Hopes for hundreds of new jobs for Fife have been dashed by the Scottish Government’s failure to support the Kingdom’s BiFab yards, union leaders have claimed.
Nicola Sturgeon’s administration was accused of letting down BiFab workers following reports that taxpayers stand to lose up to £52.4 million on the renewables’ manufacturer.
Opposition politicians urged Nicola Sturgeon’s administration to draw up an urgent industrial strategy to save jobs after the latest twist in the saga involving the yards in Fife and on Lewis.
Union leaders warned that Scottish Government cash in the form of its £37.4m bail-out that took the company from the brink of administration before it was bought by Canadian firm DF Barnes and a £15m loan could be lost.
The fears were expressed as reports emerged at the weekend that the firm was on the brink of financial collapse.
This has been an expensive publicity stunt from an SNP Government that promised Scotland would be the Saudi Arabia of renewables but has just watched as contracts for wind farms off the Scottish coast have been won by countries on the other side of the globe.”
North East Fife MSP Willie Rennie
In addition, it was reported that ministers signed off an additional £30m guarantee to support BiFab but eventually decided against issuing the cash after receiving legal advice suggesting that to do so would breach EU state aid regulations.
According to the Herald on Sunday, the change of heart came after BiFab failed to win any work on Scotland’s largest offshore windfarm – the multi-billion pound Seagreen project nearby the firm’s Burntisland and Methil yards.
The £30m guarantee was said to have been to effectively underwrite a contract to have a part in another major project – the £2bn Neart Na Gaoithe (NnG) windfarm in the Forth.
Last week, however, union leaders revealed that a deal that would have resulted in BiFab building eight turbine jackets at its Methil yard for the NnG project, developed by EDF Renewables, had collapsed.
The vast majority of the 54 NnG jackets, which anchor the turbines to the seabed, are being constructed in south-east Asia.
The Herald on Sunday said Scottish Government sources had said the £30m guarantee to underwrite the potential NnG contract had been intended to protect its investment in BiFab. But the failure to get the Seagreen contract meant the cash would now be seen as state aid, because BiFab would not now be seen as an investible proposition.
Under state aid rules, the Scottish Government believes it can only offer financial support to BiFab “in so far as a commercial investor would do the same”.
Dave Moxham, deputy General Secretary of the STUC, said the perilous state of BiFab’s finances put the £54.2m (the £37.4m bail-out plus the £15m loan) invested by the government at risk.
“The loss of the £54.2m is the most likely thing to happen, because if the company is liquidated the money is lost,” Mr Moxham said.
GMB Scotland Secretary Gary Smith said: “The Scottish Government pleaded with DF Barnes to take on BiFab when it was at the point of crisis. The Scottish Government was always going to be the primary financier.
“The Scottish Government agreed to provide assurances for BiFab last year. The guarantees were withdrawn in September as the deal was being concluded for eight jackets for the Neart no Gaoithe project. That work would have created 500 desperately needed jobs for Fife, starting 2021.”
Throughout this, the Scottish Government has failed to understand the renewables sector, failed to plan, and taken no responsibility.
They now look to have decided to sink BiFab and bury the bad news amidst the Covid crisis. https://t.co/ggeuxq4UwG
— Gary Smith (@GMBGarySmith) October 25, 2020
Mr Smith added: “Throughout this, the Scottish Government has failed to understand the renewables sector, failed to plan and taken no responsibility. They now look to have decided to sink BiFab and bury bad news amidst the Covid crisis.”
Scottish Labour leader Richard Leonard tweeted: “This is a shocking failure of the SNP – they have failed the workers at BiFab and they have failed to deliver on their own commitment to Scotland’s renewables sector. Their plan for green jobs is in tatters.”
This is a shocking failure of the SNP – they have failed the workers at BiFab and they have failed to deliver on their own commitment to Scotland's renewables sector. Their plan for green jobs is in tatters. https://t.co/SjMViCUEzT
— Richard Leonard (@LabourRichard) October 25, 2020
Mr Leonard added: “Nicola Sturgeon waxed lyrical about the investment her government made in BiFab so if they walk away now it will be an abject failure of her commitment on green jobs. She cannot allow market forces to triumph at the expense of workers here. We need an industrial strategy that would ensure these jobs are saved and that a plan for this industry is made.
North East Fife MSP and Scottish Lib Dem leader Willie Rennie said: “This has been an expensive publicity stunt from an SNP Government that promised Scotland would be the Saudi Arabia of renewables but has just watched as contracts for wind farms off the Scottish coast have been won by countries on the other side of the globe.
“We need a plan to deliver jobs for Scotland especially if we are paying for the work through our electricity bills. An industrial plan to get our yards in a fit shape to win contracts should be the Scottish Government’s first priority.”
A Scottish Government spokeswoman said: “As has always been the case, the Scottish Government does not take management and operational decisions at BiFab, therefore matters of contract negotiation are for the BiFab Board of Directors to consider in the first instance. Once the Board determine the terms of the contract, including whether or not they are prepared to provide an assurance package.
“If asked, it is at that point the Scottish Government would evaluate whether to financially support BiFab, but it would need to do so in the same way a commercial investor would in order for it to be state aid compliant.
“In considering the actual provision of a guarantee, it is appropriate and necessary to consider the prospects and performance of a company together with their subsequent performance, notably at the time when the relevant contract is to be signed, on the same basis as any commercial investor would. The pipeline of future trading and work has been adversely impacted by the decision of SSE not to award work to BiFab for the Seagreen offshore windfarm.
“Without majority shareholder investment in the company we have exhausted the options for what financial support we can provide legally. So this is a legal compliance issue and not an issue of financial commitment on the part of the Scottish Government.”
The spokeswoman added: “We will continue to do everything possible to support the business while recognising the need for us to remain in line with State Aid regulations.”