fair Work Committee heard from the chief executive officer of DF Barnes that, had it not been for Covid, work on the NnG contract would have been well under way by now. Due to the delay, the letter of intent to commence project activities was signed by Saipem and BiFab in mid-September. Then, to the shock of the workforce, the trade unions and the company, the Government announced that it was withdrawing from the guarantee. Yesterday, DF Barnes president Jason Fudge told the committee that the firm had been prepared to put up to 500 employees back to work on a contract for the turbine jackets for the NnG offshore wind farm project, when it emerged that ministers could no longer provide the necessary financial support.
The question is, what changed between the discussions and the approach to the finance committee in late 2019, and 2020?
The cabinet secretary said that the Government got legal advice that it would be in breach of state aid rules. The first point to be made about that is that we are out of the European Union on 31 December, so the state aid rules will not apply. It is convenient for the SNP to blame state aid while Governments across Europe seem to find a way of supporting their industries and workforces.
What of that legal opinion? Where did it come from and what did it say? Those seem like reasonable questions to ask. We are asking the Government to publish the legal advice. The GMB and Unite trade unions have sought and published their own legal opinions. As partners in BiFab, they have asked the Government to do likewise, but the cabinet secretary told them that they would have to seek a judicial review to get that information. That is not a good definition of partnership working with the trade unions in Scotland.
BiFab and the trade unions have presented an option for working alongside Saipem in the Fife yards, and asked the Government to jointly present the option to Saipem and EDF, but the Government has not taken that up. That option is still on the table and would secure jobs in Scotland. We cannot sit back and allow the work of Scottish offshore renewables to go to countries in Asia, where the price differentials are primarily driven by low-cost labour, state-led investment, and subsidies, while this Government hides behind European state aid rules. To do that is to sell Scotland out to the lowest bidder.
In moving the motion today, I say that the youth of today and the youth of tomorrow will need the jobs, and the only way to get those jobs is for the Government to step up and find a solution, work with the trade unions, and work with the company.
That the Parliament believes that Scotland has the potential to lead Europe’s green energy revolution over the coming decades; further believes that, in the context of the COVID-19 pandemic and job losses, green jobs will be central to creating new employment and training opportunities across Scotland; considers that, with the support of the workforce and their trades unions, the maximum effort has to be made to secure wind farm contracts for Scottish manufacturing companies; notes that, in open competition, BiFab won a £30 million contract to build turbine jackets for the NnG North Sea wind farm, work that could have started in January 2021, but has been prevented from going ahead with this; condemns the Scottish Government’s decision to withdraw the financial guarantee that was needed to enable this work to go ahead, thus risking Scotland’s reputation as a new green investment hub, and further condemns the Scottish Government’s failure to produce any legal opinion to justify its claim that support for BiFab was against the law; calls on it to act now to secure the future of the Burntisland Methil and Arnish yards, and the jobs that depend on them; further calls on it to talk to the workforce’s representatives and to ask for the help of the UK Government through the joint working party to urgently negotiate with EDF and Saipem to find a solution that ensures that the NnG contract for eight wind turbine platforms is carried out in the yards, and, with Glasgow being the venue of the COP26 summit in December 2021, calls for a concrete plan to be published in January by the Scottish Government that ensures that future work on renewables comes to Scottish yards.
I welcome the opportunity to contribute to today’s debate on BiFab. I know that this will be a worrying time for BiFab’s workers, and we continue to do everything in our power to support them.
The Scottish Government support for BiFab has been significant in that £37.4 million was converted to a 32.4 per cent equity stake, which is the financial support that Alex Rowley referred to, and a loan facility of up to £15 million was provided. The Scottish Government has provided 100 per cent of the working capital for the business.
One of the main questions that has been asked of me is why the Scottish Government was able to support the company in late 2019 but cannot do so now. It is important to note that BiFab had a strong pipeline of work opportunities at the start of 2020, with the potential to secure the NnG and Seagreen contracts. The combined delays to the NnG contract award as a result of the pandemic, SSE’s decision to award the Seagreen contract to companies in China and the middle east, compounded by JV Driver’s continued lack of financial support for the business, greatly weakened BiFab’s cash flow and balance sheet to the point at which we could no longer lawfully support the company financially.
It is a wing and a prayer to think that somehow the state aid problem will be solved in January. There will be a solution, but we have no idea what it will be. It must be understood that the Scotland Act 1998 specifically gives the Scottish ministers responsibilities that ministers in other places do not have. [
.] I want to develop my point.
I have considered all legal options for continuing to financially support BiFab. My conclusion that the Scottish Government can no longer continue to support the business is based on a range of facts, including the current position of the business, its trading forecast, its prospects for future work, and the continued no-risk position of the majority shareholder. We have explored a range of alternatives, including state ownership, but have concluded that there is no legally compliant way for us to do that.
I have just made the point that we have looked at lots of different options, including state ownership, and we discussed the transfer of shares not only to ourselves but to third-party investment. However, that, too, was not legally state aid compliant. JV Driver said that it would provide us with flexibility, but it would provide no flexibility in relation to the legal constraints.
We have also explored the provision of financial support with the United Kingdom Government which, as the joint statement on 24 November made clear, considers that there is no legal or commercial basis for it to support BiFab at this time. I recognise the interest in the legal position and have noted the calls for the relevant legal advice to be published, but, as I have previously explained, under the terms of the ministerial code it is not permissible for me to do so. [
.] No, I cannot give way; I only have a few seconds left.
With Michael Gove, I agreed to form a joint UK and Scottish Government working group to ensure that all possible options are explored in relation to the supply chain. That is an important step. The UK policy landscape is one of the major barriers to strengthening our supply chain. The weaknesses in the UK Government’s contract for difference mechanism work against Scotland and the Scottish supply chains, meaning that companies such as BiFab have limited chances of securing work. The contract for difference auction needs to ensure that project bids are not secured purely on the price per megawatt. The UK Government must consider the wider economy and our response to the climate emergency. Those are all points that have been made by industry to the Economy, Energy and Fair Work Committee.
