With your permission, Madam Deputy Speaker, I would like to make a statement on behalf of my colleague the Secretary of State for Defence and shipbuilding tsar, concerning the Government’s refresh of the national shipbuilding strategy.
The United Kingdom is a great maritime nation and shipbuilding runs in our blood. At the turn of the previous century, Britain built 60% of the world’s ships and, although we are no longer the world’s workshop, our shipbuilding industry remains a global leader in design and technology. It brings in billions to our economy and spreads wealth right across our country. Today, our maritime manufacturers are responsible for the state-of-the-art research vessel the RSS Sir David Attenborough, and for constructing the most powerful surface ships ever built in Britain: the Queen Elizabeth-class carriers.
More than 42,600 people from Appledore to Rosyth owe their livelihoods to our shipbuilding industry, but we still need to strengthen its resilience. It is worth reminding ourselves that even in the digital age, some 95% of UK trade by volume, and 90% by value, is carried by sea. Given this dependence, it is vital that we continue to safeguard our access to global maritime trade, even as we open up our sails and seek out new markets and new sustainable technologies. That is why, in 2019, the Prime Minister appointed the Defence Secretary as the shipbuilding tsar. Since then, he has been working tirelessly across Government to make our shipbuilding sector more productive, competitive, innovative and ambitious.
There has been real progress. Not only do we have much greater cross-Whitehall and industry co-operation, but we are doubling Ministry of Defence shipbuilding investment over the life of this Parliament to more than £1.7 billion a year. We have committed to procuring a formidable future fleet, including up to five Type 32 frigates, alongside the Type 31 and Type 26 programmes. We will grow our fleet of frigates and destroyers over the current number of 19 by the end of the decade. We have launched a competition to build a national flagship—the first ship of its kind to be built and commissioned in Britain—and last September we opened up the National Shipbuilding Office, a pan-governmental organisation that reports directly to the shipbuilding inter-ministerial group, is chaired by the shipbuilding tsar and is driving transformative change across our organisation.
Today, I am delighted to announce that we are going one step further by publishing our refreshed national shipbuilding strategy. Drawing on the multi-talented skills of the Government, industry and academia, and backed up by more than £5 billion of Government investment over the next three years, the plan creates the framework for our future UK maritime success.[This section has been corrected on
Secondly, we are establishing a 30-year shipbuilding pipeline of more than 150 vessels, thereby offering a clear demand signal in respect of our future requirements. We know that a regular drumbeat of design and manufacturing work is vital not just to maintain our critical national security capabilities but to drive the efficiencies that reduce longer-term cost. We are not just giving suppliers confidence in industry order books; we are going to give them greater clarity about our requirements, too. Today, we set out our policy and technology priorities, from net zero commitments to social-value requirements.
We are determined to ensure that our vast shipbuilding programmes leave a lasting legacy that goes beyond the procurement of a new vessel for the Border Force or the latest battle-winning warships, so we have made it a key requirement for shipbuilders to take account of social value, thereby ensuring not only that we deliver the capabilities that each Department needs but that taxpayers’ money is used to maximum effect. We support jobs, skills and investment and will establish a new social value minimum of 20% for competitions for Royal Navy vessels.
Thirdly, our strategy will accelerate innovation, enabling shipwrights and supply chains to unlock new manufacturing, production and clean maritime technologies. In recent times, the automotive industry has blazed a trail in the field of sustainability, investing in everything from electric to hydrogen and ammonia fuel technologies. But domestic shipping accounts for more emissions than the bus and rail sector combined, so when it comes to decarbonisation, it is high time that we made sure shipping does not end up in the slow lane.
In 2019, the Department for Transport published its “Maritime 2050” strategy, amplifying the power of UK maritime business clusters to foster a climate of innovation.
Last year’s clean maritime demonstration competition underlined the sheer depth of the sector’s potential, with 55 projects winning a share of £23 million to develop carbon-free solutions such as hydrogen-fuelled vessels and shipping charge points powered by offshore wind turbines. Building on that success, we will now make the competition a regular event, creating more opportunities for industry to bring cutting-edge technologies to market.
