The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)
That was an introduction and a half. Thank you very much, Madam Deputy Speaker: it is a real pleasure to take part in this important debate.
Looking at the motion, I see much on which we are in agreement, and looking around the Chamber, I see many of the usual characters who wholly support not only the armed forces and the armed forces industry, but our defence posture. Defence investment is important, and my view—I do not know whether it is related to what may happen later in the day—is that we need to spread that message more widely to our other parliamentary colleagues.
Let me approach the issue from two perspectives. First, why must we invest in our maritime capability? Why, from a British perspective, is it important for us to do that? Secondly, in aiming to meet whatever is our ambition and create whatever architecture we wish to create, how can we most wisely spend the taxpayer’s money on defence? It is interesting that the hon. Member for Llanelli (Nia Griffith) focused on that as well. What is a wise use of taxpayers’ money—or should we automatically give it to shipbuilders in the United Kingdom with no questions asked? That, I think, is at the core of the debate: the issue of where the line should be drawn.
Let me step back from the details for a second, and reflect on the importance of the security and prosperity of our island nation in the context of the seas. For centuries our world-renowned Royal Navy has protected our shores and our people, and has safeguarded our interests. As we mark the end of the first world war, we remember that in that war—and, indeed, in the second world war as well—it was the aircraft carriers, the frigates, the destroyers, and the other warships built by men and women across the country that kept our fortunes afloat.
Today, as the hon. Lady said, our Royal Navy is busier than ever, defending our trade routes, leading the fight against global terror, protecting shipping lanes from piracy, tackling illegal migration in the Mediterranean, and, obviously, playing a leading role in NATO’s maritime capability. Its activities have ranged from war-fighting to nation-building to peacekeeping, and from interdiction to littoral work—and humanitarian work, as we saw in the Caribbean last summer. In a post-Brexit world, however, there is an ever greater need for us to project our influence and lead by example in retaining the most sophisticated and potent Navy in Europe, to help shape the world around us and to keep ourselves and others safe.
I make no apology for raising the wider issue of defence spending—which has already been raised by the Chairman of the Defence Committee, my right hon. Friend the Member for New Forest East (Dr Lewis)—at the very time when the same issue is being discussed more widely at the NATO summit. The Defence Secretary has succeeded in elevating the need for increased defence investment as threats diversify and become ever more complex. As I said in Defence questions on Monday,
“We are entering a phenomenon of constant confrontation by state and non-state actors.”—[Official Report, 9 July 2018; Vol. 644, c. 691.]
We are not in a phase of war, and we are not in a phase of peace.
Let us remind ourselves of the very first line of the national security strategy and strategic defence and security review:
“Our national security depends on our economic security, and vice versa.”
It is important for us to persuade all members of all parties that we must invest, because if we fail to do so, our capabilities will diminish at the very time threats are increasing. We need to convey that message to the Treasury. Let me repeat that as the world becomes more dangerous, our post-Brexit economy is ever more reliant on security for access to our international markets. Some 95% of our trade still goes by sea, and we need to protect our interests there.
Mr Ellwood
If the hon. Gentleman will let me finish this peroration, I will of course give way, just to re-energise myself. If we allow that trade to be affected by the changes made in the world around us by nations that choose to breach the rules we helped set up after the second world war, there will not be any money for any Government Departments, let alone the MOD. I hope we can join together to persuade more of our colleagues about that, and not just the stalwarts and defence fans, so to speak, who are here today.
Grahame Morris
I apologise for interrupting the Minister’s flow. I do not think any Member on either side of the House would disagree about the importance of the Royal Navy and the incredible job it does, but our point on this side of the House—I suspect shared by some on the Government Benches—is that shipbuilding is a vital strategic industry. There are many benefits apart from producing the very best ships in the world, such as maintaining employment and a skills base that could itself generate more economic activity. I hope the Minister will take that into account, and not least the importance of the supply chain.
Mr Ellwood
There is nothing in that that I would disagree with; the hon. Gentleman is absolutely right. I will come on to what we are doing to promote Royal Navy ships; we will come on to the core fact of what is a Royal Navy ship and what is a fleet auxiliary ship, which again goes to the heart of the difference in how these different types of ship are procured.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Notwithstanding what has just been said, surely the Minister will accept that whenever we buy a Royal Navy warship, an auxiliary ship, an aircraft or whatever abroad, we never own all the intellectual property associated with that product. We are buying F-35s, which are splendid aircraft, but we will never know the fine details of the box of tricks that makes them work, and that is a disadvantage to our country.
Mr Ellwood
I will move on to our maritime capability and our procurement process, but first please allow me to finish the bigger case of why it is important that we invest here.
I am making the point that although we must persuade Members of Parliament, we also need to persuade the nation. This is the same nation that enjoyed the fly-past yesterday and that expects us to step forward as a global influencer, but I am afraid is perhaps worryingly naive about the need to invest, because that is not a doorstep issue; it does not come up very much on the election circuit compared with health, education or transport. I think all Members would accept that point.
Our defence posture matters; it is part of our national identity. It allows us to sit with authority at the international top table and help shape global events. Other nations and allies look to us; they look to Britain to step forward, and to lead in the air, on land, on the sea and now on the cyber-plane as well. That ambition could be lost in a generation if we do not continue to invest; that capability, and desire to step forward, could be lost.
