National Shipbuilding Strategy — [Mr Nigel Evans in the Chair]

Backbench Business – in Westminster Hall at 1:30 pm on 11th July 2019.

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Photo of Kevan Jones Kevan Jones Labour, North Durham 1:30 pm, 11th July 2019

I beg to move,

That this House
has considered the National Shipbuilding Strategy.

It is a pleasure to serve under your chairmanship, Mr Evans. I declare an interest as a member of the GMB trade union, which I have been for the last 30 years.

I was trying to think when we last had a debate on shipbuilding in the House, and it is quite a while ago. Part of the reason for that is the impression people have that the UK no longer builds ships—that shipbuilding is a smokestack industry that is a ghost of the past. I hope to put that image to bed in my remarks and, along with right hon. and hon. Friends who will contribute to the debate, to show not only that shipbuilding is an important part of our industrial sector, but that it also has a good future if it is given the proper support.

I also have to declare another interest. I chair the all-party parliamentary group on shipbuilding and ship repair. We have just produced a report on the national shipbuilding strategy, and I thank my fellow members, Anne-Marie Trevelyan, who unfortunately has another commitment today and cannot be here, but who has been a strong supporter of the group; my hon. Friend Luke Pollard, who was important in framing the report; my hon. Friend Mr Sweeney, who will be here later; and Chris Stephens, who I am sure will speak for himself, and who has been a key contributor to the work of the group.

We produced the report earlier this year, and I thank the Confederation of Shipbuilding & Engineering Unions, who supported the document and its launch. I also pay tribute to the industry, the trade union movement, academics and the Royal Navy, who gave evidence for our report. On a personal note, and on behalf of the group, I thank Richard Steadman, my former assistant, who helped draft the report, and who has now gone to pastures new as a civil servant in the Department for Transport—for his sins—and his replacement, Conor Bunning, who also helped draft the report.

The report was important, not just to review the national shipbuilding strategy, which the Government adopted more than a year ago, following the Parker review, but to advocate for the industry. As I said, people think we no longer build ships in this country. Is the industry a lot smaller than it was? Yes, it certainly is. Just after the second world war, we produced more than 50% of the world’s shipping. That went into steady decline, but the industry’s footprint is still there—in shipbuilding yards in places such as Glasgow and Birkenhead, or over at Harland and Wolff—and related industries still exist. In the area I represent—the north-east—Newcastle, Sunderland and the surrounding areas still have a lot of companies that are connected to the shipbuilding industry.

I thank Frank Field, who unfortunately cannot be here, for supporting the application for this debate to the Backbench Business Committee and for being a strong advocate for the shipbuilding sector and its importance to his area, Birkenhead, on Merseyside.

The industry is now smaller and mainly reliant on Government naval procurement for its future. That is important, and there is a basic issue that we need to address: if we want the sovereign capability to build complex warships in this country, we have to invest in it.

It is important to highlight that the industry also has spin-offs into other sectors. When people see a ship being built, they concentrate on the hull and superstructure—what they can see—but the real value and expertise in a complex warship today are in not only what it is made of, but the through-life support. That creates jobs in a whole range of sectors and ensures that those jobs are maintained over the life of the ship.

We must protect skills; the sector cannot be successful, and we cannot keep our sovereign capability, without investment in skills. That is not just about skills such as welding, which are completely different to what they were 20 or 30 years ago—they are highly qualified, highly technical jobs. There are also skills in marine engineering, and that also has a spin-off, because that whole industry supports ships in this country and around the world. There is also project management. The two aircraft carriers that were built were a huge undertaking and could not have been done without very complex project management. We do that very well in this country, and we export that skill around the world.

Our skill in naval architecture is equally important, and has come to the fore with BAE Systems’ new Type 26 frigate. Because of the design, the company has now won export orders from both Australia and Canada. The actual vessels may not be being physically built in this country, but that does not really matter. What is important is that the skills that have gone into designing the vessels and the combat systems, and the research and development that lie behind that, are kept. We also have a leading edge in information technology, and a unique capability in this country, because of the nuclear deterrent, in nuclear marine engineering.

If we want an example of what happens when the pipeline of orders is turned off, we see it in Barrow in the 1990s, when the decision was taken not to continue investing in the skills needed for building submarines. When we tried to pick up those skills for the Astute class, there were problems. I often say—some people might have heard me say it before—that these are complex skills; they cannot just be turned on and off like a tap when we need them. They need constant investment.

The industry today employs 32,000 people directly, contributing more than £2 billion to the UK economy, and there are many knock-on jobs. Type 26 is a good example. I counted more than 65 companies in the BAE Systems supply chain, and a lot of those companies are not located anywhere near the sea. We have steel from Bradford, roller shutters from Bolton North East, fire and flood detection systems from Manchester Central, and plate from Wolverhampton South East. Although we traditionally consider communities such as Glasgow and, in the past, Tyneside and Merseyside as where the shipbuilding industry is, that is not the case. It is a national endeavour now.

The other important point is that programmes such as the Type 26—I give credit to BAE Systems for its work on this—are spreading work around the country, and also putting work into small and medium-sized businesses. That is not just giving them immediate work; in some cases, it is giving them work for a long time to come.

As I said, the industry now relies mainly on naval procurement. Following my involvement with Swan Hunter on Tyneside in my early days, I could write a book about the mistakes that were made as we down- sized the industry. We had competition rules that ensured that yards competed against each other, which ultimately led to yard closures and the consolidation, quite rightly, of complex warship building on the Clyde. That is one of the things in the naval shipbuilding strategy I have difficulty with: we have to ensure that we do not make the mistakes of the past by trying to reinvent those competition-type rules.

The Aircraft Carrier Alliance was a very good example of how we can have the final assembly at Rosyth, but spread that work around the country—to Tyneside, Falmouth and elsewhere—to ensure that those blocks are built. In terms of Sir John Parker’s reference to the new Type 31e frigate, I am not sure how that ship will be built in a block form, because it is quite small. However, the alliance shows that we can have a success story if we bring together people in the industry. Although the carriers were criticised for their cost, not only was the engineering undertaken remarkable, but the carriers were delivered on time and with techniques—if we look, for example, at the US’s new carriers—that are years ahead in terms of the innovation and technology. That was because we have the skills throughout the country needed by the industry.

As I say, the old shipyards might have gone from areas such as the north-east, but the skill levels are still there. One of the key messages I want to convey is that, if we are to keep the sovereign capability and, separately, ensure that we have the skill base, we must have that throughput of work through the yards. It is important not only for the companies on the Clyde, but for the SMEs in the supply chain, because they can ensure that there is long-term work and invest in the skills and innovation that are needed.

I have asked many parliamentary questions of the Minister, who has been very helpful in his replies, and I think he is sympathetic to the case. The throughput of work is important, not just for skills, but to ensure that we have follow-on and that we do not get the situation we had with the submarine-building programme, when we lost that capability. We need to give industry the certainty that it can invest. If it has work going on into the future, it can make the right investment decisions.

I turn now to the issue of the fleet solid support ship. I pay tribute to the trade unions and others that have been lobbying for these vessels, which will be used to support our carriers, to be built in the UK.