Alongside that news, I can announce today that the Department for Transport—I am delighted to be joined by the Minister of State, Department for Transport, my hon. Friend Andrew Stephenson —has committed £206 million to develop a UK shipping office for reducing emissions, or SHORE, which will fund research into and development of zero-emission vessels and help to roll out the infrastructure that enables the UK to achieve its goal of becoming a world leader in sustainable maritime technologies.
Fourthly, shipbuilding is a long-term investment, and the more we can do to shelter it from market storms the better, so the fourth aspect of our plan is about providing greater financial support for shipbuilders to win orders. Access to finance for underwriting contracts is an essential element of any shipbuilding enterprise. Alongside banks and working capital loans, the Government also have a role to play in helping to finance vessel contracts.
UK export finance already offers credit facilities to support British companies winning work overseas. To make UK shipbuilders more competitive, we are bidding for orders for new ships from domestic customers. The Department for Business, Energy and Industrial Strategy is now working up plans to underwrite contracts for UK shipbuilders building ships for UK operation. BEIS aims to launch this new home shipbuilding credit guarantee scheme in May.
Switching to exports, opportunity is opening up for suppliers to increase their market share. In 2020, we exported £2.2 billion-worth of ships, boats and floating structures. We believe that we should be able to grow our exports by 45% by 2030. To make that happen, we are opening a new Maritime Capability Campaign Office. Covering all aspects of the shipbuilding enterprise, from platforms to sub-systems, to the supply chain, it will use robust industry analysis of global markets to help suppliers reach untapped markets. Our success in the long term will hinge on the strength of our skills base.
This brings me to the final aspect of our plan. We are determined to develop the next generation of shipbuilding talent, so today we are establishing a UK shipbuilding skills taskforce. Led by the Department for Education and working in tandem with the National Shipbuilding Office and devolved Administrations, it will bridge skills gaps and learn from best practice, particularly in relation to new and emerging technologies. Above all, it will act as a megaphone for the varied and exciting careers that shipbuilding can offer up and down the country, from designing cutting-edge environmentally friendly ferries to developing propulsion systems for complex warships.
The building blocks of our refreshed strategy are settling into place. Our NSO and Maritime Capability Campaign Office are up and running. Our UK shipbuilding skills taskforce is accepting applications from today, and, in the coming months, we will be establishing a new shipbuilding enterprise for growth. Co-chaired by the chief executive officer of the National Shipbuilding Office and a senior industry executive, it will unite the finest minds in shipping to overcome some of the sector’s toughest challenges.
In other words, today, we offer a powerful vision of what shipbuilding will look like in 2030. It is a vision of a supercharged sector with thousands of highly skilled workers; a vision to make this the country of choice for specialist commercial and naval vessels and systems, components and technologies; a vision that generates the increased investment to level up our nation; and a vision that will spark a British shipbuilding renaissance and inspire even more countries to seek out that “made-in-Britain” stamp.
The framework is ready. Now we will be working with our superb shipbuilders, our supply chains and across Government to help transform this great ambition into a prosperous reality. I commend this refreshed strategy and this statement to the House.
After months of delay, I am pleased that the Minister has come before the House with a shipbuilding strategy.
Now, we all know that the Prime Minister loves a photo opportunity or two, so I am sure that he will enjoy his trip to Merseyside today when he can dress up in his favourite fluorescent jacket and his little hard hat and make his historical analogies to Britain’s proud shipbuilding past. Perhaps while he is there, he would like to explain why the Ministry of Defence has given a £10 million contract this week to a Dutch yard for a vessel that could have been built right here in Britain.
Despite the Prime Minister’s jingoism and nostalgia, the reality is this: the Royal Navy has only 13 frigates and six destroyers. Our Royal Navy is being asked to take on increasing responsibilities, but one in five ships has disappeared from our surface fleet since 2010. It is no surprise, therefore, that the Defence Committee has concluded that the Navy cannot fulfil the full ambition of the integrated review with its current fleet. Our Navy needs more ships, but it is also vital that we ensure that they are built right here in Britain. Our shipyards are crying out for an end to the feast-and-famine cycle of procurement, yet, despite the 30-year pipeline, there is no commitment to ensure that ships are built in UK yards.
Our steel industry and shipyards are national assets, which is why Labour has called for a “British built by default” approach to defence procurement. The GMB has said that Ministers are
“again sowing uncertainty with their disastrous policy refusing to guarantee work for UK yards…No other shipbuilding nation would dream of procuring its own vessels in this way.”