We have left no stone unturned in our search for a solution to the challenges faced by the business and we are committed to working with all parties to deliver the best outcome for Scotland.
I move amendment S5M-23537.2, to leave out from “; considers” to end and insert:
“regrets that the board of directors and majority shareholders of BiFab are unable to invest in, or provide working capital or assurances for, the company; further regrets that the Scottish and UK governments are unable to provide further financial support that is state aid-compliant; encourages all parties, working with the STUC and trades unions, to seek opportunities to secure additional investment, working capital and assurances to support future work at the strategic sites currently operated by the business, making use of the recognised engineering skills of its workforce; agrees that the UK Government must use its current review of the Contract for Difference (CfD) mechanism to deliver radical changes to the CfD, which will ensure that future renewables developments support the domestic supply chain and, as a minimum, fulfil the 60% supply chain content target set in the current UK Offshore Wind Sector Deal; further agrees that, although currently a reserved matter, the Scottish Ministers should initiate consultation with stakeholders on potential ways to improve outcomes for Scotland and a secure and sustainable future for the Scottish renewable supply chain, and recognises that, given the failure of successive UK administrations to deliver an indigenous UK supply chain, these powers would be managed more effectively by the Scottish Parliament.”
I welcome the debate, which has been brought to the chamber by Labour, given just how important a topic it is, not just because of the issues that it raises about BiFab but because of all the related matters regarding wider policy objectives and Government engagement. That is true not just in the context of the future of the economy in Fife, but also in terms of the 26th conference of the parties—COP26—and the opportunity that that affords for Scotland to lead the way when it comes to climate change and the green investment and job creation that must accompany it.
When Benny Higgins presented his report on economic recovery earlier in the year, he was adamant that Scotland, in its determination to deliver the triple targets of emissions reductions, the development of natural capital and green job creation, needs an investment-led recovery with good access to both capital and digital technologies. At the time, both he and Lord Smith of Kelvin were very clear about the need for much stronger relationships between industry and Government and for strengthened relationships between the Scottish and UK Governments. That demand is surely very much at the centre of this debate, because if we are to ensure that the green jobs are not just about wind turbines but about hydrogen technologies, electric buses, carbon capture and so on, we have to have Governments working together.
BiFab has, unquestionably, raised other issues, because it is quite clear that, until the joint communiqué of 24 November when the joint working party was established, Government has been failing the BiFab workforce. Let us be very clear that jobs at BiFab have long been under threat and it was deeply regrettable that both Governments concluded that nothing more could be done to support the company’s finances. Although we know that BiFab has undoubtedly encountered issues of its own, especially with regard to outstanding payments and the resulting legal action taken by the German company EEW, the Scottish Government has lost £52.4 million in this debacle.
No, I will not, because it is a matter of joint working, as I said earlier in my speech.
Scottish Renewables told the Scottish Parliament’s Economy, Energy and Fair Work Committee that
“Unfortunately, investments that could have been made over decades, which would have seen the UK being able to compete with European supply chain companies on things like fabrication, simply were not made”—[
Economy, Energy and Fair Work Committee
, 24 November 2020; c 33.]
and pointed out that in previous years Scotland had been very competitive against countries such as Belgium and Spain.
We know, too, that the SNP invested £3 million of taxpayers’ money in a South Korean company that now has only one full-time member of staff in a factory at Machrihanish, and no orders.
We also know—I am sure that my colleague Murdo Fraser will say much more about this in responding to the debate—that Kate Forbes is not prepared to say how she will make £2.2 billion of the £8.2 billion boost for the Scottish budget part of the Scottish investment.
It is not as though the Scottish Government has been meeting its own climate change targets, as measured by several independent bodies such as the Energy Saving Trust, or meeting pledges on energy savings in new buildings and renewable heat targets. It has also abandoned its not-for-profit energy company. Consultants were paid thousands of pounds—
If I wish to correct the record, I will do so.
Consultants were paid thousands of pounds for a business case that was due in January 2019, and then delayed to April. In the latest programme for government, it was not mentioned at all—I think that I am correct in saying that.
The BiFab situation is deeply damaging, and Labour are right to bring this debate to the chamber. It raises significant concerns about consistency and coherence in green policy, as was highlighted by several witnesses at the Economy, Energy and Fair Work Committee and the Environment, Climate Change and Land Reform Committee.
I move amendment S5M-23537.1, to insert at end:
“, and further calls on the Scottish Government to ensure that these policy commitments on renewables are part of a coherent industrial strategy for the post-COVID-19 era.”
Fifteen years ago, I visited the yards at Methil. At that time, they were largely empty of workers, but in the old office block there were dozens of pictures of the huge offshore oil and gas structures that were built at the yards. They showed the workers smiling, proud of their skills and the great contribution that they made to our nation. At the time, many of us saw a bright future. Yes, the yards needed considerable investment, but on the horizon there was the promise of a commercially viable offshore renewables sector, with work for generations to come.
That bright future has now arrived in the yards of Asia and the middle east, but it has not arrived at Methil, Burntisland or Arnish. The reality is that markets have consistently failed to deliver on the full jobs potential of Scottish renewables. From CS Wind to BiFab, Governments have been unable or unwilling to assemble a domestic supply chain with the right investment in the right places at the right time.
If the Government is serious about a green new deal, it will have to put public ownership of energy at the heart of its industrial strategy and deliver on that. It is clear that courting private investors is a lottery. It appears that DF Barnes was caught out by the way in which projects are procured in the UK, as it expected more certainty and conditionality in a market that it clearly did not fully understand. I do not know who is to blame for that. Is it the board of DF Barnes, the Scottish Government or both? The reality is that, once again, the workers at the yards have been massively let down. The current situation is that the company is now unable to realise the opportunities that are right in front of it.