Photo of Sarah Newton Sarah Newton Conservative, Truro and Falmouth

The right hon. Gentleman is making a really good speech, and I congratulate him on securing this debate. I am sorry that duty calls for me to return to Cornwall and that I can only make this intervention and not a speech. I thoroughly agree with him. I am very proud that the Royal Fleet Auxiliary is based in Falmouth. As he says, we have a valuable through-life contract. I wholeheartedly agree that the ships should be built in the UK, and we are proud to have the opportunity to service them. It is vital to have such high-skilled, well-paid jobs in a peripheral area such as Cornwall, which has low wages. Those jobs are vital to our local economy. When decisions are made about procurement, they should be about not just the price tag on the vessel, but the contribution that those industries make to the regional economy.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I am envious of the hon. Lady for going back to Cornwall. I spent my summer holidays there last year, and it is a wonderful part of the world.

Photo of Kevan Jones Kevan Jones Labour, North Durham

But Cornwall is, equally, very nice.

The hon. Lady makes an important point. It is about not just the build, but the through-life support. For a lot of the systems that we procure for the armed forces —certainly in shipbuilding—we look at the initial procurement, but we should also be looking at the through-life support. That is where the jobs are, and where the value is for the original, prime companies. As she rightly says, there is also value for smaller companies and others. If we are to spread prosperity around, we should see the contract as an investment in Britain. As she rightly argues, it is an investment in skills going forward. When looking at whether we can afford to make that investment, we should ask the Treasury, “What is the prosperity agenda?” Mr Dunne did a very good report that tried to explain that the prosperity agenda should be linked to procurement in the Ministry of Defence. One of the GMB trade union’s reports argued that 20% of the value of the fleet solid support contract comes straight back to the Treasury anyway, through taxes and national insurance.

That has to be taken into account, but it is the throughput of work that will ensure that the shipyards and supply chain are maintained. We have a great opportunity to do that with the FSS contract. Unfortunately, for reasons that I am not sure even the Minister understands or privately supports, it has been put out to international competition. We will make the same mistakes that we made in the 1980s if we think this will somehow lower the price or get a better deal. I am sorry, but no other country in Europe does the same thing.

We can dance on the end of a pin over whether EU procurement rules apply to the FSS vessels—I have made it very clear that they do not. The French have just ordered four new Vulcan class support ships. Did they think about putting that out to international competition or asking British yards to tender? No, they did not; they ordered them directly. It is the same for Italian and Spanish ships. That is the difference.

The South Koreans and Daewoo have now pulled out of the competition for the FSS contract, but we are not dealing with a level playing field. Those companies have huge amounts of Government subsidy, which is not open to UK shipbuilders. If we are to procure the ships and build them abroad, it is quite clear that the Exchequer will not get back 20% straightaway in tax and national insurance. We will also lose the ability to support our shipbuilding and ship repair businesses.

Since 2010, the Government’s industrial strategy on defence has been disappointing. When I was a Defence Minister, I had the privilege of working with Lord Drayson, who understood this issue. As part of his wider industrial strategy on defence—I think it ran until 2010—he rightly argued that if we want to build complex warships in this country, we need to put in the investment, get the drumbeat of work going, and ensure there is certainty for industry.

Since 2010, we have been promised various defence strategies, but what we really need is an overarching defence industrial strategy. I know the Minister will say that the Department for Business, Energy and Industrial Strategy or other Departments are dealing with these things, but I am sorry: a particular strategy needs to be developed for defence industries, including the maritime sector.

Sir John Parker’s strategy was an attempt but, as I said, I think it misses the point. It tries to reinvent some of the wheels of competition that failed in the 1980s. There is a fixation in the Ministry of Defence—I cannot understand where it comes from—with the idea, “Isn’t it terrible to give the work to BAE Systems?” BAE Systems is the only company in the UK capable of building complex warships. There are ways of incentivising it, but also ensuring that we get value for money and that we have the necessary systems. The hulls are important and the steel is important, but being able to invest in combat systems, engine technology and other things related to shipbuilding is vital, because they are exportable.

The carriers were a good example of Babcock, Thales and BAE Systems coming together in an alliance that worked. I do not understand why that alliance should be broken up on completion of HMS Prince of Wales, which will happen soon. That alliance seems an obvious way forward in terms of skills for the FSS. I understand that the new Secretary of State wants competition to be reviewed, which is welcome. I hope we can get understanding of the points that I and a lot of other Members have made about the importance of shipbuilding in the UK.

Let me conclude where I started. This is a vital sector if we are going to keep sovereign capability for complex warship building in this country. It needs to be invested in. It is not a smokestack industry; properly invested in, it is an industry for the future. Off the back of contracts such as that for the fleet solid support vessels, I would like to see investment in not only technologies but skills. We need urgently to ensure that companies such as BAE Systems, which do a fantastic job of recruiting apprentices, have the certainty to invest in skills. If we do not, we will fall behind: even with the political will to build complex warships in this country, we will not have the skills to do so. As I said, we have only to look at Barrow and the submarine programme to see the problems with trying to regenerate skills from scratch.

I am pleased that we are having this debate and putting shipbuilding on the agenda. I hope that that incentivises the Government to make an early decision to award the FSS contract to British yards or a British consortium.

Photo of Julian Lewis Julian Lewis Chair, Defence Committee 1:53 pm, 11th July 2019

As an old schoolmate of yours, Mr Evans, it is a particular pleasure for me to contribute to this debate under your able chairmanship. I pay tribute to Mr Jones for continuing his relentless and entirely justified campaign to ensure that the defence footprint, particularly as regards naval shipbuilding, is not shrunk still further in this country.

Mr Evans, you will know, having been in the House even longer than me, that one of the few benefits of having spent more than two decades here is that we get to see trends over decades. What has happened with our naval shipbuilding does not make for a pretty picture. I remember the 1998 strategic defence review undertaken by the then new Labour Government of Tony Blair. It set out a policy for the Royal Navy that seemed to leave it in quite a winning position. Although the Royal Navy was asked to sacrifice three of its frigates or destroyers, thus reducing its total from 35 to 32, the review put forward the concept of carrier strike and amphibious strike, which meant that the two large aircraft carriers would be built.

Had it remained in that formulation, the Royal Navy would have had every reason to be satisfied. We all know, however, that that was not the case. Successive Governments reduced the total from 32 frigates and destroyers, first to 31, on the basis that these were much more capable ships and therefore 31 would be able to do the work of 32. When that little stratagem succeeded, the 31 were reduced to 25, and the 25 were then reduced to our present pathetic total of 19 destroyers and frigates—six destroyers and 13 frigates, to be precise. Before anybody starts lecturing us about the change in the nature of warfare, it is worth reflecting on the fact that one of those 13 frigates, HMS Montrose, is in the news today, having performed the very important function of protecting British shipping from Iranian attempts to respond to the impounding of a large vessel of theirs that was believed to be carrying contraband oil to Syria.