When we look at the current challenges facing Europe, the middle east and parts of Africa, we see that we are the best in Europe in terms of security, military capability, and intelligence and policing. We have an opportunity to leverage that position of strength as we craft a new post-Brexit relationship with our European allies and take a leading role in NATO, but we can only realistically do that with a sensible increase in our defence spending, which includes investment in ships.
Gavin Robinson (Belfast East) (DUP)
The Minister is right to say we need to build support not only across this Chamber among Members who are not present, but from across the nation, about the imperative benefits associated with investment in defence. I hope the Minister agrees that one of the ways to do that is by injecting a sense of national pride in our defence industry: by increasing the connectivity between our yards and our people, and between our people and their representatives. In Harland and Wolff in east Belfast that is exactly what we expect. It wants to be part of this investment and of this country’s defence infrastructure, and it looks forward to playing its part and building its support locally.
Mr Ellwood
During my time as a Member of Parliament I have seen a change in the posture of the Royal Navy that we can all be proud of. What is the Type 45? It is the best in its class. What is the Type 26? It will be the best in its class. What is the Type 31? It is a change in approach to modular design, which will be exactly what we need for export. This is what Britain is doing. We invented the aircraft carrier; we were the ones who first put that concept together. That innovation that is inherent in our DNA is what is allowing us to do exactly what the hon. Gentleman says.
Chris Stephens
I thank the Minister for promoting modular build in the UK. If modular build is good enough for the Type 31 frigate, surely it is good enough for fleet support ships, which could be built in the UK on the same basis.
Mr Ellwood
I have hinted that I will come to that in a second, but there is a distinction between fleet support ships that employ civilians and Royal Navy ships that employ Royal Navy personnel. There is a distinction between the two from a security perspective.
Going back to the point about value for money for the taxpayer, the Defence Secretary, the Procurement Minister and I all want to ensure that we are able to utilise the advanced skill sets in our defence industry across the UK, but the bottom line has to be value for money. Let us take as an example the ships that were recently purchased in Korea. The price was half the British value. Is the hon. Member for Llanelli saying that she would pay double the price for the same auxiliary support ships?
Nia Griffith
The Minister needs to take into consideration the fact that something like 36% of that spend would immediately come back to the Treasury in taxation. There would also be a knock-on effect for all the small businesses that would benefit from that money being spent out into the local economy. We would also have to take into account the cost of social security if those people were unemployed, as well as the disastrous cost of losing our shipbuilding industry altogether. Does he recognise that if we do not invest now to create a drum beat of orders, we could see the shipbuilding industry going the same way that the Tories let the coalmining industry go?
Mr Ellwood
Now we really are seeing the difference between us, if the hon. Lady is comparing this situation with the coalmining industry. Is that where this debate is going? I certainly hope not.
Several hon. Members rose—
Mr Ellwood
I am suddenly very popular, but may I just finish answering that point? Then perhaps we can go round houses.
This is a serious point. The hon. Lady did not answer the question on whether she would endorse purchasing a British-built ship that cost twice the amount as one built elsewhere. I hear what she says about the knock-on impacts for small and medium-sized businesses and so on, but a third of the money being spent comes back to Britain anyway. That is part of the contract that has been secured by the Procurement Minister. So in fact, we are already doing as she says, but taxpayers are paying half the price that they would have been paying had we purchased something from Britain. That is the situation that we face, and without wishing to sound too political, that is the difference between us on the Government Benches, who want to be fiscally responsible with taxpayers’ money, and those who simply want to pay for anything. I absolutely want it to be British, but we have to have value for money. Also, it is wrong to suggest that there is no shipbuilding capacity coming through. I have just mentioned the aircraft carrier, the Type 26 and the Type 45, in which there is continuing interest, and we also have the Type 31 and the offshore patrol vessels that are coming through. So there is plenty out there to keep our capability alive and busy.
Several hon. Members rose—
Mr Ellwood
There is so much choice that I do not know where to start. Let us go with the right hon. Member for Warley (John Spellar).
John Spellar
Will the Minister confirm that the Korean shipbuilder that took this contract, DSME, underbid and actually lost significant sums of money on the contract? It was not a fair contract, and because of its general business practices, it came very close to going bankrupt and had to be bailed out.
Mr Ellwood
I am glad that the right hon. Gentleman put it like that, because I was worried that he was going to say that state aid had been involved. I am sure that he would not suggest that that was the case, because I know him better than that, even though that was hinted at by those on his Front Bench. That was the commercial decision that the company took, but we are left in a situation where Britain is getting value for the taxpayer’s money.
Mr Kevan Jones
The Minister is talking complete and utter nonsense. On the military afloat reach and sustainability contract, there was no UK bid, and the reason for that was that the industry was told that the contract was going abroad. As my right hon. Friend the Member for Warley has just said, the Korean bid was underbid and basically bankrolled by the South Korean Government.
Mr Ellwood
The right hon. Gentleman sits down and folds his arms, but there was a UK bid.
Mr Ellwood
I would like to move on, so I am going to make some progress and perhaps invite the Minister responsible for procurement, who will be concluding the debate, to go into the detail of the bid. If Labour is taking a position of only taking British offers and not looking abroad, it is not taking taxpayer value for money into consideration.
Leo Docherty (Aldershot) (Con)
Does the Minister agree that the picture painted by Labour Members is rather inaccurate? Due to the remarkable scale of investment, not least in our new Type 26 fleet, the picture is one of extraordinary investment activity, so to portray the industry as being on its knees is, frankly, a gross mischaracterisation.