I must ask the Minister this: why does the strategy not promise a “British built by default” approach to defence procurement? Why does the strategy not include targets for UK steel in UK ships? Without either, how can the Minister ensure investment in his stated ambition of local jobs invested in our communities?
The strategy also fails to tackle the deep-seated problems of MOD mismanagement and delivery. The National Audit Office currently rates no major shipbuilding programmes as being on time or on budget, and it is only getting worse. The number of MOD projects rated “amber/red” has doubled and fleet solid support ships have moved from amber to “amber/red” in the past year. Why has the strategy been published without a clear timeline for delivery? How will the £5 billion cover the cost of 150 ships, and is this even new money?
At a time of increasing threats, it is not the time for vanity projects, but the Government, and the Prime Minister in particular, continue to push ahead with a new royal yacht. The Defence Committee had stated that it has
“received no evidence of the advantage to the Royal Navy” in acquiring it. Does the Minister still think that this is the best way to spend MOD money?
Chasing headlines and photo opportunities on shipbuilding is one thing, delivery, value for money and investment in Britain are quite another. Unfortunately, this strategy fails on all those counts.
I make no apologies for taking time to come to the House with this strategy, because we want to make certain that it is a strategy that works, and that is exactly what we are delivering. There is no jingoism or nostalgia about this strategy; it is hard facts that will deliver for our shipbuilding industry. It is a shipbuilding industry that needs to embrace the modern technology of artificial intelligence and environmental sustainability. That is why we are establishing the UK Shipping Office for Reducing Emissions, with £206 million behind it. It is a strategy that will support our ship buyers with a home shipping guarantee system, in the same way that we support our exports with export guarantees. We have a National Shipbuilding Office that is doing great work and is cohering across Government and delivering for the entire industry.
The hon. Gentleman spoke of warships. We can be very proud that we are putting more money into warships —£1.7 billion will be the spend by the end of this Parliament, doubling our current commitment. The Type 31 frigate HMS Venturer had her steel cut in Rosyth, with HMS Glasgow now well under way on the Clyde. Opportunity exists for Type 32, with up to five entering service with the Royal Navy, and a certainty that we will be going beyond our current level of 19 frigates and destroyers by the end of this decade.
The hon. Gentleman referred to FSS ships, which he knows will have a very substantial element of UK build. They are on time to be delivered within a couple of years of the procurement. We are doing our utmost to ensure that we derive value from this strategy and that it will deliver for Britain.
The hon. Gentleman asks why we cannot have a “build in Britain” strategy. As he knows, that is exactly what we do for warships, and it is this Government who have extended that to say that, for every ship being acquired by the MOD, we will make a case-by-case examination to see whether that needs to be a build in Britain. We have broadened that scope.
When we go beyond defence and warships, we cannot, on the one hand, say that we will support the international rules-based order, yet, on the other, ignore rules organisations such as the World Trade Organisation. We need to work within those rules to get the maximum value for our country, which is exactly what the NSO will do. We have a programme of 150 vessels, £4 billion of support going into British shipbuilding over the next three years, and exciting opportunities that our industry can follow.
The British-built Type 45 destroyer is arguably the best of its class in the world, but it has been plagued by persistent problems with its propulsion system. The Ministry has a “put right” programme, but it will not be completed until 2028. Given that we now have to deter a Russia that is prepared to bomb maternity hospitals, we need those ships fully capable and fit to fight now, not in six years’ time. Will the Minister go from this place back to his Department, review the entire programme and issue an urgent operational requirement, so that if they were required, those wonderfully capable ships can fight to keep our country and NATO free?
My right hon. Friend is absolutely right that the Type 45s are excellent bits of kit. They are one of our bits of equipment that I know our adversaries fear, and rightly so. The concern we always have is balancing operational requirements; as he knows, we have two Type 45s out on station at the moment, so we must make certain that we can bring those ships back in for their power improvement project upgrades. I can confirm that we are looking at ways to accelerate the PIP programme, and I recognise that it is important that we do so.
I also apologise to my right hon. Friend, and I dropped him a note this morning. In response to an intervention yesterday, I said that Dauntless was undergoing sea trials, but I had conflated sea trials with the test and commissioning phase. That is where she is now, but the three new diesel engines are working successfully and she will be embarking on sea trials in a few weeks’ time.