It is rather hard to have a strategy when we are dealing with only a relatively limited number of vessels, even though those vessels may well be much more potent, powerful and versatile than their predecessors. However powerful, versatile and potent they are, each can be in only one place at any one time, and that means that each can be built in only one place over a particular period. That makes it harder to have a versatile and flexible strategy to match those qualities in the ships that are being built.

One of the encouraging results of the publication of the national shipbuilding strategy was that, in identifying the general purpose frigate, the Type 31e—the cheap and cheerful version of the next generation of frigates—as one that should be designed for export, Sir John Parker, to whom we should again pay tribute for everything he did, also specified that, as a result of those vessels being built in modular fashion, they would be very flexible and adaptable over time to what is sometimes called incremental acquisition. In other words, we get the ship hulls built and get them out to sea, and then, over time, because we have built compartments in the vessels that can be used for a variety of purposes over a period of years, we sow the seeds of their future adaptability and additional potency.

We should remember that this was the first time there was talk of an increase in the total number of vessels. Instead of just being told, “We will be replacing 13 Type 23 frigates on a like-for-like basis,” we were told that there would definitely be eight of the Type 26, specialising in anti-submarine warfare, and at least five—not a limit of five—of the Type 31e general purpose vessels. It will be interesting to hear from the Minister whether there are plans to exceed the figure of five for the Type 31e.

Slightly less than a week away on Tuesday 16 July there will be another debate in this Chamber about defence expenditure. Of course, all these issues, including the important one about the fleet solid support ships raised by the right hon. Gentleman, generally come back to defence expenditure and—it must be said—the inadequacy of defence expenditure.

I regard it as one of the achievements of the Select Committee on Defence that, with members representing no fewer than four different parties, it has consistently come to the view, irrespective of party allegiance, that too little is spent on defence in the United Kingdom—far too little. Our expectations were managed downwards to such an extent that it was believed to be some sort of triumph when we did not dip below NATO’s basic recommended minimum guideline of 2% of GDP. To coincide with next Tuesday’s debate, the Committee will bring out an updated report, following on from our 2016 report in which we laid out the decline in defence expenditure as a proportion of GDP compared with rises in health, education and, above all, pensions and benefits, and how defence had declined in our scale of national priorities to such an extent that the size of the armed forces was becoming unsustainable.

The national shipbuilding strategy gives us an opportunity to reverse that decline, and I would be grateful to hear from the Minister what plans there are to do that. It will be no easy task, given that we will remove the Type 23 frigates from the fleet at the rate of one a year between 2023 and 2035. It will be no small task to replace each of those frigates at that sort of rate with a new, modern, complex warship.

Photo of Kevan Jones Kevan Jones Labour, North Durham

The right hon. Gentleman is talking about the number of ships. Does he agree that the crisis point in the Navy is also about people and not just in number? I referred to skills in the shipbuilding industry, but there is also a need for particular skills in the Royal Navy.

Photo of Julian Lewis Julian Lewis Chair, Defence Committee

That is true, because if we fall below what one might call critical mass, we will not be able to maintain the necessary footprint to support the construction and manning of vessels on a consistent basis. That is why the question of the fleet solid support ships is so important. Those vessels can be classified as warships or, if we choose not to, simply as auxiliaries. We have that choice, and it is a choice that we feel, on a cross-party basis, it is necessary to exercise.

The trouble that the Ministry of Defence runs into is that every time a long-term strategic view suggests to it that we ought to make an investment of this sort, it runs up against the short-term imperative that the defence budget is so small that cuts must be made at every opportunity, even where, as in this case, they are short-sighted and storing up problems for the future.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

I thank the Chair of the Defence Committee for giving way. Is there not another priority for the MOD—the increased submarine activity we are seeing from Russia? The lack of Navy surface vessels could contribute to that. The modernising defence programme really needs to address that issue.

Photo of Julian Lewis Julian Lewis Chair, Defence Committee

I entirely endorse what the hon. Gentleman said, and I am glad that he mentioned the modernising defence programme. I will take a moment to talk about that exercise. It was felt at the time that the programme was not a very substantial document, but it did rescue the armed forces from what I can only describe as a bureaucratic ambush laid out for it by something called the national security capability review.

Right hon. and hon. Members will remember that that mini-strategic defence review was an exercise that I believe began in 2017 and was conducted not by the Ministry of Defence but by the National Security Adviser, who is currently also the Cabinet Secretary. It was designed to consider security, intelligence, cyber-warfare and defence all in the round. I even heard Sir Mark Sedwill in front of a Committee on which I sat refer to a £56 billion defence and security budget, thus taking all the budgets and putting them together, as it were, in a single basket. There was only one snag with that. If the review decided, as it was minded to do, that much more money needed to be spent on what was called “21st century threats” such as cyber-warfare and ambiguous or hybrid warfare, as there was to be no extra money for anything, the already depleted conventional armed forces would have to be cut further.

The hon. Gentleman’s point is therefore particularly pertinent. Although we live in a world where we face new hybrid warfare, cyber-warfare and other highly technological threats we have not faced before, that does not mean that the traditional threats on the sea, under the sea, in the air and on land have gone away. It is a profound mistake to say that, just because we need to spend more money to meet novel threats, we can afford to spend less money to keep up the strength of our conventional armed forces.

I referred briefly to the Defence Committee’s original report from April 2016, entitled “Shifting the Goalposts?” that set out charts showing the decline in defence expenditure to barely 2%—and that figure was achieved only by including certain categories in the total, such as war pensions, that NATO guidelines allow us to include but we never previously chose to. We just scraped over the 2% line by doing that. I will not spoil the effect by revealing in advance what the new figures show, but believe me, they are not cause for great comfort.

We are now at a stage when we are expecting a change of Prime Minister. Every Prime Minister has a honeymoon period. Even the present one did—sadly, it did not last all that long. In this case, the person most likely to become the next Prime Minister projects an optimism, a sunny personality and a robust world view.

I suggest that all of us, from whichever party we are, should remain united on one thought—there will be a brief window of opportunity. There will be a moment when we will have a new occupant of No. 10 Downing Street who will be full of the joys of spring. This will be our chance to say that the great naval traditions, all those matters of history and all the events in which his great hero, Sir Winston Churchill, participated as First Lord of the Admiralty and later as Prime Minister will be laying, as another Prime Minister once said, the hand of history on his shoulder. What better way to shake the hand of history than to restore defence spending to its rightful place in the scale of our national priorities?

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

Hon. Members will be able to tell that the right hon. Gentleman and I are old school chums because I gave him a bit of latitude to ski off-piste. I call Douglas Chapman.

Photo of Douglas Chapman Douglas Chapman Shadow SNP Spokesperson (Defence Procurement & Nuclear Disarmament) 2:10 pm, 11th July 2019

Thank you very much, Mr Evans; it is a pleasure to serve under your chairmanship. I will try to maintain as best I can the level of optimism displayed by Dr Lewis. I congratulate Mr Jones on securing the debate. I welcome the opportunity to talk about the great importance of this issue not only to the industry but to those who work in it and—from the perspective of a Scottish MP—to the Scottish economy.