Mr Ellwood
I am grateful to my hon. Friend, but I want to move on to the second question that I posed, which is how we can best meet the ambition of optimising our industry’s capabilities while spending taxpayers’ money wisely.
The UK is a world leader in the defence sector. In 2016, the UK defence sector had a turnover of £23 billion, £5.9 billion of which was export orders. The MOD is the sector’s most important customer, spending £18.7 billion with the UK industry and directly supporting 123,000 jobs in every part of the UK. Indeed, my hon. Friend the Member for Ludlow (Mr Dunne), in his report that was published on Monday, shines further light on the important contribution that defence makes UK prosperity, and I pay credit to him for his work. The report shows that there is more that we can do, which should be welcomed by both sides of the House.
Leo Docherty
I am grateful for that compliment. The Minister is describing an interesting picture. Does he agree that aviation and aerospace are an important part of that picture? Does he also agree that activities in and around Farnborough, including the international airshow, are vital? Will he confirm that he will be attending the airshow next week? If he is not, I will happily arrange that for him.
Mr Ellwood
We have wandered away from ships a little, but my hon. Friend is right. I pay tribute to the RAF for its event yesterday, and for what it has done and continues to do. The Royal International Air Tattoo starts at RAF Fairford on Friday, and we have the Farnborough airshow next week, where we will be launching our air strategy, based on the same principles as for shipping, which will be exciting.
Returning to ships and the role of the maritime sector, we should remind ourselves of the significant changes to the Royal Navy fleet. We have two incredible aircraft carriers coming into service, a new generation of Dreadnought-class submarines, the Type 45 destroyers—the most advanced in the world—and the new Type 26 global combat ships. We also have the Type 31e frigates—e for export—which have deliberately been designed with a modular concept. Depending on the export need, which could be interdiction, surface support or humanitarian purposes, its parts can be interchanged simply to adapt to the local requirement. This is an exciting time, and all the ships will be built in the United Kingdom.[Official Report, 24 July 2018, Vol. 645, c. 7MC.]
To achieve our ambitions, we need a strong shipbuilding industry as part of the wider maritime sector. As the Opposition spokeswoman said, more than 100,000 people work in this country’s maritime and marine sectors, including in the shipyards that supply parts and support equipment to keep the great industry alive.
Mr Ellwood
I will, but I need to make progress, as other people want to speak and there may be something else that we all want to go to later.
Mr Sweeney
The Minister refers to shipyards. He might be aware that a deal was done in 2013 so that, in return for closing down operations in Portsmouth, capital investment would be made on the Clyde to make it a world-class centre of shipbuilding expertise, but that deal was never followed through with. He talks about creating a world-class industry, so why has he failed to follow through on the investment proposals that would make the Clyde world class and restore that capability?
Mr Ellwood
We are investing both in the Clyde and in Portsmouth. Looking back over the past few decades, let us be honest that although we have world-class shipbuilding capability, efficiency has not been what it could be. Successive Governments could have done better—we put up our hands up to that—which was why it was all the more important to create a shipbuilding strategy. We commissioned John Parker’s report so that we would be able to understand—
Mr Ellwood
I will make some progress, if the hon. Gentleman does not mind, because other Members wish to speak. Let me make some progress and I will give way shortly.
Nia Griffith
Does the Minister recognise that the Parker report very clearly mentions having a “drumbeat” of orders? That is vital to the industry so that we do not lose skills, so that we do not fall behind on R&D and so that we can remain in the game. Does he agree that that is important and that these ships could contribute to that drumbeat of orders?
Mr Ellwood
I do not disagree. I try to be less partisan than others who jump up at the Dispatch Box, and I absolutely agree with the hon. Lady about the importance of that drumbeat of orders, but it should not come at any price. We need to make sure it blends with what is built for the Royal Navy and for the Royal Fleet Auxiliary. We have accepted every single recommendation made by John Parker, and we thank him for his very wise report.
Mr Ellwood
The hon. Gentleman is sitting on the edge of his seat. Obviously I cannot refuse to give way.
Chris Stephens
The Minister is very generous. What did John Parker’s report recommend for how the fleet support ships should be built? I am very curious. Can he tell us what the Parker report says about fleet support ships and the exact page on which it says that?
Mr Ellwood
The Parker report is about our approach to shipbuilding, and it has led to our shipbuilding strategy and our defence industrial strategy.
Mr Ellwood
If I can make some progress, I may actually be able to answer the question.
Mr Dunne
My right hon. Friend has been generous about my report, which was published on Monday, and I am grateful for the other comments about the report by Members on both sides of the House. On page 53 of the report, I refer to the fleet solid support ship and make the point that the fact that we are currently a member of the European Union means that we are precluded from taking advantage of the article 346 exemption to require that ship to be built in the UK. One of my recommendations is that we should take advantage of the opportunity of Brexit to consider the opportunity, after we leave the EU on 29 March 2019, to build UK content into our own procurement rules, which might allow us to change the position, but we cannot do that today.
Mr Ellwood
I suggest that the right hon. Gentleman reads the report by my hon. Friend the Member for Ludlow to understand the full picture. My hon. Friend is correct that EU regulations provide guidance on building those ships. The regulations do not apply to royal naval ships because, from a security perspective, every sovereign nation is allowed to bypass them, but the rules absolutely apply to non-royal naval ships—as in Royal Fleet Auxiliary ships—that employ civilians on board. I encourage hon. Members to read the report before judging what my hon. Friend has just said.