I thank the Minister for advance sight of his statement and commend his fleet-of-foot actions in changing the range from Appledore to Glasgow to Appledore to Rosyth. That is an important correction to make.
The fourth from final paragraph in the Minister’s statement cuts to the chase on this issue in the way that the strategy does not when he states that it is a vision to make the UK,
“the country of choice for specialist commercial and naval vessels and systems, components and technologies”.
Among the 80 pages of waffle and padding, the strategy alights briefly on that point, but not in the way it really should. The strategy also highlights the word “international” 31 times. I welcome the realisation that in a global economy with global supply chains the notion that we can procure every single element in the United Kingdom, while a noble ambition that we should sweat as much as we can, is naive.
I welcome the fact that the national strategy sets out a range of opportunities, which excellent yards all around Scotland are ready to lean into and capitalise on. I am a little sceptical about whether the funding announced in the strategy will have a massive impact across all the yards in the United Kingdom, but I hope it will.
Scotland’s skills, as I am sure the Minister will agree, have been highlighted many times in the past decade, not least on the QE2-class ships, which are outstanding in their quality and performance, the Type 26 under construction in Glasgow and the Type 31 under build in Rosyth. He will welcome, as I do, the export success that has been achieved, with 26 going to Canada and Australia, but he will know that those are in-country builds. That is not to downplay the opportunities of intellectual property and engineering that Glasgow will enjoy from them, but does he agree that really what we need is Type 31s sold to countries that will require them to be built in Rosyth?
First, as I am sure the hon. Gentleman will acknowledge, this is a UK-wide endeavour. There are great assets and skills in Scotland, and I am delighted that this week, I think, we have signed a lease to ensure that there is space in Edinburgh for part of the National Shipbuilding Office to be based there. This is a national endeavour, delivering for the whole of the UK. He is right that £4 billion is a lot of money and we want it to go further by winning export orders.
The hon. Gentleman is right that the Type 26 exports to Canada and Australia are a solid bit of progress. It is right to say that they will support thousands of jobs and design is incredibly important, as are many of the subsystems often used by overseas purchasers, even as they do a lot of work on the frigates themselves. We will learn from them as well as their learning from us.
On Type 31 and export, there has been great news: first the work with Indonesia and secondly the down selection last Friday by the Polish navy of Type 31 or Arrowhead. That is an extremely important step forward and I am very proud to have been part of it. I spoke to my Polish opposite number on that and other topics this morning. It would be great if we could also sell Type 31 to countries that do not have the capacity to build themselves, and do that work in Rosyth or elsewhere. That is a grand ambition. However, I am delighted that our design, our subsystems and our skills are being recognised in the export orders we are already winning.
I warmly welcome my hon. Friend’s statement. I am sure he has been glued to the Transport Committee’s current inquiry into fuelling the future, where we have heard evidence about a plethora of new, cleaner fuels being developed for use across the transport sector. With the £206 million he has announced for the UK Shipping Office for Reducing Emissions, may I urge him to give as much regard to the cleaner fuels of the future as to the tech being developed on vessel?
Absolutely; I thank my hon. Friend and look forward to the conclusion of the Select Committee’s work. He is right about fuelling for the future, and I have no doubt that my colleagues in the Department for Transport will place a significant emphasis on exactly those issues. They certainly did in the first round, with the £23 million of the clean maritime demonstration competition, which had 55 awards and was oversubscribed. I know many of the R&D suggestions coming forward were in exactly that space, which offers a great opportunity for the future.
I draw the House’s attention to my non-pecuniary interests entry in the Register. I welcome the Minister’s statement. In his original report, Sir John Parker emphasised the drumbeat of work and regular orders that is important for yards—but that means orders. The Minister’s own Department, in the past few weeks, has awarded a £10 million contract to a Dutch yard, even though I warned him about that several months ago. He has given no commitments on the FSS, and the Border Force and the Home Office are looking at procuring boats from the Dutch, too. No other country does that. We need a full commitment from Government to ensuring that when those orders are procured, they are procured in UK yards. They used to hide behind the European Union, but they can no longer do that. I understand that Ministers are now hiding behind some international trade issues, but no other country has this problem.