As hon. Members will know, shipbuilding has been part of the industrial fabric of Scotland for most of the last three centuries. The world’s highest-quality ships were once built on the River Clyde, where around a fifth of the world’s ships were constructed in the early 1900s. As we all know, the industry’s decline has hit Scotland hard, but there is still a sense of pride among Scots about our shipbuilding heritage. There are plenty of reasons why shipbuilding can and should survive in Scotland today. We have the talent and the infrastructure to take on large shipbuilding contracts, as we have seen in the construction of both aircraft carriers, and it is imperative that we maintain that capability as part of a sensible industrial strategy and defence strategy for future years.

If the Government are serious about protecting the future of shipbuilding and about the delivery of the shipbuilding strategy, they must award the contract for the fleet solid support ships to the UK consortium’s bid. My views on the issue have been clear from the start: it was a huge mistake for the Ministry of Defence to tender the contract internationally. I maintain that position.

Francis Tusa, an expert from Defence Analysis, prepared a compelling report on behalf of the Confederation of Shipbuilding and Engineering Unions last year, setting out the case for the fleet solid support ships to be built in domestic shipyards. The report notes that retaining the contract in the UK would result in serious returns to the Treasury of up to £415 million—even by Treasury standards, that is not small beer. The report also points out that a yard in Rosyth, which is in my constituency, is big enough to accommodate those ships. That yard is crying out for work to secure its future after the contract for the HMS Prince of Wales aircraft carrier comes to an end.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Does the hon. Gentleman agree that the fleet solid support vessels are big enough to be built in block form, as the carriers were, with the work spread around the UK?

Photo of Douglas Chapman Douglas Chapman Shadow SNP Spokesperson (Defence Procurement & Nuclear Disarmament)

Absolutely; the right hon. Gentleman makes a valid and accurate point. The Minister has visited Rosyth and has seen for himself what we have to offer, but he is assiduous and visits areas across the UK, so I am sure that that point will not be lost on him when decisions have to made in future. The GMB estimates that if the support ships order were placed in UK yards, it would create up to 6,500 jobs. Not only would that help to protect the future of Rosyth but the benefits would be shared across the UK. A Government who say that they have a prosperity agenda at their heart must show that it is real and not just something that trips off their Ministers’ tongues. It must be made real and must have a real impact on our economy.

The Government continue to roll out their tired old party line: “These vessels are not warships and are therefore subject to international competition.” How can they peddle that myth when the Minister’s predecessor confirmed in an answer to a written question that he expects the support ships to be fitted with close-range guns, such as the Phalanx? The Phalanx is a 20mm Gatling gun designed to shoot down fast anti-ship missiles, aircraft and fast-attack craft. To argue that a vessel fitted with such weapons is not a warship is difficult for everybody to fathom.

Like many hon. Members, I have repeatedly raised this matter, whether at Defence questions, via written questions, during debates in the Commons Chamber and in Westminster Hall, and again today. The Government must look at this again to be absolutely sure that they are making the right decision, not just for the future of the shipbuilding industry but for the prosperity agenda that they say is so important. I have also raised the matter with the Prime Minister during Prime Minister’s questions, and followed up with a written invitation to her to visit Rosyth dockyard in my constituency, to see for herself the skills, talent and infrastructure that we have there to fulfil such a contract. To echo the right hon. Member for New Forest East, the new Prime Minister will receive an invitation as soon as he is appointed, and I hope it will be met with more optimism and will provoke a better response than last time.

My message has received cross party support. I tabled an early-day motion calling on the Government to restrict the support ships tender to domestic competition, and it was signed by Labour, Conservative, DUP, Plaid Cymru and SNP Members. I would be grateful if the Minister gave some reassurance that our plea for those ships to be built on these islands was not falling on deaf ears.

Although it is an island, the UK’s ability to protect its own coastline is severely lacking. Scottish maritime territory accounts for 60% of UK waters, yet the UK Government have failed to maintain any surface vessel presence in Scotland. All Royal Navy vessels are based on England’s south coast, so it currently takes more than 24 hours for a ship to reach us. I visited Devonport on Tuesday, and it took me half a day to fly there by plane. A 24-hour delay by ship is too big a risk for us to take with our national security.

I am not privy to diplomatic cables—I know that some people are—but I have heard rumours that the US are looking at developing a naval base somewhere in Scotland. Imagine the US having a larger naval presence or footprint in Scotland than the Royal Navy. If there is any truth in that rumour, we live in very strange times indeed.

The RAF Nimrod maritime surveillance aircraft were scrapped in 2010, and we are told that we would need to wait until 2021 for the full P8 fleet to be delivered. That is outrageous when, in recent years, incursions into Scottish waters have increased to their highest level since the cold war. Incidents of Russian transgressions into Scottish waters were reported in 2011, 2014 and 2019. The previous Defence Secretary admitted to the Defence Committee that

“Russian submarine activity in the North Atlantic has increased tenfold in recent years.”

Despite that, the Tories have perpetuated a nosedive in the number of Royal Navy ships from 77 in 2010 to 66. Furthermore, during the Scottish independence referendum, we were promised that 13 Type 26 frigates would be built on the Clyde, but that figure has since been reduced to eight. The commitment to a frigate factory is another promise that was rolled back and has come to absolutely nothing.

When he was Defence Secretary, Mr Hammond repeatedly told the people of Scotland that the only way to secure the future of Scottish shipbuilding was to remain part of the UK. Yet inside the UK, Scotland’s shipbuilding industry has been eroded. Shipbuilding in Scotland employed 15,700 workers in 1991. That figure has more than halved to just 7,000 in recent years. Compare that with independent Norway, a state of similar size to Scotland, where over 37,000 people were employed in that sector in 2008.

During the Scottish independence referendum, we were also promised 12,500 full-time military personnel in Scotland, yet levels are now well below 10,000. In Norway, again, 20,000 people are employed in the armed forces—double the proportion of the population in Scotland.

It is safe to say that the Tories have broken their promise to Scottish shipbuilding and on many other fronts. They clearly cannot be trusted with the future of the industry—although I will be happy to hear more positive sounds from the Minister today. Plenty of small states such as Denmark manage to maintain their sovereign naval defence capability very successfully. With independence, I am sure that Scotland could do exactly the same.

Last year, as a member of the Public Accounts Committee, I led an evidence session on the defence equipment plan, which highlighted a £15 billion black hole in the MOD budget. Sufficient funds have not been made available to dispose of any of the 20 submarines that the MOD has decommissioned since 1980, seven of which lie in the dockyard in my constituency. All the while, the nuclear arsenal continues to burn a huge hole in the defence budget, to the tune of £2.2 billion per year. Continuing to spend such astronomical sums on nuclear weapons that will never be used while our coastal defences are compromised is simply unsustainable and unacceptable.

The Public Accounts Committee findings uncovered the fact that the Type 31 budget did not exist. It is a smaller frigate, but its exportable elements are important to the future surface ship business, in particular in yards such as Rosyth and others across the UK. All the skills and talents that we developed while building two of the largest ships that the Royal Navy has ever built— the QE class—will be lost unless we can maintain the shipbuilding industry through contracts for the support ships or, for example, the Type 31s. In terms of the numbers, the Type 31s could employ 2,000 people over the term of the contract, attracting 150 new apprentices into the industry. That is a price worth paying to ensure that we have a good industry into the future.