I do not doubt the Scottish Government’s desire to see BiFab flourish, but it is not acceptable for the Government, as a minority shareholder, to continually throw up its hands and say that it cannot do anything, when it has in the past had clear opportunities to take a majority stake in the company and take control in the boardroom.
Undoubtedly, the lack of conditionality in the CFD process continues to be a problem for BiFab and the rest of the UK renewables supply chain. The UK Government has clearly failed to create a jobs guarantee that would be in the public interest, and the CFD scheme is ultimately self-defeating. If its aim is to ensure the supply of energy to the consumer at the lowest cost, that has to be built on a strong Scottish supply chain that specialises in delivering the next generation of solutions for Scottish waters, such as floating wind.
All the ingredients are there at BiFab, with its long history of offshore fabrication, to enable it to deliver in the challenging environment of the North Sea. Alongside CFD reform, the jobs guarantee must be delivered through Crown Estate Scotland leases. Supply chain statements from companies that are looking to bid for the next round of wind farms in Scottish waters are being produced now. They must be meaningful, so that BiFab and other companies can use them as strong bankable foundations for their business plans. They need to demonstrate that there is a clear future pipeline of work for industry based in Scotland, whether in fabrication, blade manufacture or operation and maintenance. There must be a clear picture of the supply chain and of where it will be located, and that must align with the supply chain plans that will be required in the future under CFDs.
The frustration of communities in Fife and the Western Isles is palpable. This is not the first time that they have been let down, but it must be the last. The promise of a green new deal cannot be just about words; it must put food on the tables of the workers, and it needs to do that fast.
Five hundred workers were on the verge of filling up the BiFab yards to work on the NnG wind farm off the Fife coast. That would have provided a real-life connection between domestic electricity users and the massive turbines that they are ultimately paying for. It would have tied the economic wellbeing of industrial communities across Scotland with our efforts to combat climate change. It would have signalled to other companies and countries across the world that Scotland was matching the high rhetoric of Alex Salmond, Nicola Sturgeon and even Keith Brown, with delivery.
Everyone buying into the battle on climate change is essential if we are to succeed in it. Today, things have come to nothing. There will be 54 turbines for the NnG wind farm, but the Government cannot get organised to build even eight of them. At no point did the Scottish Government tell the Parliament that BiFab was on the edge of collapse. Where was the debate about the additional support that was supposedly required? For two years, the Government boasted that it had saved BiFab, but the truth is that a couple of hundred temporary jobs were created in the past couple of years.
If the reports that the Government may lose the more than £52 million that it invested in BiFab are accurate, that will mean that each of those jobs has cost us £262,000—a quarter of a million pounds for every temporary job that has been created. If we had paid £50,000 a year to each of those workers to sit at home and do nothing for the next five years, we would still have money left over. It is an astonishing waste of money. What is even more wasteful is the failed opportunity to bring economic opportunities to hundreds of people across Scotland.
The Government’s answer is to have yet another working group and to make a commitment to leave no stone unturned. The Government is expert at creating working groups, reviews and studies. If setting up working groups and turning over stones created jobs, we would have full employment in this country by now.
Who knew that when Alex Salmond talked about our being the Saudi Arabia of renewables, he meant that Scotland was going to be turned into an industrial desert? I feel sorry for Fiona Hyslop, who was handed the portfolio. Keith Brown is not even here today to answer for himself. He, Nicola Sturgeon and Alex Salmond should be in their seats explaining why this has all gone wrong. They are the architects of this situation, and they are responsible for it. I find it staggering that the Scottish Government is pointing the finger at DF Barnes when it was the Scottish Government that recommended that company to the Parliament. The Government brought DF Barnes in; it is responsible for that company being in charge.
What should happen now? The Government should publish the legal advice on state aid without any further delay. The union has done that, and the Government should follow. The Government should immediately contact EDF and Saipem to ensure that the eight jackets can still be built here if we can get our act together and to ensure that we have an industrial plan by January to secure those jobs and even more.
The clock is ticking. From the Fife coast, I can see that the work on NnG has already started. The S7000, Saipem’s semi-submersible crane vessel, is installing the casings for piles and is preparing the sea bed. The question is: can the Government get working too, or will it just create another working group?
It is just over three years since the workforce of BiFab marched down the Royal Mile to the Scottish Parliament to fight for their jobs and their community. The company was on the brink of collapse and jobs were in the balance. Through no fault of their own—this was a hard-working, skilled and respected workforce—the company faced administration and the workers redundancy.
I recognise the role that the Scottish Government played in retrieving that situation and enabling that contract to be fulfilled. It did so through an investment of public money into the company and the bringing in of DF Barnes with investor JV Driver.
We face a situation wherein the company is again on the brink of collapse, and the Scottish Government appears to be falling short. The cabinet secretary said yesterday that she had “examined and exhausted” all options. This past Tuesday, the Scottish Government and the UK Government issued a joint statement that ruled out financial support for BiFab, effectively bringing to an end the prospect of up to 500 jobs from the NnG contract. The statement also said that the working group will
“explore options for the future of the sites” where BiFab currently operates, which suggests to me that the Scottish Government thinks that BiFab is finished. The Scottish Government and the UK Government must take joint responsibility for cutting off that lifeline for the company.
Lord Davidson challenged the Scottish Government’s defence of state aid rules and said that the decision looked to be “irrational” and could be open to judicial review. At the very least, the decision would appear pre-emptive, as we are weeks away from leaving the European Union. There are questions to be answered over what has taken place over the past three years and other members have spoken about that.
The information is perhaps partial because the Scottish Government has not published what it is taking advice from.
