National Shipbuilding Strategy

Part of the debate – in the House of Commons at 12:33 pm on 10th March 2022.

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Photo of Jeremy Quin Jeremy Quin The Minister of State, Ministry of Defence 12:33 pm, 10th March 2022

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 15 March 2022, column 10MC — read correction] It contains five essential elements. First, it radically extends the scope of our existing shipbuilding strategy. I may be standing here as a Defence Minister, but rest assured that the plan is as much about commercial shipbuilding as it is about the Royal Navy. We are focused not simply on hulls alone but on internal systems and sub-systems.

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.