Moving back to what I was saying, we must have an honest debate about what is happening, which is why we need to develop a modern, efficient, productive and competitive marine sector that allows us to build on the work that has been done on the Clyde, in the north, in Belfast, in Barrow, in the north-east, in the north-west and in the south-west of England. We have incredible capability, and I am pleased to see so many hon. Members representing constituencies in those areas in the Chamber today.
Our new shipbuilding strategy sets out exactly how we can achieve such a marine sector. We will continue to build Royal Navy ships only in the UK while encouraging international collaboration in harnessing open competition for other naval ships. Our new framework will ensure that the impact of UK prosperity will be considered as part of our procurement decisions. The 2015 strategic defence and security review created a new security objective: promoting our prosperity. Competition and strategic choice remain at the heart of our approach, but we recognise that there are several different models for working successfully with the industry, and we need to take further steps to bolster that and make the right decisions to enable a strong partnership between the Government and industry.[Official Report, 23 July 2018, Vol. 645, c. 7MC.]
That is part of the whole Government approach, spearheaded by the national industrial strategy, with its mutually reinforcing focus on driving productivity and supporting innovation, which provides a strong and clear policy framework in which industry can invest and grow. Key to that is how defence procurement might build economic value by strengthening UK productivity and industrial capability, including at a local level, and boosting exports sustainably. We recognise that responsible exports are now widely accepted as having a part to play in our wider national defence and prosperity objective. They are considered to be an opportunity, not a burden.
Sir John Parker’s 2016 independent review made a series of recommendations about improvements we can make, and, as I said, I am pleased that we will be accepting all of them. He did place emphasis on the dysfunctional relationships between government and industry. Old ships were retained in service well beyond their service date, with all the attendant high costs, and it is important that that changes. So our new strategy is founded on three pillars. The first is better planning, giving industry greater certainty and predictability. We are providing a 30-year Royal Navy shipbuilding masterplan to guide all future naval shipbuilding decisions, and to document the number and types of ships in which we will invest over the next three decades.
The second pillar is a new approach to design and construction. We want to challenge naval standards and introduce new ones, forcing through advances in design, in new materials such as composites, and in manufacturing methods. Our new carriers are a prime example of that. They are built in blocks, with parts built in different parts of Britain, drawing on the expertise of 10,000 people, and being brought together from centres of excellence from across the country. Thirdly, we want to focus on building exports, where there is an opportunity, as the Type 31 will be the first frigate for export since the 1970s. We know that more sales can cut costs in procurement over time and give us the potential to buy even more cutting-edge ships.[Official Report, 24 July 2018, Vol. 645, c. 8MC.]
For now, for reasons of national security, the shipbuilding strategy sets out that warships will be built and integrated in the UK via competition between UK shipyards. However, for the purposes of shipbuilding only, the national shipbuilding strategy defines warships as destroyers, frigates and aircraft carriers. All other naval ships, including the Royal Fleet Auxiliary ships, as well as other Royal Navy manned ships, such as patrol, mine countermeasures, hydrographic and amphibious ships, will be subject to open competition—that means international competition. That remains where the difference lies between us and the Opposition, but it is the cornerstone of our defence procurement policy. I remind the hon. Member for Llanelli that she talked repeatedly about value for the taxpayer, and it is important we understand that. I hope that there is a compromise whereby where we want to and can, we will utilise British shipbuilding capability, but when it comes in at twice the cost of an overseas opportunity, we will have to be very careful about which decision we make.
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. The Minister will have to sit down.
Mr Deputy Speaker
Order. I don’t care what the Minister thinks he is doing; I am just telling him what he has to do.
Mr Ellwood
My hon. Friend is absolutely right—that would be considered royal naval class, so not manned by the Royal Fleet Auxiliary.
It is important that, as we move forward, we look closely at value for taxpayers’ money.
Mary Glindon (North Tyneside) (Lab)
The GMB commissioned a Survation survey that found that 74% of people want these ships to be built in this country. Do not public opinion and the pride that people would feel if the ships were built here matter as much as value for money?
Mr Ellwood
I can only say that I hope that 100% of people would like ships to be built in the UK, but I also think that 100% of fiscally responsible people would like value for taxpayers’ money. That is the difference that this debate will illustrate.
Since the strategy was launched in 2017, the Government have worked closely with our partners in industry and made significant progress on our commitments under the shipbuilding strategy, not least through our continued investment in five River class offshore patrol vessels that are being built on the Clyde. Those ships have safeguarded industrial capability through a contract worth around £635 million, which is exactly what the shadow Secretary of State wants to see. We must make sure that there is this drumbeat of work, not only so that none of the shipyards face closure, but because it is essential so that we can continue to act when we require ships to be built for the Royal Navy. The first batch of the cutting-edge Type 26 frigates that are being built under the £3.7 billion contract with BAE Systems are also being built on the Clyde.
Mr Sweeney
The Minister mentions the River class batch 2, which was primarily designed to maintain production at Govan shipyard until the Type 26 was of sufficient maturity to begin construction. Does he accept that the only reason why Govan shipyard is open today is because a Royal Fleet Auxiliary order for the Wave Ruler was placed there in 1999 to keep the yard open until the Type 45 build could start? The only reason why that yard exists today is because the Government placed that Royal Fleet Auxiliary order with Govan, and that is exactly what we are arguing for today: to maintain these builds in the UK to maintain industrial capability.