What were the terms of the deal with DF Barnes? The company challenged the Scottish Government’s argument that it had failed to invest, saying that JV Driver had repeatedly offered shares to the Government at no cost, and that it was understood that the Scottish Government would be the primary financer. If the Scottish Government says differently, will it publish the details of the deal that was struck? Will the Scottish Government be honest about the meeting on 19 September and the advice that it gave to DF Barnes? Why has the Scottish Government stopped working closely with the trade unions? I cannot understand why the unions were sidelined and why their members had to read about the decision to pull the plug on critical funding in the newspapers.
It is clear that contracts for difference need to be reformed. Overseas yards that deliver the work for a cheaper price undercut UK companies, which leads us to the ludicrous situation that the majority of the NnG contract is manufactured in Indonesia and shipped thousands of miles to the Fife coast. Let us not, however, use that as a way to deflect from Government failure in this case. The NnG contract for difference is a more advantageous deal than those that have been done more recently, and the eight jackets that are on offer for BiFab are slim pickings from what is a significant contract.
My key concern and that of the people in Fife is how to rescue the NnG contract. There are those who will argue that JV Driver should get out of the way and let someone else take over. I want clarity over whether that is a realistic option that will secure the NnG contract. In discussions yesterday, the cabinet secretary said that there would have to be a company involved in the tendering process with Saipem. Is there an option for providing that guarantee?
The NnG contract is vital for building the reputation of the company and to demonstrate that it can deliver. Without it, there is little to invest in, because the short to medium-term pipeline is virtually non-existent. BiFab is based in Methil and Burntisland in Fife, and we cannot underestimate the significance of the job for that area—the Levenmouth area is in the 5 per cent of most-deprived areas in the whole of Scotland and suffers from industrial decline and isolation.
The good news of the reopening of the Levenmouth rail link is a boost, but there is a desperate need of good employment and apprenticeship opportunities in the area, which the NnG contract can deliver. The BiFab yard at Burntisland is also important to the prosperity of the town. Three years ago, the First Minister said that the BiFab workers had
“every reason to be optimistic” about the future. What optimism can the communities of Methil and Burntisland have today?
I welcome the opportunity to speak in this short debate on BiFab. At the outset, I say that as the MSP for Cowdenbeath constituency, I stand full square behind the BiFab workers who have demonstrated time and again that their skills are second to none. I wish to recognise the important role that their trade unions have played.
It is clear that the BiFab workforce is angry. I quite understand its anger, because it has been let down by the neglectful disinterest of the majority shareholder and parent company, JV Driver. Indeed, JV Driver has completely failed to step up to the plate by refusing to provide either working capital or guarantees, notwithstanding—as we have heard this afternoon from the cabinet secretary—its commitment in the pre-acquisition business plan to do just that. I say to JV Driver, and to the board, that it is now time to step up or step out. If JV Driver will not act, it needs to make way for someone who can back up their words with real investment.
The other key problem is the UK Government’s contract for difference auction rules, which represent a significant barrier to supporting the renewables domestic supply chain in Scotland. The UK Government’s CFD rules facilitate a race to the bottom, due to the abject failure of the UK Government to have built any conditionality into the process. That key problem has long been identified by the Scottish Government and others, but calls for its reform have so far been ignored by the UK Government. That pivotal issue concerning the CFD regime clearly demonstrates the elephant in the room—that the power over energy policy lies not with this Parliament, but with Westminster. The Scottish Government has been unstinting in its efforts to support BiFab over the years, backed up with more than £51 million of investment to support Scottish workers, which is something that the Liberal Democrats do not seem keen on. It should be noted that the Scottish Government has had to operate with one hand tied behind its back. Of course, the Scottish Government did seek a wholesale transfer—[
Sorry, Ms Ewing, please sit down a moment.
In a very quiet chamber, barracking from either side means that I cannot hear the speech. So far, I have heard most of the speeches clearly, and I would like to hear Ms Ewing’s, and anybody else’s, as well.
During the 2014 Smith commission process, the Scottish Government did seek a wholesale transfer of energy policy to the Scottish Parliament; however, sadly, it must be recalled that the Labour Party made no proposals at all to the Smith commission for the comprehensive transfer of energy policy competences. For the sake of completeness, I point out that no such proposals were made by the Liberal Democrats or the Tories either.
Some may conclude that it is just a bit rich for the Labour Party—which has not supported the transfer of energy policy to this Parliament and, as such, does not support the Scottish Parliament having the necessary powers to do the job—to point a finger, when it has been quite content over the past six years for the Scottish Government to operate with one hand tied behind its back. It is a perennial curiosity of the Labour Party’s position that it would prefer that energy policy in Scotland be driven by the imperatives of Boris Johnson, Jacob Rees-Mogg et al, rather than by our Scottish Parliament, members of which are elected by the people of Scotland.
It is self-evident that, in energy-rich Scotland, there can be a bright future for the renewables sector in Fife and across the country. For the BiFab workers at this time, I know that the Scottish Government continues to explore all options that are open to it, and it continues to have discussions, in particular with Saipem. It is also self-evident that, to maximise the potential of our renewables sector, we simply cannot afford to see our workers being let down by a UK energy policy that does not work for, and has demonstrably worked against, Scotland.
At its heart, politics is about people, and it is about dignity.
When I say that
I want to hear things, I do not mean just for a moment. I want to hear the rest of the debate. Members reverted to type, which annoyed me. Mr Golden, I know that we will hear you in delicious silence.
The motion opens with a statement to which every one of us should be fully committed: Scotland should lead the way in building a green economy. Central to that is a just transition, as rebuilding from the pandemic must level up the entire country, especially in sectors that face decline.
The North Sea oil and gas sector is a prime example. As fossil fuel use drops, the sector will need support to protect jobs and to transfer valuable skills to low-carbon industries such as decommissioning and renewables. The UK Government has already committed to a north-east transition deal, so it would be sensible for the Scottish Government to work with the UK Government to ensure the best chance of success.
