Ministers have decided to complete work on a much-delayed ferry even though it would be cheaper to scrap it and build a new one.

An official review found it would cost the public purse less if the vessel, known only as hull 802, was procured from another shipyard instead of the state-owned Ferguson Marine.

But Economy minister Neil Gray said that if further work on the vessel did not go ahead it would mean waiting four years for new a one to be delivered. 

“I do not consider that it is acceptable to ask our island communities to wait this further period,” he said in a progress report on the two ferries which are over-budget as well as years overdue.

Mr Gray has been forced to seek written authority as the project does not meet value for money tests. Gregor Irwin, director-general for the economy at the Scottish government, said that ministers must provide written authority to proceed in order to comply with public finances legislation.

The two ferries were ordered from Ferguson Marine in 2015 and were expected to cost only £97m, with ministers announcing they would enter service in 2018.

But the project has since been hit by what public spending watchdogs have described as a “multitude of failings” and will now cost taxpayers around £300m.

The first vessel – MV Glen Sannox – is not due to be completed until autumn this year, with 802 scheduled to be finished by the end of next summer.

In an update to parliament on work on the second vessel, Mr Gray said he had been informed it “could be cheaper to re-procure a new vessel” from elsewhere.

He told MSPs: “Put simply, if vessel 802 was not delivered at Ferguson’s then the very future of the yard, and the hundreds of jobs it supports, would be in jeopardy.”

Mr Gray also said he could not rule out further increases in costs for the two ferries because the shipyard was facing inflationary pressures and still discovering design flaws.

He declined to give a final estimated cost for the project under questioning from opposition parties, who said the fiasco was a “betrayal” of islanders.

Scottish Conservative transport spokesman Graham Simpson said it was “an utter, abject humiliation” that “years down the line it would be cheaper to start from scratch” on the second vessel.

“The building of ferries 801 and 802 is a national scandal that continues to snowball before our eyes,” he added.

Labour and the Liberal Democrats said they were waiting fror someone in the Scottish Government to be held accountable.

Lib Dem economy spokesman Willie Rennie said: “Doesn’t this show utter contempt for this Parliament and for the taxpayer and for the workers and the islanders that the Transport Minister left in the middle of this statement and didn’t even have the courtesy to listen to the questions being answered?  

“We’ve had eight years of this utter fiasco in which the government has soaked the taxpayer, has betrayed the islanders and has utterly humiliated the workers.  

“Yet, we’ve had six ministers in that time. Not a single one of them, including the current First Minister, has lost their job for this fiasco.  

“Will anyone ever face the music for this disaster?”

Scottish Labour Transport spokesperson Alex Rowley said “A string of SNP Ministers have come and gone, but not one has ever been held accountable for this mess. 

“At the heart of this scandal are island communities, shipyard workers and taxpayers being badly failed.

“Securing the yard and delivering these ferries is essential – but that is the bare minimum the government needs to do.

“The SNP must deliver these ferries without any more delays or overruns, and set out a real long-term plan to protect the future of the yard.”