Mr Ellwood
The hon. Gentleman sort of makes my point. We need to make sure that we bear in mind not only prosperity and British capability, but value for money for the taxpayer.
The Type 26 will offer a leading anti-submarine warfare capability for its planned 25-year service life, providing critical protection to the continuous at-sea deterrent and maritime task groups. We are currently in dialogue with industry on the strategy’s flagship Type 31 frigate programme, which is worth £1.25 billion for five modern warships. They will be flexible and adaptable in design, as I said earlier, and part of a balanced Royal Navy fleet that will be deployed across operations in support of the UK’s maritime task group.
The shadow Secretary of State mentioned the launch of our fleet solid support ships programme, which is procuring vessels for the Royal Fleet Auxiliary through international competition. They will provide munitions, stores and provisions to support maritime and amphibious-based task groups at sea.
On exports, we are delighted that Australia is considering the Type 26 global combat ship and BAE as the preferred tenderer for its future frigate programme. The consequence of our creating something that other countries want is that further countries have been prompted to look carefully at the Type 26. That is exactly what is happening in our discussions with Canada. This is exactly where we want to go: we want to make sure that we have the capability to build something that we can export, not just something to keep shipyards open. That is critical. The UK’s long-term commitment to the Type 26, which is currently being constructed for the Royal Navy in Glasgow, was an important consideration for Australia in its decision-making process. The fact that we continue to invest in it showed our continued confidence in the Type 26, which we believe is the world’s most advanced, capable and globally deployable anti-submarine warfare frigate.
In conclusion—[Interruption.] I could go on, if Members would like. I hope that the House will join me in recognising the important role that the defence industry plays in helping us to meet our ambitions and commitments, ensuring that we continue to deliver cutting-edge, battle-winning capability for our armed forces for years to come.
Dr Julian Lewis
As an immoveable Defence Committee commitment means that I have to leave this debate for a period, though I hope to catch Mr Deputy Speaker’s eye later on, I would not like the Minister to sit down without knowing how much we on both sides of this House appreciate that he has been prepared to speak out as strongly as he has in favour of an increase in the defence budget. I hope that he will continue to press the Opposition to operate on a bipartisan basis in this way, because if we want to invest to keep shipyards open that might otherwise close, surely the logic is that the defence budget must increase.
Mr Ellwood
My right hon. Friend is very kind in his words. May I reciprocate by saying that he has done much work to keep this debate alive? The Defence Secretary is absolutely passionate about this. As I said earlier, we need to share this further, beyond defence colleagues and beyond those who naturally find this important and understand it or indeed who have constituencies that are connected with the armed forces. This is something on which we need to engage with the nation. We need to recognise that it is part of our DNA to be strong, to be firm and to be leaders in Europe and on the international stage itself. I hope that that message is being shared in NATO at the summit now.
Mr Ellwood
I am desperate to finish, but I will give way to my hon. Friend.
Leo Docherty
I am grateful to my right hon. Friend for giving way. Given that, at the NATO summit, President Trump has called on all NATO members to invest 4% of GDP on defence, does my right hon. Friend agree that 3% from the United Kingdom is the very least that we should be investing in our national security?
Mr Ellwood
Before wandering too far down that road, let me say that this is just too important for us to play a guessing game and try to thump out numbers of GDP advancement. Other Departments will just turn around and say, “Well, I want a bit more of that for my Department as well.” We must make the case; we must spell out exactly what the money would be spent on, what savings would be made and what efficiencies we can provide inside defence itself. Therefore, whether the figure is 4%, 3% or 2.5%, the purpose of the defence modernisation programme is to give us the detail on what we need to do for our air, land and sea; what we need to do to upgrade in all phases of war; what we need to do in the new areas of complex weapons, cyber-security and protection of space for fear of hollowing out our conventional capability.
In conclusion, this Government have a responsibility to obtain the right capabilities for our armed forces. However, as a customer, we must ensure that this represents value for money for the taxpayer. Competition is at the heart of our approach. Our shipbuilding strategy is a pathfinder and exemplifies many aspects of our approach, set out in the Government’s policy framework, which includes an ambition to transform the procurement of naval ships; the importance of making the UK’s maritime industry more competitive; investment in the Royal Navy fleet; a commitment to exports; and a plan to boost innovation, skills, jobs and productivity across the UK.
We are rightly proud of all those who serve our country. We have a duty to look after them and protect them. That includes procuring the best possible equipment, which allows us to remain a tier 1 nation, leverage our industrial capacity and produce cutting-edge equipment for us and for us to export.
Wayne David (Caerphilly) (Lab)
On a point of order, Mr Deputy Speaker. Earlier, the Minister was adamant that there had been a British bid for the MARS tanker contract. That was not the case, and I wonder whether he would like to correct the record.
Mr Ellwood
Because of the mechanics of the Defence Committee, I, rather than the Under-Secretary of State for Defence, my hon. Friend the Member for Aberconwy (Guto Bebb), stepped forward to open this debate. However, defence procurement is his brief, and it would make more sense for him to give a comprehensive reply on this very subject as he is concluding this debate.
Mr Deputy Speaker
The matter is now on the record for it to be picked up—[Interruption.] Hot potatoes!
