My Lords, there has been no change in the Government’s plans to procure a first batch of five new Type 31e frigates. We still want the first ship to enter service by the end of 2023, with all five ships delivered by the end of 2028.
I thank the noble Earl for his Answer—in “Yes, Minister” terms, he is very brave to make that statement. Our great maritime nation has 13 ageing frigates, which is a national disgrace. Replacing them is crucially important. The first design contract for the Type 26 frigate, the key replacement, was placed in 2005, and the first one will be delivered in 2024 or 2025, some 14 or 15 years later—a very long time. The Type 31e does not as yet have any contractors, designers or orders, yet we are saying that it will take four years. I hope that the Minister is right—that would be wonderful—but I am concerned. Is it not time to push the Type 26 programme to get these ships delivered more quickly, and to order the remaining five of them, in order to get a steady drum beat of orders that will drive the cost of the Type 26 ships down? A number of people in the Treasury would like to see that happen.
My Lords, the Type 26 programme is proceeding at pace, on time and on budget so far. The point that the noble Lord makes, about ordering all Type 26 ships in one go, might not be the right way to get value for money. If we had done that in the first instance, it is arguable that we would have overpriced the contract, because Australia has since come in with a firm order for Type 26 frigates. We are sure that this will play very favourably into the price of our next order for the Type 26.
My Lords, the noble Earl’s reply to the noble Lord a few moments ago was, to say the least, concise. He failed, however, to point out that the contract for the Type 31 has been restarted. Part of the problem, as the Government have indicated in their reason for restarting, is that the bids that were received were “not compliant”. I understand that to mean that the capability that the Government seek is not deliverable at the price of £250 million per ship. On that basis, the Government have a choice to make: either to reduce the capability or to increase the price. Unless they do one of those things, the exports on which the Government have set great store will not be achieved.
I hope to reassure the noble Lord on those points. The contracts that were being competed for, and which have now been recommenced, were to pay for a series of design deliverables to support the main procurement contract; they were not the main assessment of industry’s ability to deliver the manufacture programme. We still believe that industry will be able to meet that challenge, and the procurement process, despite having been recommenced, is now proceeding at pace.
My Lords, this is the first warship design and build programme for which the UK has competed in a generation, but based on our understanding of the market, which has developed considerably since this time last year during all the engagement with industry that we have enjoyed, we believe that industry can rise to that challenge. We are committed to starting the new procurement, as I say, at pace.
My Lords, it is a pleasure to support the general thrust of the Question from the noble Lord, Lord West. Clearly, the Royal Navy and the fleet at its disposal is far smaller than it has ever been in peacetime before. This is a national embarrassment, which our allies are picking up on. Is it, however, not a reflection on the size of our overall defence budget? We have never spent as little as 2% of GDP on our defence. Is there not surely a rising case to increase the size of the defence budget not only for the benefit of the Royal Navy but for the other two services as well?
I greatly respect the noble Lord’s point of view, but I humbly suggest that we should not get too distracted by percentages. We need to look at the threats and make sure that we have the right capabilities to deal with them. That work is ongoing through the modernising defence programme. We continue to have one of the largest defence budgets in the world, and it is growing by £1 billion a year.
My Lords, I have just come back from the conference in Portsmouth with the First Sea Lord yesterday. I have been to many of these and I found it inspiring because, for the first time, with all the younger officers there, the climate of interest in changing the culture and delivering that is dramatically different from what it has been during the last two or three years. It really was something you could capture. The Second Sea Lord, who has the responsibility of delivering the Type 31 ships, has no illusions as to what needs to be done. He made the point, which I totally agree with, that you have to make the best use of the money you have actually got and not just pile more money on top of it. We need more money in practice and perhaps the Minister would be kind enough to ask again because, over and above what is being done—I think they will deliver that on time—the key, as has just been said, is that we need it to enlarge the whole capability of our armed response.
My noble friend speaks with considerable authority on this matter. The modernising defence programme is about making our Armed Forces more capable, against the harder threats that we now face, and it is looking at how best we can use our growing budget to that effect.
My Lords, this Question prompted me to look at the National Shipbuilding Strategy, whose first birthday is today. When it was published a year ago, it was meant to be a solid basis for industry to develop. It is interesting to see how it is starting to erode. Paragraph 56 said of the Type 31e ships:
“The first will be in service by 2023”,
but “by 2023” means during 2022. The Minister has just answered a similar question by saying that it will be by the end of 2023. This is the first incremental crumble in the strategy. In paragraph 61, the strategy said:
“We have set a maximum £250 million per ship price for the Type 31e”.
Are either of those statements still sound, or is this one year-old strategy going to crumble incrementally, like all the strategies before it?
My Lords, our target dates have not changed, as I have already said, and we still believe that industry can deliver all five Type 31e frigates at a price of £1.25 billion. The national shipbuilding strategy is an overarching strategy for the future of naval ship-building in the UK over the next 30 years, and is much wider than the procurement of a particular class of ship. Type 31e is a pathfinder project for a new way of procuring warships, and we are learning beneficially from those challenges.