I welcome the support of both of Scotland’s Governments. I will come on to the failures of the Scottish Government shortly, but I will first continue with the menu of working together.
A co-operative model has already been established with the announcement of a joint working group to consider the future of the BiFab site, as well as to boost the renewables supply chain in general in Scotland. The co-operative model must become the standard because, ultimately, it offers the best chance to create and save jobs. Saving jobs is the immediate priority, even as we look to create new low-carbon jobs in the years ahead.
The UK Government has launched a truly massive rescue effort. Nearly a million Scottish jobs have already been saved, and the UK Government’s furlough scheme will now run until next year to ensure that those jobs stay protected.
Any co-operative model requires both sides to play a role, so it is time for the SNP to step up and produce a coherent industrial strategy—one that sets out clearly how the Scottish Government will create future green jobs and how old industries such as oil and gas will be transitioned to a net zero future.
The approach from the Scottish Government thus far has clearly not produced enough positive results. Alex Salmond promised that 28,000 jobs would be created by 2020, but fewer than 2,000 have been created, despite Scotland seeing an unheralded expansion of renewables. I believe that 28,000 jobs may have been created—it is just that they have not been created in Scotland as the SNP promised that they would be.
The same pattern is repeated over and over: promises are made and SNP politicians smile for the cameras, and then they disavow responsibility when it falls apart. Examples include the SNP’s £100 million green jobs fund, which was a big announcement with zero detail; the not-for-profit energy company that was announced in 2017 with hundreds of thousands of pounds splurged on consultants, but which was not even mentioned in the latest programme for government; and the green ferries fiasco from the disgraced Derek Mackay, the results of which have been cost overruns that have climbed past £100 million and years of delay.
BiFab is the most recent sad example of the lack of a serious industrial strategy risking jobs. The SNP’s clumsy handling of the matter has meant that workers face an uncertain future, the public looks set to lose more than £52 million and our green recovery takes a needless blow.
There is no shame in not having all the answers, but I urge the SNP to try something different: work with our UK Government partners to ensure that Scotland builds back better.
We are confronted with a multitude of crises, from Covid-19 and its effect on the economy and employment around the country to the climate and nature emergencies. A conscientious and strategic Government would be making substantial steps and investments to tackle all those crises in tandem.
I join my Labour colleagues in condemning the Scottish Government’s decision to withdraw the financial guarantee to BiFab, and I add to the calls for the Government to produce the legal advice to justify its claim that its hands are tied. Are the cabinet secretary and the Scottish Government hiding behind the ministerial code? It is a significant and important matter.
Expert work has been done by the Scottish Trades Union Congress and its member unions, particularly the GMB and Unite the union, to put options on the table. We need the Scottish Government to exercise a little creativity and, on behalf of the people of Scotland, to be bold in the face of the risk that the BiFab workers face.
In opening for Scottish Labour, Alex Rowley outlined clearly the developments so far. When will the pattern of offshoring jobs end? When will our manufacturing base begin to flourish? Cabinet secretary, will it be now? Will the Scottish Government urgently negotiate with EDF and Saipem to find a solution that ensures that the work on the NnG contract—which is for only eight out of the large number of wind turbine platforms that will be built—is carried out in the BiFab yards? Will the Government commit to a proper industrial strategy that establishes a publicly owned energy company that can create jobs from day 1? That is what we urgently need rather than another working group, which the STUC aptly describes as “the thinnest of gruel”.
Sadly, we will be out of Europe only too soon. However, on state aid, surely it would be possible to think creatively and bravely, even if we remain aligned to that policy. Does the cabinet secretary agree that community and environmental externalities, including the carbon footprint of the transportation of content—sometimes halfway across the world—need to be factored into human processes?
I am mindful of a speech that I made on BiFab in May 2019, in which I said that the issue was a test of the Scottish Government. Can anyone dispute that, 18 months on, it has been a resounding failure on the part of Government? The absolute disconnect between warm words from and tangible action by the Government is deeply frustrating. The cabinet secretary should be assured that the Parliament, stakeholders, affected workers and communities, and the broader public, are taking notice in this climate emergency.
Friends of the Earth states that the situation shatters the foundations of a just transition. It also comes a year before Glasgow hosts COP26—the 26th conference of the parties—in December 2021, in which just transition is supposedly one of the Government’s main themes, along with people.
At last week’s Scottish green energy awards, there was heartening work to be celebrated in the renewables sector, which aligns with the growth in energy generation. However, the number of low-carbon jobs is down since 2014. Would anyone believe it? That clearly proves that Scottish workers and affected communities need much more intervention in order to realise the supply chain opportunities.
BiFab and, in a different sector, Alexander Dennis Ltd, should be the proud signifiers of a bright future in green jobs, and it is painful that those companies and workers are struggling. I cannot emphasise enough that a just transition must be the ultimate driver. That counts for all sectors.
The just transition commission’s lifespan is coming to a close, and the Government is yet to respond to some of its interim recommendations. Surely the cabinet secretary must commit to extending the commission and putting it on to a statutory and long-term basis. Its work is certainly not done; in fact, it has hardly started. As for the climate change plan update, that must be integral to connecting with a just transition obligation. I hope that the Government will commit to that today.
However, right now, surely the Government must think again for the sake of BiFab, its workers and their families and communities, and rescue the NnG contract. We would then have a symbol of the future that really counts for something.
As the MSP for the Kirkcaldy constituency, where two of BiFab’s yards are situated, I very much welcome the opportunity to speak in the debate. The firm has been a major employer in my constituency, a significant contributor to the local economy in Fife and the beating heart of Scotland’s green reindustrialisation.
One of my first engagements following my election to the Parliament in 2011 was visiting the BiFab yard in Methil to meet the management team and the workforce following the completion of wave energy developer Aquamarine Power’s next generation Oyster 800 hydroelectric wave energy converter. That fantastic piece of engineering highlighted on a national stage the quality and skills of the workers that we have in Fife.