In conclusion, in the context of ever-tightening budgets, in the MOD in particular, the Government must reconsider their defence spending priorities and review their ship- building strategy. Shifting resources to shipbuilding would mean responding directly to 21st century security threats. The Government must also review their decision-making process for tendering shipbuilding contracts abroad to ensure that a vital industry is protected from further decline. We must also see fulfilment of the unmet promises that the Government made to the people of Scotland during the 2014 independence referendum.

There can be a bright future for shipbuilding in the UK and in Scotland, although the jury is still out on whether the Government can produce the prosperity agenda that we all look for. Agreeing to the contracts for the fleet solid support ships, the Type 31e frigates and the missing list of Type 26 frigates is paramount in the future of shipbuilding and in making the national shipbuilding strategy not just a document to lie on a shelf gathering dust in the main building but a real plan for action and prosperity.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment) 2:23 pm, 11th July 2019

It is, as always, a pleasure to see you in the Chair, Mr Evans. It is also a pleasure to represent the Clyde shipyards and the shipyard workers of Govan in the Westminster Parliament. On Friday morning, I had the opportunity to see the work being carried out on the Type 26 frigate HMS Glasgow, which is being made in Govan. In a few weeks’ time, I look forward to going to the steel-cutting for the second Type 26, HMS Cardiff.

I thank my good friend, Mr Jones, for securing this debate and for his fantastic work as chair of the all-party parliamentary group on shipbuilding and ship repair. I am delighted to serve on that APPG, which reflects the public affection and support for the shipbuilding industry across the UK. That affection and support crosses political boundaries, as we have seen today. Whether someone is a supporter of the Union or independence for Scotland, or indeed of Brexit or remaining in the European Union, right across thet range people care deeply about the shipbuilding industry in Scotland and the United Kingdom. As the right hon. Gentleman said—I was delighted that he highlighted it—the export success of the Type 26 frigate shows the world-class design capability in the workforce on the Clyde.

I was not the only visitor to the Govan shipyards on Friday. I was there in the morning, but on Friday afternoon there was another curious visitor to the Clyde shipyards—but I will return to Boris Johnson shortly. I will first say that I agree with the points made by all those who have spoken so far in paying tribute to the trade union movement. I am clear that were it not for the pressure that the movement has placed on all political parties, we would not have a shipyard industry at all and, indeed, the CSEU—the Confederation of Shipbuilding and Engineering Unions, which is having its conference today—has written to the two contenders to be the next Prime Minister. It did so because in a couple of weeks—I say this with great affection and respect to the Procurement Minister—he may not be the Procurement Minister; we do not know. There are rumours of shredders in the Departments working overtime in preparation for the new regime. It might even be you, Mr Evans, who is called to become the Defence Procurement Minister.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

The right hon. Gentleman says that, but I can assure you, Mr Evans, that I could name a lot worse—but I will not.

The CSEU wrote to the two contenders asking them about support for the shipbuilding industry and specifically on the issue of the Royal Fleet Auxiliary fleet support ships. It has yet to receive a response from either contender. It was curious that the right hon. Member for Uxbridge and South Ruislip should appear in a shipyard in Scotland but not mention his support or the importance of the shipbuilding industry to the United Kingdom—curious indeed. Not only those who work in the shipyards but the general public are entitled to know what the direction of travel will be under the person with the sunny disposition referred to by the Chair of the Defence Committee, Dr Lewis.

The public are entitled to know what both of the two individuals contending to become Prime Minister will do for the shipbuilding industry, and in particular whether they believe that the Royal Fleet Auxiliary support ships should be built in the United Kingdom. As the CSEU clearly stated in the foreword to the all-party parliamentary group report on the importance of the Aircraft Carrier Alliance, which other hon. Members have mentioned,

“that work is now coming to an end and the CSEU believes that up to 20,000 skilled jobs in shipyards and 20,000 jobs in supply chains are now at risk. There is an urgent need for work to fill these yards.”

I totally agree with that proposition.

The excuses about fleet support ships not being warships are curious. We might think that they were some sort of cruise liner—that the next time we watched an episode of “The Love Boat”, we would see this fleet support ship that has been built and is somehow not a warship. I understand from parliamentary answers that those ships will take part in, for example, counter-piracy. I have never seen “The Love Boat” involved in counter-piracy, but I know that warships are involved in it. To suggest that ships that are armed with naval guns are not warships is curious.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Does the hon. Gentleman agree that a ship that is equipped with Phalanx guns is a warship? They are not there to keep the pigeons off the deck.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

That is an excellent analogy, perhaps better than the one I used. The right hon. Gentleman is absolutely correct: these are warships. If it looks like a warship and acts like a warship, it is reasonable to assume that it is, in fact, a warship and not a civilian ship.

The criterion should be changed to designate fleet solid support ships as warships. If I understood correctly the answers the Minister gave the right hon. Member for North Durham and others in Monday’s Defence questions, that will be the direction of travel. It is all very well saying that will be the future direction of travel, but it should be the immediate one for those contracts. The GMB trade union has said—a point emphasised by my hon. Friend Douglas Chapman—that 6,500 jobs could be created by securing that; £285 million of the estimated cost of the order could be returned to taxpayers—money that would be lost should the order go overseas. That is an important criterion that the Ministry of Defence, and the Treasury, appear to overlook.

After four years in this place I am starting to believe that it is the Treasury that makes the defence decisions, not the Ministry of Defence.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

Apparently the Chair of the Defence Committee agrees. If the Treasury is making those calls, surely it has to take account of the fact that the workers who would build those ships would pay income tax and national insurance that would go back into the Treasury coffers, but that will not happen if the contracts are sent to other places. Unite has estimated that the Treasury would receive 36p in every pound from those defence projects. This is an excellent opportunity for the Minister—in the next two weeks, before his elevation—to demonstrate the Government’s commitment to taxpayer value by making sure that the ships are built in the UK. I have other constituency demands, which I have lobbied the Minister about, and I hope he will take my advice on those in the next couple of weeks, too.

There are plenty of examples of other countries—normal-sized nations or larger ones such as the UK—that better plan their sovereign naval defence capability, build their warships and keep their drumbeat going. As my hon. Friend the Member for Dunfermline and West Fife highlighted, and as shown in my exchange with the Chair of the Defence Committee, this issue is important in the context of current Russian activity. The excursions into Scottish waters are increasingly blatant but there are still no Navy surface vessels based in Scotland—they are all based on the southern coast of England. That seems a very curious way of organising defence when there is increased Russian submarine activity.

As others highlighted, promises have been made about the shipbuilding industry. We heard the classic one that there would be 13 Type 26 frigates; the Treasury then interfered and they became eight Type 26 frigates, and then five Type 31 frigates. Despite that announcement more than three years ago, I still do not know exactly where the Type 31 frigate sits within the Royal Navy and what its purpose will be. It may have a general purpose, but where does it fit in? It is just a smaller and cheaper ship, and that seems to be the only reason it exists. That ship was supposed to be exportable—one that would be easier for BAE Systems and others to sell abroad, so perhaps we might think about going back to 13 Type 26 frigates. In relation to the Type 31 frigate, the Minister should look at the benefits of the prosperity agenda across the UK; I hope he will give a commitment to that.