The right hon. Gentleman and I did have a discussion across this Dispatch Box regarding the order, and his intuition proved correct. There was a competition process, and he proved to be correct in his assumption, although I emphasise that that was not a new build of a new vessel, but a requirement for the Royal Navy to have an existing vessel that it could practise some new developments on. It went into the market as a competition and that is how it ended. They fine-tuned the competition to ensure that it was fully fair, and we got that result.
I know the right hon. Gentleman has been a regular advocate of an FSS build in this country. FSS is proceeding and it will be substantially built. I am trying to remember exactly when the two years starts—I believe it is two years from the start of the manufacturing phase but, if it is not, I will write to him and leave a note in the Library.
On the point about the WTO rules, we do not take them lightly and it is right that we work within them, but that does not mean that we do not do everything in our power to maximise the benefits to British shipbuilding. That is what the National Shipbuilding Office has been set up to do, and that is what this refresh is about: whether on shore, on the home shipbuilding guarantee or on skills, we must ensure that we win, that we succeed and that we can compete with and be just as productive as other northern European yards.
I, too, welcome the statement from the Minister, which is excellent—what is not to like? This is about jobs, livelihoods, R&D, technology, self-sufficiency, investment and exports. I welcome the growing imperative towards a “build it in Britain” strategy. That is very important. Given our proud shipbuilding pedigree in Wales, England, Scotland and Northern Ireland, does he agree that this is great for the Union? Moreover, noting that we are a proud seafaring member of the United Nations P5 and of NATO, does he agree that we are better off together?
I absolutely agree that we are better off together. I agree with my hon. Friend that we should build in Britain; that should be the result of this refresh. We should be not only winning in Britain, but winning export orders overseas, due to the quality of our products and ideas and the productivity of our manufacturers. I agree with all that in the context of the United Kingdom build. That is a huge emphasis and, as Scottish yards have found, whether with the British Antarctic Survey or Babcock, having the weight of the Royal Navy—a benchmark Navy—behind them and the UK Government in full support really does help to bring in those export orders. We are committed to jobs, skills and infrastructure the length and breadth of the UK.
I welcome the Minister’s statement about the commitment to shipbuilding. May I urge him to do all he can to make sure that the ships are built in Britain, using British steel? In Rotherham, we make world-leading steel and we are the only place making speciality steel. If he could make that commitment, it would give real security to the industry.
In the same way that we have that pipeline of 150 vessels, as the hon. Lady knows, we always set out the pipeline of what is coming up imminently to help steel manufacturers in the UK to know where the opportunities are. With some ships—for example, the carriers—a huge proportion of the steel was from UK sources. It does vary according to the technical specification. However, I am absolutely convinced of one thing: if we can increase the amount of shipbuilding in Britain, the amount of UK steel being used will increase proportionately as well.
I feel that today I have trod on the toes of many Departments in bringing forward many policies from the Department for Business, Energy and Industrial Strategy, the Department for Transport and the Department for Education, which are going to do a great job for British shipbuilding. I am not going to plunge into coal—I will leave that to my colleagues—but I agree 100% that warships will be made in this country by British shipyards doing a great job, as they always have done, in supporting the Royal Navy. The more UK content we can have in those ships, of all forms, the more I welcome that.
In 1941, Winston Churchill embarked on HMS Prince of Wales to meet President Roosevelt and sign the Atlantic charter. That was a battleship—a warship. In 1947, the royal family embarked on HMS Vanguard to start their South African tour. HMS Vanguard was a battleship—a warship. May I suggest to the Minister that it would be better to spend the cost of a Type 31 frigate on another Type 31 frigate than on a national flagship?
I respect the hon. Gentleman’s views. I remind him that the cost of the national flagship, spread over four years, is about 0.1% of the MOD’s overall budget, so this does not break the bank; it is a relatively small proportion of the overall budget. The ship has a job to do. It is not a matter of being a royal yacht, as Chris Evans suggested earlier—it is a national flagship with a job to do. A huge proportion of the most successful cities on earth are on the coastline. It has a job in marketing and spreading the word for global Britain. I think it will be a great success. People decry it now, but I have no doubt that in five years’ time they will be saying it is great and in 30 years’ time they will not be able to imagine us not having one.
I thank the Minister for his excellent statement. Does he agree, though, that we should not just rely on domestic demand to drive investment in British shipbuilding but look to sell more abroad, as with, for example, the contract Babcock secured with Poland last week?