BiFab’s apprenticeship training scheme ensured the continued provision of a highly skilled local workforce, providing training and skills to young people. Fife and wider Scotland cannot afford to lose that workforce. They are a valuable resource and they are suffering because Scottish renewables sector companies are being rendered powerless, as overseas yards can build at a greater scale and with prices far lower than Scottish firms can achieve.
I was not surprised to read the content of Labour’s motion—the comments and options fit its narrative and conveniently overlook the harsh realities of the situation. The message is, “Let’s all condemn and blame the Scottish Government for the problems being faced by BiFab,” although the Scottish Government has fought tooth and nail to protect the future of the company. There is no mention of the failure of the majority shareholder, JV Driver, to make any investment or provision of working capital or assurances for the company.
In order to save BiFab from closure in 2017 and support the delivery of SSE’s Beatrice offshore wind project, the Scottish Government invested £37.4 million through equity and loan facilities, and converted that into a 32.4 per cent equity stake in BiFab. An additional loan facility of £15 million was provided, to support working capital. That finance supported and ensured the completion of the Beatrice offshore wind farm, the Moray east pin piles and the FIRST Exploration and Petroleum Development Company contracts. In turn, that created more than 1,000 jobs across the three yards at Arnish, Burntisland and Methil.
Labour also fails to acknowledge in any way the problems that were highlighted in JV Driver’s statement that
“a ‘race-to-the-bottom’ Contract for Difference (CfD) auction process ... created intense pricing pressure on BiFab’s pursuits that no level of domestic investment could overcome”.
That confirms that, without a change in UK Government policy, BiFab was never going to win the contracts.
Although it is obviously disappointing that SSE was unable to award the Seagreen contract to BiFab, it is extremely telling that neither has it been able to award the contract to any UK or European supplier. BiFab’s bid was competitive over other UK and European bids, but the UK Government’s damaging contracts for difference rules work against Scotland and Scottish supply chains, meaning that companies such as BiFab have limited chances of securing work. The reality is that BiFab was competitive with all European yards in its bid for the SSE Seagreen fabrication contract, but the work ultimately went to yards in the far east.
Given that relevant powers are reserved to the UK Government, the Scottish Government has no ability to change the CFD rules. That is clearly a failure of past and present UK Governments, and illustrates the unacceptably high price that Scotland has been forced to pay as part of the UK—[
No, thank you—I will not take an intervention.
JV Driver’s lack of financial investment in the business, and the zero-risk position that it has adopted as a shareholder, are extremely disappointing. I strongly believe that, if JV Driver is not willing to invest in BiFab, to create jobs in the renewables sector and, more importantly, highly skilled local jobs that will benefit the local economy, the time has come for it to step aside as majority shareholder and to allow other interested parties to invest in the company.
BiFab and Fife have shown themselves to be strong players in offshore renewable energy technologies, with the workforce and expertise to be a major player in the global efforts to develop clean energy and reduce our carbon footprint. However, it is clear that the energy potential in Fife and places like it will be realised only in an independent Scotland, in which we would have the powers to insist on supply chain work as part of any subsidy regime. We are currently rich in expertise, technology and ambition. Scottish companies can no longer be left standing on the sidelines, watching as contracts are awarded overseas.
I welcome Labour’s debate on BiFab and have much pleasure in participating in it. Scottish Conservatives recognise the need for more renewable energy, to help cut emissions as part of a more balanced mix of energy sources, but that cannot come at the cost of thousands of jobs. Any transition on energy must be fair to the workers.
It seems to me rather ironic that, in order to tackle climate change, many elements of renewable energy developments such as offshore wind farms can be built halfway round the world and then transported back to Fife, with a significant impact on the environment. Transition is important, but it is important also that we cut our emissions and ensure that we do not have that issue. When a company in Scotland such as BiFab has the capabilities and the capacity to build parts of wind turbines and support local jobs, it seems completely mad to commission those parts from elsewhere in the world and locate them just 10 miles off the Fife coast.
As we have heard today and in the past, those contracts mean the very survival of BiFab yards, and many associated jobs are at risk. We have heard that an injection of public money for BiFab would breach state-aid rules. We have also been told that it is “not viable” due to the lack of contracts coming down the pipeline. We also know about the lack of willingness to put money into it. The Scottish Government has claimed that, if Scotland was independent, it could save BiFab. In reality, the SNP’s objective of taking Scotland back into the EU means that it would be constrained by state-aid rules, which would not benefit the yard or the workforce.
During this saga, I have seen the broad campaign that has involved community groups, workers, trade union representatives, elected representatives and environmentalists, who have worked together to put pressure on the company and Governments. Their calls have fallen on deaf ears. It is a kick in the teeth for the local community.
The Scottish Government failed to ensure that promises were kept. Back in 2010, the then First Minister claimed that the offshore renewables industry could create 20,000 jobs in Scotland. That has not happened.
Liz Smith talked about the need for an investment-led recovery and green jobs. The Scottish Government has failed BiFab. Maurice Golden talked about the information and transition period that are needed to support the sector. What is needed is support for the community, the workforce and the sector, but the Scottish Government has failed, time and time again, to make that a reality.
I very much welcome this debate, but it is a disaster that it has had to take place in the circumstances in which we find ourselves. The policy of renewables support must be coherent, community led and achievable. The Scottish Government has failed on every aspect of its support for the company.
The impact of the BiFab situation on the Arnish fabrication yard and the wider community in Lewis, where I live, is only too obvious. The sense of disappointment is raw. As members pointed out, there is no legal route for the Scottish Government or the UK Government to provide further financial support to BiFab in the absence of a shareholder guarantee and investment from the majority shareholder, JV Driver.