I now have to announce the result of today’s deferred Division, which was subject to a double majority vote under Standing Order No. 83Q, in respect of the Question relating to the draft Renewables Obligation (Amendment) Order. The Ayes were 299 and the Noes were 211. In respect of the same Question among those Members from qualifying constituencies in England and Wales, the Ayes were 282 and the Noes were 201, so the Ayes have it.
[The Division list is published at the end of today’s debates.]
Stewart Malcolm McDonald
Oh, I am going to come to that. The hon. Gentleman leapt up, but sometimes hon. Members’ interventions are best made from their seats; that might have been one of them.
On whether this is a civilian ship or a warship, my party is in agreement with the shadow Secretary of State. We think that the Government have the wrong definition and we do not believe that they are actually fulfilling their responsibilities as far as the Parker report is concerned. These ships are armed and, as has been mentioned, take part in counter-piracy and counter-narcotics missions.
I want to read a quote from the Under-Secretary of State, the hon. Member for Aberconwy (Guto Bebb), who is responsible for procurement. He said in a written answer on 27 April this year:
“The programme to deliver the Royal Fleet Auxiliary (RFA) Fleet Solid Support ships is in the Assessment Phase. We expect that the ships will be provided with a limited range of weapons and sensors for self-protection, most likely to include small arms, and close range guns such as Phalanx. The exact equipment provision has not yet been finalised but will remain consistent with the defensive measures provided to RFA vessels.”
On that definition, the Minister who has just spoken is getting it wrong.
Mr Ellwood
May I invite the hon. Gentleman to visit a Royal Fleet Auxiliary ship to see the self-defence assets that are on board? That is allowed by law, given that civilians are working there. They are allowed to have a certain accommodation of capability, as he has just rolled out. That does not make such a vessel a royal naval warship or one that is doing any kinetic operations.
Stewart Malcolm McDonald
The Minister is free to invite me. Indeed, I look forward to getting a suggested date and time.
I am not the only one who is picking a fight with the Government over this; I am joined by all the Opposition parties in the Chamber today, the shipbuilders who will be producing these ships when the order finally comes through and the trade union movement that supports them.
Kevin Foster
I thank the right hon. Gentleman for his intervention. Sadly for him, if he had waited until I got to a later part of my speech, he would have heard me talk about the Republic of Ireland, which is building naval ships at the Appledore shipyard in North Devon. He asked me to name one country in the world, and he has got one: the Republic of Ireland. I do not think I will take another intervention if knowledge is so limited that even our closest neighbour is not known about.
Mr Ellwood
I just want to make a technical point. One reason why we are in this situation is that the Royal Fleet Auxiliary, as I mentioned, is made up of civilians. Most nations that have advanced naval capability have support vessels that are part of their naval fleet; it is for sovereign capability that those ships are built in that way. They do not have even the freedom to offer that elsewhere.
Kevin Foster
I thank the Minister for his intervention.
The part of the motion I have sympathy with is about ensuring that when we engage in procurement exercises the criteria take into account the wider benefits of using particular contractors. One of the things I am slightly concerned about is the idea that buying from the UK is something we are only going to do if we have a protectionist policy in place. As is shown by the example I have just been able to give of Babcock building ships for the Irish navy, our industry is perfectly capable of winning contracts in the international market. That is because of the quality of the teams, the quality of the product and the cutting-edge nature of some our technology. The recent Australian navy contract won by BAE, which has already been mentioned, will see the export of our knowledge and expertise—many small and medium-sized enterprises in the UK will get jobs and contracts out of that decision—and it is a sign of the quality we can offer.
It is almost doing down our industry if we stand up in the House and say to its potential international customers that the only reason we would want to buy from it is if we were required to do so, because that is simply not the case. Our industry has moved on hugely, and it is a cutting-edge and competitive one. It is disappointing that more Members have not got up and said that in this debate. I must say that Members on both sides of the House have implied there would be a massive cost to buying here in the UK, whereas we can actually win contracts overseas.
For me, it is clear that our industry can go out and compete properly for work, based on criteria that take into account the wider benefit of delivering a particular contract in a UK yard. I want to see these ships built in the UK and I want a yard to win that contract. I want us to be able to go out and say to our international competitors that that was done because our shipbuilding industry put in a good bid, at a good price, and could deliver exactly the right product and one that they would want as well. Let us be candid: if global Britain is about saying, “We want to sell everything to you, but there is no way we’re going to buy anything in return,” it will not be particularly successful.
In every trade deal we sign, we should rightly look to include protections against subsidy or state aid. In the same way that we would look to stop the dumping of steel via tariffs, we should make sure that a procurement contract deals with any nation wanting to subsidise it with a view to having an unfair competitive advantage. Again, fair criteria would deal with that.
Chris Stephens (Glasgow South West) (SNP)
I will try my best to keep my remarks to four minutes, Mr Speaker. First, may I welcome the trade union representatives from the Clyde shipyards? Such is their passion for the industry that they have come down to London today to hear this debate.
The debate so far can be summed up by paraphrasing that great conservative icon Lord Vader because, “We want these ships, not excuses.” All we have heard from Government Members has been excuses, because—[Interruption.] If the hon. Member for Torbay (Kevin Foster) has ever watched the films, he would know that Lord Vader is far from a socialist.
What we have heard today is exactly what we heard at Defence questions on Monday, when Opposition Members were told that the reason why fleet support ships are going to international competition is that it is in the national shipbuilding strategy. Government Back Benchers have been told that the Government will make sure the weaponry for these ships will be UK-based.