Now, there is the frigate factory. A former Defence Secretary still insists that the frigate factory exists in the Clyde, and has found himself arguing that twice in the House of Commons Chamber. On one occasion, the GMB trade union and a BBC journalist with a television camera went around the site of the proposed frigate factory and found ash. There is an important point here, which is contained in the all-party parliamentary group’s report, and I hope the Chair of the Defence Committee will pick it up: the Ministry of Defence needs to look at giving some support to shipyard investment. It is no use the Treasury and the Ministry of Defence insisting that they want the industry to build more efficiently and save costs if they do not help the industry to invest in its own shipyards. That shipyard investment can ensure that ships are built more efficiently and cheaper.

Photo of Kevan Jones Kevan Jones Labour, North Durham

It is about not just Government investment but private sector investment. Companies such as BAE Systems must make that private sector investment if there are long-term future orders for those yards. Does the hon. Gentleman agree that what we do in this country is in stark contrast to the Canadians’ investment in new shipyards at Halifax, and the Australians’ investment in Adelaide?

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

I absolutely agree. What Canada and Australia are doing seems light years ahead of what the current UK Government are doing. I am sure the hon. Gentleman will agree that, for far too long, the shipbuilding industry has been experiencing feast and famine—a stop-start period in which there is no continuous drumbeat to build. He is right that the Government have to make a continuous commitment, with the private sector, to look at shipyard investment.

The APPG report—the Minister has a copy—lists 10 reasonable and excellent recommendations. As a member of the APPG, I am very proud of the report, which is about ensuring that we have a thriving shipbuilding industry. One of my frustrations when shipyards are shown on television is that there is always a clip from the 1970s, with the welder wearing the welder’s helmet. I have some sympathy for that because I have family members who were welders, but the industry is far more highly skilled than that. The design is far better. I recommend anyone to visit the visualisation suite of BAE Systems—I know the Minister has been there, as have I. It shows the highly skilled way in which warships are built.

I fully support the all-party parliamentary group’s report, and it has been a pleasure, as always, to take part in this debate.

Photo of Gerald Jones Gerald Jones Shadow Minister (Defence) 2:37 pm, 11th July 2019

It is a pleasure to serve under your chairmanship, Mr Evans, for the first time I believe. I thank my right hon. Friend Mr Jones for securing this debate. I declare my interest as a long-standing and proud member of the GMB trade union. As my hon. Friend outlined, despite decline into a smaller industry, shipbuilding is still a vibrant part of our economy and needs proper support. If we want to maintain sovereign capability, we need to invest. It is not just about the jobs linked to the ships but the spin-off industries and other parts of the UK economy. As he said, it is a national endeavour across the UK and supports small and medium-sized businesses.

We heard the Chair of the Defence Committee, Dr Lewis, support the shipbuilding industry and talk about the variety of purpose, versatility and future adaptability of the vessels. As he has done on many occasions, he talked about the inadequacy of defence expenditure. I am afraid I do not share his optimism about the prospect offered by a new Prime Minister, particularly if it is the candidate that I think he was talking about, but that may be another discussion.

We heard from Douglas Chapman about the need for the fleet solid support ships to be built in domestic shipyards. I will talk later about the expertise in the hon. Gentleman’s constituency at the Rosyth shipyard. Unfortunately, I cannot share his optimism about the future of Scotland outside the UK—or indeed of Wales outside the UK—but that is something more appropriate for the debate currently taking place in the main Chamber.

Overall this debate has been consensual; I want to keep it in that spirit, but there are a few points I wish to raise. When the Secretary of State delivered one of her first public speeches in her new role, we were encouraged to hear her mention the prosperity agenda and talk up buying British. In recent weeks, as exemplified at Defence questions at the start of this week, we have seen little genuine change in that direction. The fleet solid support ships are still being tendered internationally. Ministers have consistently refused to reclassify them as warships, which would ensure that the contracts support the UK defence industry and allow us to retain crucial skills that lie at the heart of our sovereign capability. In the meantime, the shipyard at Appledore was closed; in December the Harland and Wolff shipyard was put up for sale by its parent company, which has since filed for bankruptcy; and Cammell Laird has been making redundancies.

We see this not as a matter of administrative hurdles or roadblocks, but simply a matter of political will. The Government want to save money, which is an honourable goal, but they are not considering the long-term benefits to our economy, as we have heard throughout the debate when contributors talked about the increased tax and insurance take, and the wider benefits and prosperity across the economy, as well as the benefits to our sovereign capability. In his summing up can the Minister muster the political will and ensure that the contract is tendered to UK companies only? Can he confirm what assessment has been done on the potential costs of retrofitting a foreign-made ship with sensitive equipment in the UK?

We see the narrow obsession with cost cutting elsewhere, such as with the Type 31e programme. The average, similarly-sized European frigate costs £350 million, I understand. Reports have suggested that at the UK asking price of £250 million the ships will be unable to protect themselves. We in the Opposition believe that security cannot be done on the cheap. Can the Minister confirm whether the price for a Type 31e frigate is capped at £250 million? Is that a fixed price? If so, given such reports, does the Minister not think that this is a security risk?

Finally, Mr. Evans, the ships we build must be properly staffed. Last week, the RMT announced that 700 members of the Royal Fleet Auxiliary—the Navy’s supply lifeline—had decided to take industrial action over their below-inflation pay offers. They have been offered 1.5% compared to the Royal Navy’s 2.9%, despite the RFA carrying out 64% of the Navy’s tasks, on top of its own. Can the Minister confirm that he will urgently consult the Defence Minister’s people to ensure that our RFA staff are properly paid? Does he not realise that shoddy pay offers contribute to reducing the attractiveness of this important service?

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence 2:43 pm, 11th July 2019

It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate Mr Jones on securing the debate, and I thank all right hon. and hon. Members for their contributions. I echo the comments made by Gerald Jones about the tone of the debate, which has been somewhat less fraught than some shipbuilding questions and debates that I have been involved with in my time in this role.

As the Minister for Defence Procurement, I am acutely aware that I have responsibility for ensuring that we procure the best capability for our armed forces, but also for keeping an eye on value for money because we have a huge responsibility to the taxpayer, as well as for making sure we protect our nation’s interests, both here and abroad. I understand and appreciate that there is also a responsibility to ensure that our defence spending encourages and promotes prosperity throughout the United Kingdom, not just in the main industries but, crucially, throughout our vast supply chain.

I am pleased to speak in the debate, and I am grateful for the insights that others have contributed. The need for us to project our influence globally, while promoting UK exports and prosperity, was at the heart of the 2017 national shipbuilding strategy. Since its publication, work has been going on to deliver the vision of a productive and innovative UK shipbuilding industry, and that is at the heart of this subject.

I thank the right hon. Member for North Durham and the other members of the APPG on shipbuilding and ship repair. I appreciate the meeting we had, which was of great value. There was some serious food for thought in the document that he and his colleagues presented, and I will talk a little more about that later.

