PARLIAMENTARY DEBATE
National Shipbuilding Strategy - 10 March 2022 (Commons/Commons Chamber)
Debate Detail
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.[Official Report, 15 March 2022, Vol. 710, c. 10MC.] 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 the Member for Pendle (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.
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.
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.
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.
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?
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 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.
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