My hon. Friend is absolutely right. A lot of work went into that. I spoke to my Polish opposite number only this morning. The Poles are delighted by what they are getting. The Arrowhead Type 31 is a fantastic frigate that will do brilliantly for the Polish navy, which works very closely with the Royal Navy in developing these ideas. We have plans around the rest of the world with our allies and our friends to support their capabilities and at the same time to support design and build here in the UK.
The Minister prays in aid of his case international rules, but surely that requires international agreement, conformity and consensus. The Government used to claim that the issue was EU rules which no other EU country followed. Then they claimed it was WTO rules. Now it is the international order. Now in the statement they have declared the fleet solid support ships to be warships. Frankly, the last veil has been ripped away and his policy is naked to the world. Why will he not declare that they will now buy British first?
We will be buying British in so many ways among those 150 vessels, but we will be doing that not because we have retreated into a narrow protectionist hole but because the design, innovation and skills in this country will be second to none as we work through the benefits of this refresh. The right hon. Gentleman is trying to hide behind the rules. I am trying to say: let us look at the rules to make certain they work and work in the interests of this country. That is why we have the NSO and SHORE. It is why we will have the home shipbuilding credit guarantee. We are finding ways to assist and to ensure—this is the most fundamental point; I know he wants this as much as I do—that our shipyards are as productive as every other shipyard in northern Europe. We are not there yet, we need to get there and we are determined to make that happen.
My constituency has 23 inhabited islands and therefore ferries are never far from my mind. Babcock is the site of a state-of-the-art advanced manufacturing facility currently manufacturing Type 31 frigates. Does the Minister agree that this expert workforce are ideally placed to design and to manufacture specialist vessels that could serve Scotland’s island communities, and indeed those across the UK, for many years to come?
I certainly agree that there are great skills and great design capacity in Rosyth. I have seen that for myself. I went there to see the new shipbuilding shed, which is a fantastic bit of work. There is a great workforce and a great sense of optimism, quite rightly, in the yard. From memory, the ferries contract has been awarded elsewhere by the Scottish Government, and it has not been a happy situation, so I would not wish to impinge on their personal grief. But are there good skills in Scotland that could be used, and is Babcock a good option? I would say so, but it is not for me to award these contracts.
While communities across the north such as those in my own constituency recognise and appreciate industrial investment in places that share a proud industrial heritage built by generations of craft, skill and dedication, does the Minister recognise that his party was responsible for the decimation of our shipbuilding industry over many years? I join hon. Members across the House in asking him to commit to UK shipyards such as A&P Tyne in my constituency to secure these jobs. I also ask him to commit to involving and consulting the trade unions in the new national shipbuilding strategy.
I and the trade unions I have met, particularly on the Clyde, have the same sort of vision for the future of our national shipbuilding endeavour. That is to have those high skills and to have a workforce who are trained, effective and incredibly proud of what they do, which I know is the case today. A huge number of manufacturing jobs were lost under the last Labour Government; I am afraid that the decline of national shipbuilding has not been under the purview of one party or another. But this party and this Government are determined to reverse that, and we do so by ensuring that we can compete effectively on the world stage and that we have the skills, the innovation, the R&D and the productivity. That is what this refresh is about. We will be winning, and winning well, on the international stage. I know the hon. Lady is as keen on that as I am.
I thank the Minister for his statement and very much welcome it. There is, as he knows, a great tradition and history of shipbuilding at Harland and Wolff in Belfast in Northern Ireland. It is critical that we in Northern Ireland play a central role in the national shipbuilding strategy. Can he confirm that Harland and Wolff in Belfast will have an important, practical, physical role in that strategy, and that financial benefits related to wage packets and so on will come as a boost for the Northern Ireland economy, which will be a central objective for us in getting the benefit of this strategy as well?
It is fair to say that I am very excited by the prospects of Harland and Wolff. It is great to see a great shipyard with a terrific history hopefully sparking back into life as part of our renaissance across the UK. I am not going to be prescriptive about what yards and what procurements will be involved, as that would be wrong on all kinds of levels, but we have 150 vessels coming through over the next 30 years and £1.7 billion of procurement for MOD vessels by the end of this Parliament. There is lots of opportunity, and I wish everyone well in going for it.