The national shipbuilding strategy is based on Sir John Parker’s report, which says:
“There is the opportunity with the Fleet Solid Support ships for UK firms to make…bids, and hopefully secure the contract, thus contributing further regional economic benefits in the UK.”
The Parker report does not recommend international competition for the fleet support ships, so it is wrong for Ministers to say that the national shipbuilding strategy accepted all the recommendations of the Parker report. Frankly, we find ourselves in a position where the Government are saying there should be modular build for small frigates but not for fleet support ships, which is ludicrous.
The Government cannot have it both ways. I asked a written question on the range of the weaponry, sensors, arms and close-range guns, such as the Phalanx, and the answer, published on 27 April, has been mentioned. The Phalanx is a Gatling gun designed to shoot down fast anti-ship missiles, aircraft and fast attack craft. It is fitted only to high-value ships that are vital to naval operations, so it is ludicrous to say that these ships have limited weaponry.
The MARS vessels are fitted with cannons, mini-guns, machine guns and anti-submarine and anti-surface-warfare helicopters, yet we have been told by Ministers that they are not warships. I am sorry, but I strongly disagree. If it looks like a warship and acts like a warship, it is a warship.
Opening up shipbuilding contracts for international competition only makes sense if other countries are doing the same, so which other countries are putting auxiliary ships up for international competition? Is France, Germany, Italy, Spain or the United States of America doing so? The answer is no. No one treats auxiliary ships as a commercial commodity to be bought wherever, because the reality is that other countries see them as vital ships both for military and industrial reasons.
I support the Opposition motion, and the hon. Member for Llanelli (Nia Griffith) made important points about the economic benefits of these fleet support ships being built in the United Kingdom. It will keep people in work, and it will bring tax, national insurance and vital revenue into the country. Again, if it looks like a warship and acts like a warship, it is a warship, and it should be block built in this country.
The Parliamentary Under-Secretary of State for Defence (Guto Bebb)
Phalanx is a defensive weapon.
Chris Stephens
Again, the Minister is shouting from a sedentary position. The MOD website is full of the vital military components used by the Royal Fleet Auxiliary, which is why these ships should be built in the United Kingdom in a modular way—the same way as the Queen Elizabeth aircraft carrier.
The Parliamentary Under-Secretary of State for Defence (Guto Bebb)
It is a pleasure to respond to this important debate. I think that we have had 12 passionate speeches on this matter. [Interruption.] I thank the right hon. Member for North Durham (Mr Jones).
Although we all agree about the importance of the future of our shipbuilding sector, there is clearly a differential between my views and those of the Ministry of Defence, and the views of many Opposition Members. However, I am willing to recognise completely openly the commitment of those who have spoken in this debate to our defence sector, the defence industry and jobs within that industry.
Before I go on to my detailed notes, I want quickly to say two things. I have been asked to be short in my response because of a football match that is going on this evening—although, as a Welshman, I am quite happy to miss kick-off.
Mr Deputy Speaker (Sir Lindsay Hoyle)
I assure the Minister that the rest of us are not—come on!
Guto Bebb
I just want to place on the record a clarification of the comments made by the Under-Secretary of State for Defence, my right hon. Friend the Member for Bournemouth East (Mr Ellwood). He was correct in saying that UK companies were involved in the MARS tanker competition and procurement process, but Opposition Members are also correct in saying that there was no British company involved in a final bid. I hope that that clarifies the point of order made by the hon. Member for Caerphilly (Wayne David).
I welcome the fact that the shadow Secretary of State has brought this debate forward. The comments made by the hon. Member for Glasgow South (Stewart Malcolm McDonald) were also very interesting, and there is no doubt that the team from Glasgow have very much argued the case for their city on this issue. I also welcome the speeches made by the right hon. Member for North Durham, the hon. Members for Dunfermline and West Fife (Douglas Chapman), for Barrow and Furness (John Woodcock) and for Glasgow South West (Chris Stephens), and of course my hon. Friend the Member for Torbay (Kevin Foster), who made an important speech highlighting the fact that we have to understand the context in which these decisions are being made.
The truth of the matter is that we did recommend a shipbuilding strategy and we commissioned a report from Sir John Parker. We have accepted all the recommendations of that report, and it is important to highlight that we have done that in full. The crux of this issue and of this debate may come down to the comments made by the right hon. Member for Warley (John Spellar). I thank him for his kind words. He said quite clearly that he had no problem whatever in companies based in the United Kingdom that are not owned or held in the United Kingdom competing for these contracts. That goes to the crux of some concerns that Government Members have about this motion, because it says very clearly that that contract should be offered only to “UK-only competition”. There is no definition of what that means, so the right hon. Member for Warley was probably discontented with the Opposition motion.
It is very clear that the Government are fully committed to supporting our defence sector. The shipbuilding strategy was not developed in order to avoid our support for the shipbuilding sector. The whole point was to ensure that we did support, in a coherent manner, a shipbuilding sector that would be competitive on an international basis, that would be able to retain the skills about which hon. Members have spoken so passionately, and that would allow the qualities of our shipbuilding sector to be understood and appreciated on a worldwide basis.