All that gives my constituents an awful sense of déjà vu. The promise of inward investment and plentiful contracts, all heralding a bright future for Arnish, has been followed by a lack of corporate investment. It is ultimately the responsibility of JV Driver, as the majority shareholder, to provide that investment. I understand that company representatives failed to provide much detail in response to questions about that when they appeared before the Economy, Energy and Fair Work Committee yesterday.
However, there are questions for the UK Government to answer, too. For instance, we have heard that the bid for the Seagreen contract was competitive with all the other UK and European bids and included a significant Scottish supply chain component, which would have helped to drive Scotland’s green recovery. Sadly, that was not to be, due to the built-in drive to the bottom that marks the UK contracts for difference scheme. As Claire Baker and other members said, until the UK Government amends the scheme and allows supply chain commitments to be a factor in the awarding of CFDs, rather than basing awards solely on price, it will always be an uphill struggle for Scottish yards to compete on anything like fair terms.
We need to be sure that all options are kept open, including the option of the Arnish yard being used by other companies. The action for Arnish campaign has made that point clearly. When the cabinet secretary sums up the debate, it would be good if she could give a view on whether BiFab has fulfilled all the lease requirements on the Arnish site and on whether the Government is open to the option of Highlands and Islands Enterprise leasing the yard to someone else who intends to utilise it.
For instance, a number of my constituents have suggested that Arnish could be a hub for constructing the hydrogen infrastructure that could help to decarbonise the transport sector in the islands. Arnish-built hydrogen infrastructure could also help to provide local grid stability, which would avoid the current sorry situation whereby emergency funding was needed to keep local wind turbine-funded charities afloat when the SSE cable to the mainland broke recently.
Those may be only ideas, and the focus has to be on the options that will bring work in the here and now. However, all those ideas and the other imaginative options for Arnish hold out the prospect of good, skilled jobs in the islands, as well as obvious link-ups with Lews Castle College.
Arnish has the potential to be a vital training hub for skilled workers. I urge the Scottish Government to engage with Highlands and Islands Enterprise and fully explore all those options to allow Arnish to become productive again. I also ask the Scottish Government to continue its efforts to persuade the UK Government to embed meaningful supply-chain commitments in the CFD process, as that alone will allow yards such as Arnish to be the fully functioning part of our green recovery that they deserve to be.
I have only a few minutes to wind up the debate, and I want to spend the little time that is available to me to deconstruct some of the arguments that we have heard from SNP speakers in their shameless attempts to shift the blame for what has gone wrong on to anyone else. As Alex Rowley said when he opened the debate, this is a Government that will not take responsibility for anything at all.
We have heard attempts to shift the blame in three different directions: to JV Driver; to the EU for its state aid rules; and to the UK Government in relation to contracts for difference. I will look at each of those in turn.
I will start with the involvement of JV Driver, because it seems to be the principal bogeyman being put forward by the SNP. The cabinet secretary expressed her concern at its lack of support, which led BiFab to respond on 27 November that it was “perplexed and disappointed” by what the Scottish Government was saying. According to BiFab, JV Driver had repeatedly offered to transfer its shares to the Scottish Government at no cost. That puts into context Annabelle Ewing’s ludicrous demand that JV Driver step up or ship out. It has offered to ship out numerous times, and only the Scottish Government prevented it from doing so.
I will give way to Annabelle Ewing if she is brief.
I am sorry that Annabelle Ewing did not take the opportunity to apologise for her ludicrous remarks, given that we have been told that JV Driver offered to transfer its shares and the Scottish Government refused to take them on. That is no one’s fault but the Scottish Government’s. It is no wonder that BiFab said that the claims that JV Driver had broken its promises were “inaccurate” and “untruthful”—what a damning assessment of the Scottish Government.
We also had an attack on EU state aid rules from the Scottish Government, and we have heard about the legal advice. We know that the trade unions have a legal opinion from Neil Davidson QC on the issue. As has been pointed out, we will leave the EU in 29 days’ time. If there was an issue with EU state aid rules, it may not apply in 29 days’ time—we do not know. Surely we should show some ambition and leadership. As the STUC said in its briefing for the debate, other European countries manage such situations, so why cannot this Government? Is it so uniquely inept?
We also heard numerous SNP speakers criticise the UK’s contracts for difference system—that must be their go-to argument for the debate. That system is a bid system; it is designed to reduce the cost of energy to the consumer. The same people who are complaining about it are the same people who, week after week, come to the chamber to complain about fuel poverty and the cost of energy and to say that the Government is not doing enough to keep energy costs down. Here is a system that is designed to reduce costs and make sure that large energy companies are not—[
.] I have no time for an intervention, thank you. Here is a system that makes sure that they are not charging our constituents too much for their energy, but those members decry it.
Whatever the contracts for difference system says, planning is under the control of the Scottish Government. Scottish ministers granted planning consent for the wind farms through Marine Scotland. During the planning process, it could have installed conditions on local training and local supply, but it failed to do so. That is no one’s fault but its own.
This is a modern-day Scottish scandal. A promise was given to workers in Fife and Lewis that they would benefit from jobs from a new generation of renewable energy projects, but those jobs are going elsewhere. That would have been entirely avoidable, if the Scottish Government had been prepared to step up and help, but it failed to do so, and we have been let down as a result. Now, the Government needs to do what the motion says that it should do: it needs to step up, and it needs to sit down and work with the UK Government to see whether there is a way forward.
Today, the Scottish Parliament has to send a clear message to the SNP Government that it has failed the renewable energy sector, it has failed the workers in Fife and Lewis and it has failed Scotland. For that reason, we should support the motion in Alex Rowley’s name.
The Scottish Government’s position is clear. The issue is not a lack of willingness to support BiFab; it is simply that we cannot legally provide further support at this time, and we would not have been able to do so with state ownership. If Murdo Fraser had listened to my answer to his first intervention, he would know that. He also shows his ignorance of state aid restrictions on planning.