The strategy sets out the Government’s procurement approaches for Royal Navy warships and other naval vessels. The strategy builds on our strengths, but also identifies where more must be done collectively, in both Government and industry, to address the structural challenges the sector faces in terms of access to innovation, maximising productivity, skills—a number of people mentioned those—and winning global business. Our ambition is for our shipyards, and the vast network that underpins them, to be catalysts for their local economies, driving growth and creating the highly skilled and well-paid jobs we all want to see.

Photo of Douglas Chapman Douglas Chapman Shadow SNP Spokesperson (Defence Procurement & Nuclear Disarmament)

I hear everything the Minister is saying, but there are shipyards in the UK that will be hanging by a thread in terms of skills and future investment in infrastructure unless quick decisions are brought to the House and made by the Government. We cannot go on like this, going from feast to famine. One of the points of the national shipbuilding strategy was to get a steady drumbeat across all these sectors. I would like to hear what he has to say about that.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

If the hon. Gentleman will forgive me, I will come on to that point a little later, because I accept that it is an important element of where we need to get to to try to support our shipbuilding industries.

I was glad that the APPG’s report recognised the contribution from the UK’s shipbuilding and ship repair industry to the UK economy of over £2 billion; we should be mindful of that. I am fully cognisant of the need to obtain the right capability for our Royal Navy, at the same time as trying to ensure that we get good value for our taxpayers. That is why we are helping the industry to grow, compete and successfully win bids in the global market, as well as just in the UK market. That is part of our objective, and we will be looking at that more widely when we consider our approaches to a potential defence industrial strategy.

In my time in post, there has been a huge amount of focus on the fleet solid support ships, which I understand, but in terms of a successful UK shipbuilding industry, we should be looking much more widely, and the right hon. Member for North Durham made that point powerfully. All of our vision is for a shipbuilding sector that does not need a contract for a couple of non-complex warships; it could also work in the civil sector.[This section has been corrected on 17 July 2019, column 10MC — read correction] It is a globally competitive sector that is looking at how it can export high-value designs, systems, sub-systems, and integration work, so it can win commercial and defence contracts on its own merits.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I understand the point that the Minister is making, but it is important that investment in Ministry of Defence contracts for ships in this country has a spin-off into the civilian sector, in terms not just of producing complete ships, but supporting marine engineering, architects and everything else. If we are to keep that leading edge, which feeds into civilian work both in this country and abroad, including in ship repair and refurbishment, that steady drumbeat of work and investment is needed.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

I said that I would come on to those issues a little later, and I promise I will—I will not hide from them.

The strategy is important for the Ministry of Defence, but I am keen that we look at this across Government too. For that reason, I have asked to meet the Minister for Business and Industry and the relevant Parliamentary Under-Secretary of State at the Department for Transport so that we can discuss how best to support UK shipyards, from the perspective of not only defence, but the opportunities that may exist for the commercial maritime sector and whether it is ready and prepared for them. I want this to be a cross-Government approach to securing the future of the industry.

The strategy sets out an ambitious plan to put the UK at the forefront of the technologies of the future. That is why investment in science, technology, and innovation is key, as they have the potential to drive improvements in productivity, to grow prosperity in the UK and to build an internationally competitive industry that is resilient to the peaks and troughs of both military and civil shipbuilding.

We have heard today about the success of the BAE Systems approach when it comes to the Australian and Canadian work; the company has also been successful in terms of the Royal Thai Navy’s offshore patrol vessel requirements. My right hon. Friend the Secretary of State has had conversations with both the previous and the current Secretary of Defence in the United States about whether the Type 26 and Type 31 might be appropriate and suitable for their requirements. That is something that she will continue to pursue, as will we all.

Of course, there are all sorts of other investments happening, such as the Royal Navy’s new autonomy and lethality accelerator. This £45 million programme will deliver rapid and ongoing transformational change across the maritime environment. The Royal Navy is also forging ahead with things such as the 3D printers that the right hon. Member for North Durham sent me a question about recently. There is a lot of work going on in that innovation area that will continue to support the wider supply chain to our industry.

A few hon. Members have mentioned the Type 31e programme, so I will give an update. It is, of course, a pathfinder for the delivery of the new shipbuilding and capability vision set out in the strategy. We announced the award of contracts for the competitive design phase in December. I am pleased to say that the competition is still on track, and it is our intention to announce the outcome of the competition for the design and build of the ships by the end of the year. It has been a vibrant and healthy competition.

I take the point that Gerald Jones made regarding the value. I have been checking throughout the price we have, which is £250 million per ship. We made some initial adjustments to make it tie in with the way we have procured other warships in the past, so we have taken costs such as Government-furnished equipment out of that £250 million. The Royal Navy assures me—both I and the Secretary of State have been quite robust with it—that the capability we will receive will meet its requirements; it has given us that absolute reassurance, and it is looking forward to receiving the ships.

I will go over some of the other points that have been made. In opening the debate, the right hon. Member for North Durham rightly talked about the skills agenda—I will come on in a minute to the points about the supply chain. He is absolutely right that we must ensure that we learn the lessons from the submarine programme. It has been blindingly obvious to me, as I have been learning this job, that ensuring that Barrow is right up there again and capable of delivering our submarine programme has been a major challenge.

Coming on to the drumbeat, it is our intention to ensure that the industry has that 30-year plan of what the Royal Navy’s requirements will be, so that it can see where the opportunities will arise and where there may be potential gaps that it may need to fill. That said, we have of course provided 20 years’ worth of work on the Clyde. I will comment in a minute on what my right hon. Friend the Secretary of State is doing in this area, because it will be incredibly important.

[Steve McCabe in the Chair]

I have heard a number of people say that the FSS are warships, and that no other country in Europe buys its support ships or other ships from international orders. That is not quite true: for example, Germany had an international competition for its multi-purpose frigate, Norway has procured a support ship from South Korea and five frigates from Spain, Australia has had two support ships from Spain, and New Zealand has an auxiliary ship from South Korea. It is not true to say that all those countries always have their ships built in their home countries.

Photo of Julian Lewis Julian Lewis Chair, Defence Committee

What the Minister says is completely correct. The question is not so much whether countries choose to do this but whether they have to. In the case of Germany, its expenditure on defence is notoriously a much smaller proportion of its GDP than ours is of ours, so it is probably doing it for the same sort of reasons. That does not make it the right policy.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

I will come on to my right hon. Friend’s comments. He talks about funding, which is absolutely the heart of the issue. With a very challenging budget, we must ensure that we get the maximum capability possible for our Armed Forces at the best value. I must say that in the past, international competition has proved very successful; on the MARS tankers, it saved a considerable amount of money. We want to go for two of the ships on the FSS with the option of a third.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

I will give way to my right hon. Friend, but there will be a fixed budget, and we must get the best we can out of that money.