The Australian Government’s order of the Type 26 frigates in the SEA 5000 competition is an acknowledgment of the design skills that we have on the Clyde. It is also an acknowledgment of the confidence that the United Kingdom has in saying very clearly that we want to compete on an international basis and to offer our products on an international basis, and that we want to do so with a degree of confidence. We do not believe that the way forward for our shipbuilding sector is simply to say that every single vessel has to be built in the United Kingdom, because we are more ambitious for our shipyards. We want to see our shipyards winning contracts on an international basis.
I want to correct something. When I first stood at this Dispatch Box as a Defence Minister, I was told by the right hon. Member for North Durham that we had not sold a warship design in 40 years, so what made me think that we would start now? Well, we have. That is an indication of the fact that our strategy is working. It is working because we have confidence in our shipbuilding sector.
Mr Kevan Jones
The Minister is being economical with his quote, because it was not about design—it was about the export of a vessel, which we have not done since 1960. Does he envisage a day when we will be building French, German and Italian warships in UK yards?
Guto Bebb
I remind the hon. Gentleman of the comment by my hon. Friend the Member for Torbay: we won the contest to build OPVs for the Irish navy. Again, that seems to be ignored. I find it very odd that Members who claim to speak up for shipyard workers throughout the United Kingdom seem to dismiss our success in ensuring that we had that contract delivered for the Irish navy.
Guto Bebb
I need to make some progress because I must cover some of the points that were touched on.
From a defence perspective, we are trying to put a coherent plan in place to ensure that we have a competitive UK defence industry that can compete with the best. The way to do that is not to be scared of competition but to embrace competition. We have a shipbuilding strategy that says very clearly that we will understand the need for a national sovereign capability when it comes to building our warships. We need to make sure that we can measure our shipbuilding industry against the best in the world. The way to do that is not to go down the route of a protectionist “Britain first” policy but to invest in the capability that we have in our shipyards. That is why we invested £6.3 billion in Rosyth when we saw the fantastic build quality in the completion of the Queen Elizabeth class. That is why we are investing £3.7 billion in the first three Type 26’s in Glasgow. That is why we are showing a degree of confidence in our shipbuilding sector that Opposition Members need to share.
John Spellar
In a throwaway line, the Minister just made a disparaging comment about putting Britain first. What is wrong with putting Britain first?
Guto Bebb
The key thing, as my hon. Friend the Member for Torbay said, is that when Opposition Members talk about threats to the south Wales steel industry as a result of the “America first” policy, they are quite happy to attack Donald Trump for his protectionist attitude. The same thing can apply to this debate in spades, I am afraid. Competition and the ability to compete internationally are based not on protectionism but on the ability to be open in the way that we deal with this issue.
Guto Bebb
No, I will not give way any further at this point.
The key thing that Opposition Members need to be aware of is that in addition to developing a shipbuilding strategy, we are ensuring that we are looking at the future of our combat air. That shows that this Government are taking a coherent approach across the board. We recognise fully in the Ministry of Defence the importance of defence in terms of the contribution that it can make to the prosperity of the United Kingdom. I welcome the contribution made by my hon. Friend the Member for Ludlow (Mr Dunne) in his report on the prosperity agenda, which has been welcomed by Members in all parts of the House. This Government and this Ministry of Defence intend to make sure that the lessons and the ideas put forward in that report get full consideration.
Many Opposition Members have rightly argued that in our procurement processes we should be thinking very carefully as to the means by which we can ensure a contribution to the economic wellbeing not only of the United Kingdom but of localities within the United Kingdom.
Stewart Malcolm McDonald
One of the ways that other NATO countries do that is by the use of multi-year defence agreements. Why do this Government not look at that seriously?
Guto Bebb
I am sorry, but I have to make some progress.
What we are highlighting is that across the Chamber we want to see a successful British shipbuilding sector, and we categorically want to see the conclusion of Sir John Parker’s report implemented. He said clearly in recommendation 21 that he wanted to see the opportunity for British shipyards to compete for the fleet solid support ships contract. That is categorically the position of the Ministry of Defence. We want to see a competitive bid from British shipyards. It can be a competitive single bid or a block build option, but we want to see that bid forthcoming. We want that bid to win because that bid is the best, the most cost-effective, the one that offers value to the taxpayer and the one that shows that the confidence we have in our shipbuilding sector is justified and will be maintained.
Wayne David
I thank my fellow Welshman for giving way. Does he think it is fair that we could be in a situation with the FSS ships where British companies will be competing with heavily subsidised companies from abroad? Is that a level playing field?
Guto Bebb
No, of course it is not, which is why every single tenderer in this process will be subject to the same procurement rules and the same European rules that exist at this point in time, to ensure that we have a level playing field. The hon. Gentleman should understand the importance of ensuring that we have a level playing field. The way to ensure such a level playing field is not to insist on only UK companies being able to bid for what is not a warship.
The strategy has been adopted in full and was consulted on widely. The Ministry of Defence has decided that we have to adopt the strategy and implement it, and we are confident that we will see the success of this strategy and, more importantly, a very successful future for our shipbuilding sector. I look forward to bids coming in for the fleet solid support ships from British yards with the confidence that seems to be lacking from Opposition Members.
Question put and agreed to.
Resolved,
That this House recognises the important contribution of the defence industry to the UK; calls on the Government to support the UK defence industry by taking into account the economic and employment benefits to the UK when awarding contracts and to publish a full, overarching defence industrial strategy; and further calls on the Government to make the competition for the Fleet Solid Support ships contract a UK-only competition to maximise the return on that contract.