Points about Arnish and the opportunities there were well made by Alasdair Allan. I do not have enough time to go into that, but he made some valid points, on which I will engage directly with him.
We will work to ensure a positive future for the yards and the workforce. We also remain committed to developing the strength of our renewables supply chain in Scotland, and I have emphasised to both EDF and Saipem the priority that I place on the delivery of the eight jackets and the NnG contracts in Scotland. Alex Rowley raised that issue with me, and I say to him and Willie Rennie that I spoke to EDF on those points in September, and my officials have been in regular contact since. Further, on 10 November, I wrote to Saipem to reiterate the position that had already been shared with it by my officials.
I want to make a point about Labour’s motion. BiFab is the contracting party with Saipem, with which the relevant contract and management knowledge, as well as the ability to make operational decisions, rests. The Scottish Government has in no way prevented BiFab’s board from engaging directly with Saipem. We are not aware of BiFab or JV Driver having progressed any such discussions with Saipem.
Mark Ruskell’s points were well made. He talked about DF Barnes and JV Driver perhaps expecting that there would be more certainty in the market and more conditionality. That gets to the heart of the issue. As the Economy, Energy and Fair Work Committee heard last week from Scottish Renewables and EDF, the issue with contracts for difference is that, with those contracts offered to developers paying the lowest price, it would be difficult for developers to accept paying a premium to secure the economic and environmental benefits that industry wants to deliver.
Let us look at some of the differences in the cost. The Beatrice wind farm received a strike price before the first auction round of around £140 per megawatt hour. The cheapest project in the first auction round was under £114; in the second, it was £57. In the third auction round, Seagreen 1 received a contract of only £41 per megawatt hour. That represents a drive for low-cost tenders, and the UK is not using the powers that it has to impose the supply-chain conditionalities that Mark Ruskell referred to.
We will continue to press for radical changes to the contracts for difference system. I know that trade unions share the view that change is necessary. As Annabelle Ewing set out, Opposition members in the chamber want the jobs but not the powers to secure the jobs. The difference between the position in our amendment and their position is that we want the powers in Scotland to deliver the jobs and not be constrained by the ill-thought-out race to the bottom in global cheap labour costs that comes with Labour and the Conservatives continuing to support the Westminster Government’s control of powers over contracts for difference policies.
There are challenges and issues. We want jobs for the workforce—we are committed to that—and I have set out a number of areas in which we have looked at all the possible options. We are in a difficult position, but members should be under no illusion: this Scottish Government wants the jobs in Scotland, we want the jobs in Fife and we want the jobs at Arnish.
We should all be committed to green jobs and a just transition, but the Scottish Government has failed to deliver either. BiFab is a stark example of that. With the three yards in Methil, Burntisland and Arnish, Scotland should have been leading the way with the just transition, but that has not happened.
We have conflicting information from the Scottish Government and DF Barnes. The Scottish Government says that it is not an active shareholder, but provided a guarantee that was required to bring home the contract for Neart Na Gaoithe. It is unclear why, at the 11th hour, that guarantee was revoked. If the business plan was out of date, it should have been updated before now. If the guarantee was subject to work being won, it should have remained in place to secure the contract. The Scottish Government says that JV Driver should have invested; DF Barnes says that it has. We are now involved in a blame game. Meanwhile, the contracts go elsewhere.
Alex Rowley said that the Scottish Government hides behind state aid rules, but in less than a month we will have left the EU and will no longer be subject to them. Meanwhile, Spanish yards that have benefited from some of the contracts continue in state ownership and enjoy state intervention.
On one hand, the Government says that it cannot invest unless a market economy investor would do the same, which begs the question why the Government invested in the first place, if there were market investors queuing to invest? Yet now, when we know—because the Scottish Government has told us—that other organisations want access to the yards, it withdraws the guarantee. That makes no sense.
Claire Baker pointed out that Lord Davidson disputes the Scottish Government’s view. We need honesty and transparency on that. Will the Government publish its legal advice, or is it, as Claudia Beamish said, using the ministerial code to hide that advice?
I will take a moment to highlight the plight of Arnish, in my region. Although it is a smaller yard, it can employ proportionately more of the local population on Lewis and is therefore an economic driver. The yard is in good order and well equipped, due to investment from the public purse. It has facilities that are sought after, yet it lies empty. The terms of the lease require care and maintenance of the machinery, but it appears that that is not happening.
Therefore, DF Barnes and the Scottish Government, as a shareholder, are in breach of their lease agreement. Because of that, the lease must be terminated, the infrastructure protected and the yard made available to other organisations that could use the facility. I understand that there is interest in the yard that could bring jobs and wealth to our local economy.
Liz Smith and Mark Ruskell pointed out the similar position in Machrihanish, which is also in my region, where the CS Wind yard lies empty and turbines are sourced from abroad. Again, that yard has had public investment but is failing to bring jobs to our communities.
The same is true in Burntisland and Methil. If the Scottish Government and DF Barnes are a dead hand, they must transfer the yards to organisations that will bring green jobs and work to our Scottish yards.
It is clear from the debate that there is something wrong with how contracts are let. In Indonesia, a welder is paid £2.80 an hour, and our leases and taxpayers’ money go to companies that use such terms to line their shareholders’ pockets. No licence, planning permission or lease should be let without an obligation to provide local content, and without an obligation that the building be done by people who get the fair rate for the job, and whose safety and conditions are equivalent to those that we expect for our workforce in this country. That would not be illegal, because all bidders would be subject to the same rules, and it would promote our values.
The Scottish Government chooses to blame everyone else. It demands more powers but it is not using the powers that it has at hand to make a difference. That is not acceptable, and the Scottish Government needs to come clean. It needs to share its knowledge and legal advice in order to work with the Parliament and the trade unions to secure the future of our yards.