Photo of Julian Lewis Julian Lewis Chair, Defence Committee

I fully understand the logic of the Minister’s position, but it just goes to what I was trying to convey in my speech: it is a question of short-term savings that will show up in an annual budget, compared with medium to long-term costs when the time comes that we want to build other ships and we find that we have lost our industrial footprint to some extent and have to reconstruct it. I acknowledge that that is the dilemma that he faces.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

I am grateful for the point that my right hon. Friend makes. That is the balance we are struggling with at the moment; I will be completely up front about that. It will probably be helpful if I go on to talk about what my right hon. Friend the Secretary of State has said. In the speech that she gave to the Royal United Services Institute, she was quite right to say that we needed to look at where we could explore changing policy so that the UK could at least have the choice, if it so wished, to just build in the United Kingdom.

A tremendous amount of work is going in to reviewing the national shipbuilding strategy. We have Sir John Parker’s comments and of course we are taking stock of those. My right hon. Friend asked for a review to learn the lessons from the MARS tankers, so that we can feed them into potentially changing the policy, but I assure hon. Members that all that, and all the debates, meetings and questions I have had, is followed through.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

I had better give way to the right hon. Member for North Durham first, and then I will come back to my right hon. Friend.

Photo of Kevan Jones Kevan Jones Labour, North Durham

On the MARS tankers, when the Minister is asking for the costings, could he ensure that the costs of the assessment phase, which I think were nearly £100 million, are included? I am also led to believe by industry that some of the costs were incurred because of the poor workmanship and other issues that surrounded it, so what was seen, on ticket price, to be very competitive was overall quite expensive.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

I assure the right hon. Gentleman that the report we commissioned will look at every single aspect of that, including the benefit to the supply chain in the United Kingdom. There is some evidence that a number of UK supply chain companies have seen their international work increase as a result of being part of that. We are formulating our response to the review of the strategy.

Photo of Julian Lewis Julian Lewis Chair, Defence Committee

The Minister is being amazingly kind. I really appreciate it. Let me put this sunny scenario before him. Let us imagine that the wishes of the Defence Committee come true and the defence budget is restored to 3% of GDP, as it was right up until the middle of the 1990s, quite a few years after the end of the cold war. Will he at least acknowledge that if there were an uplift in the defence budget, spending some of that extra money on securing the shipyards and the defence-industrial footprint, even if that sometimes meant that we spent more than we might spend in the short term if we contracted with an overseas builder, would be a sensible strategic decision?

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

Again, that is part of the work that the Secretary of State is looking at, so that the United Kingdom can make a choice on those options. Of course, that will require more money. We have to accept that. I look forward to right hon. and hon. Members securing similar debates, so that Treasury Ministers can answer those questions.

Photo of Julian Lewis Julian Lewis Chair, Defence Committee

They never do. They always try to put it back to you.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

The next time it comes to me, I will push it back, so that hon. Members can challenge that. We can make strategic decisions, but we are governed by the rules of the Treasury Green Book, which we obviously have to follow. The debate on that is a wider debate that we need to have.

I want to put to bed some questions on the FSS. Frankly, we are at a point in the competition at which to delay it and start again would not be helpful for our plans for the carrier groups, so I cannot say to right hon. and hon. Members that that competition will change. It is still an international competition and will continue to be. That said, we still have a UK consortium in there, which should we welcomed. I sincerely hope that that consortium submits a competitive bid that not only features the skills we have been discussing, which are highly valued around the world and have certainly provided success in areas such as Australia and Canada, but help it to become more internationally competitive. Again, that is part of the strategy. We hope that it may well win some more of that work.

There were a couple of comments about the frigate factory. I feel like I am repeating myself somewhat, but BAE Systems took this decision that, for commercial reasons, the value for money was not there; the MOD agreed, but it was a commercial decision. Chris Stephens talked about the exportability of the Type 26 and the Type 31, and how the Canadian and Australian examples should mean that we should forget about the Type 31 and concentrate on the Type 26. However, the vessels are for different markets, which again is part of the offer that our shipyards might be able to promote to other parts of the world. The Type 31 follows a modular approach, as my right hon. Friend Dr Lewis rightly says, so it can be adapted to suit varying countries’ needs for whatever work they want the ship to do. We hope that the prosperity brought to the UK through exports of the Type 31 will be quite considerable.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

The Minister is being very generous. Are he and the Ministry of Defence open to discussions on frigate factories and future shipyard investment with, for example, BAE Systems and other private sector organisations, to look at how we can improve shipyard construction?

Photo of Stuart Andrew Stuart Andrew Assistant Whip, The Parliamentary Under-Secretary of State for Defence

Yes, absolutely. Sir John Parker was commissioned to undertake a review, and he spoke to businesses, industry and all the stakeholders. He has written his recommendations, which we are considering. I have had extensive conversations and meetings with trade unions, industry and trade associations, and I assure right hon. and hon. Members that I have taken all their points on board. We are in the middle of assessing all that information, so it is quite difficult for me to say anything concrete at this point.

I assure the hon. Gentleman and other Members—I know that I speak on behalf of the Secretary of State—that, as long as I am in this role, which may only be for another 14 days or so, we will continue to ensure that all the points that have been made will be seriously considered. We will review and challenge, and we will make sure that all that helps us to formulate the Ministry of Defence’s response to that review, so that we can do what I actually believe we are all trying to achieve: to make our shipbuilding industry successful here in the UK and abroad, so that the skills and jobs that so many people have come to rely on, including our country and our armed forces, can be relied on for years to come.

Photo of Kevan Jones Kevan Jones Labour, North Durham 3:06 pm, 11th July 2019

Welcome to the Chair, Mr McCabe. We have had a good debate, with contributions from my hon. Friend Gerald Jones, the Chair of the Defence Committee, Dr Lewis and the hon. Members for Glasgow South West (Chris Stephens), for Truro and Falmouth (Sarah Newton) and for Dunfermline and West Fife (Douglas Chapman). I agree that it has been a consensual debate, and it has been good to get this issue on the agenda and to make sure that we discuss shipbuilding in the House.

I was going to ask Mr Evans whether he would do me a favour. The hon. Member for Glasgow South West challenged the two Conservative leadership contenders on the letters they received from Mr Ian Waddell, general secretary of the CSEU, on their attitudes towards the fleet solid support vessels. I can hardly ask you to convey that to them, Mr McCabe, so I ask the Conservative Members here to tell those contenders that a reply to those letters would be helpful. It was especially remarkable that Boris Johnson visited a yard in Glasgow last week and was clearly not even briefed on the vessels.

It was a good debate, and we need to keep having these debates and talking about these issues because while shipbuilding in this country has a bright future, whether we like it or not that future depends on Government and private sector investment and on the throughput of work that those yards want. Without that, we will not retain skills and we will not have the bright future that the industry not only can have but rightly deserves.

I wish the Minister the best of luck in the next 14 days. To be fair to him, he is prepared to listen to different views and I give him credit for that. I am not sure that I have the same interest in the Department for Environment, Food and Rural Affairs, so if he goes off there, or somewhere like that—I do not know. I put on the record my thanks for the work he has done in this sector. If he could sign the contract for the FSS in the next 14 days, that would certainly make a lot of people very happy.

Question put and agreed to.

Resolved,

That this House
has considered the National Shipbuilding Strategy.

Sitting adjourned.