National Shipbuilding Strategy

Baroness Jolly Excerpts

Wednesday 6th September 2017 Lords Chamber

[Lord Touhig (Lab)]

My Lords, I think this is the Minister’s first time at the Dispatch Box representing defence and I am sure it will not be the last. I welcome her.

I am tempted to say, “Eureka!”. We have it at last—the Government’s national shipbuilding strategy. It was promised in the spring but, like so many government promises, that one did not materialise. Why is it so late in coming? Why has so much valuable time been lost? After all, it was first trailed in the SDSR 2015. Was it worth the wait? I am hoping the Minister will be able to convince us today that it was. In 2015 we were told the strategy would support innovation, allow SMEs to bid for defence and security contracts more easily, enhance and support exports and train at least 50,000 apprentices by 2020. How will this strategy paper deliver on those pledges?

In November last year, Sir John Parker produced a report to inform the drafting of the shipbuilding strategy. It was damning, to say the least. He said the MoD lacked an overriding master plan for each project, resulting in fewer and more expensive ships being ordered too late. Ageing ships were retained in service, resulting in expensive refits and maintenance costs. Not enough effort was put into exports. There was a lack of assured capital budget per ship, and this was subject to annual arbitrary change. There was a lack of empowered governance and a lack of continuity as people moved to new roles. Most crucially, he said the MoD had lost the expertise in both design and project contract management.

That last point is very important because on the “Today” programme this morning, the Defence Secretary again spoke about supporting the defence budget by finding money from “efficiency savings”. Does that mean sacking more civilian staff and replacing them with service personnel? Is that the Government’s plan to fill the black hole in the defence budget? That would have massive implications for maintaining the capability and readiness of our Armed Forces. It would be tantamount to ignoring one of Sir John’s key observations.

In 2015 the Government said they would slash staff numbers by 30% by the end of the decade. That is three years from now. In 2015 the MoD employed 58,860 civilians. Two years later, that has been reduced by 270. Are the Government having a rethink on this policy? I hope they are, because I agree with my noble friend Lord Tunnicliffe, who said the pre-2015 cuts in civilian roles were short-sighted.

How long will it take for the report to be implemented? Will Sir John continue to review its progress and, if so, how often? Will a Minister be put in charge of overseeing the strategy and taking it forward? We welcome the commitment to build the new frigates, but can the Minister give more details on the timescale for the development of the Type 31e? There is a stated aim of getting them into service by 2023—just six years away—in order to replace the Type 23s as they are decommissioned. In the Statement the Minister said industry needed to improve its competitiveness. Can she confirm whether the £250 million ceiling for Type 31e is achievable if productivity increases do not materialise?

We welcome the potential increased use of block building, as it can spread employment opportunities and economic gain across the regions of the United Kingdom, but with the apparent heavy reliance on exports, is the Minister confident that there is enough work for multiple shipyards? Similarly, we welcome the increased focus on the export market, but it is hugely important that the Government ensure that the shipbuilding industry is not negatively impacted by Brexit and the declining value of sterling. The Government need to work to promote British shipbuilding to secure a steady flow of orders.

The United Kingdom has the potential to be a centre of excellence for shipbuilding once again, and we certainly welcome the ambition to secure existing jobs and create new jobs across the country, not just on the Clyde, but I press the Minister to say something more about the use of British steel. Paragraph 55 of the strategy states that about 50% of the total value of steel needed for the Type 26s will be British-made, but is that not somewhat lacking in ambition? The national shipbuilding strategy should fit into a wider defence industrial strategy. Will the Government bring forward a defence industrial strategy, which could streamline our procurement policy?

Finally, remembering that more than 4,000 naval personnel were made redundant in the 2010 SDSR, from which the Royal Navy has never fully recovered, can the Minister assure us that we will have enough personnel to crew all the new ships?

[Baroness Jolly (LD)]

My Lords, I join the noble Lord, Lord Touhig, in welcoming the Minister to the Front Bench on her first defence Statement. As a general rule, we welcome the shipbuilding strategy, which is all to do with the delivery of the 2015 SDSR. We welcome the boost that it is likely to give to British engineering and the use of the distributed build model, which was so successfully used with the carriers. We welcome the opportunity that should come from this to spread enterprise and employment to shipbuilding yards across the UK, and the opportunities to export.

I should welcome some clarity from the Minister about the opportunity to open the market. I have not read the detail in the strategy, but can she indicate how this might work? As she outlined, the timescale is really tight if we are to have our first Type 31e frigate by 2023, so how long is the procurement process expected to last, and how long the build? Here, I echo concerns about efficiency savings. We clearly need to be effective and efficient, but if we start cutting corners, we will rue the day.

What gives the Government confidence that there will be men and women available to build the ships and, once built, to man them, given that unemployment is pretty much at an all-time low at the moment and the Royal Navy is not attracting recruits or retaining young men and women? Finally, what mechanism is envisaged to report to Parliament on the progress of the strategy outlined in the document?

[Baroness Goldie]

My Lords, I thank the noble Lord, Lord Touhig, and the noble Baroness, Lady Jolly, for their questions and express my appreciation of their kind words about my taking on this brief. I am very much dependent on the sympathy of your Lordships. It is clear that my expertise does not lie in the design, construction or build of naval ships, but I shall do my level best to deal with the issues arising. First, I will take the points raised by the noble Lord, Lord Touhig, which were comprehensive, and deal first with the issue of delay. I remind the House that when Sir John Parker produced his far-reaching, forensic and profoundly analytical report in November 2016, the Government published it without redaction. We thought it important that everybody should understand, as the noble Lord said, exactly what the challenges had been for Governments of all political hues.

It is a measure of the reaction to the report that the Government have placed such importance on trying to build a strategy on the main recommendations of the report. Yes, there was a delay. A general election intervened and, naturally, that inevitably distracted from getting on with the business as the country went to vote and had to return a new Government. But what is important now is how the Government take forward, in a very comprehensive manner, the recommendations of Sir John Parker. It is worth reminding the House that the Government have accepted all the recommendations in the report that concern the Government.

A number of issues arose and I shall try to deal with them as best I can. I was asked how we can deliver on pledges about growth, apprenticeships and training. What has been announced today is reflective of a very healthy procurement programme, and one with a certainty about it that perhaps has not attended previous procurement exercises. Our shipbuilding industry in the United Kingdom is in very good health, I am delighted to say, which is manifest in the activity reflected throughout all parts of the United Kingdom. To answer the point made by the noble Baroness, Lady Jolly, there is now within the United Kingdom good competition for seeking to build ships for the Royal Navy. Also very importantly, there will be an international competition, because we shall be looking to engage with international shipbuilders, along with our United Kingdom shipbuilders, on the building of ships that are not warships and where there are not issues of national security. That is to ensure that we get the best possible choice of vessel, at the price that is the best possible option for the taxpayer.

On the growing defence capability, the issue of employment was raised by the noble Baroness, Lady Jolly, and the noble Lord, Lord Touhig. My understanding is that the Royal Navy is at 97% levels of manning, which is very good—and it also means, if my memory serves me correctly, that we are at the lowest unemployment for the Royal Navy in 40 years. That is a very positive development but, notwithstanding that, the Secretary of State announced in the other place this morning that we shall engage a further 400 service personnel for the Royal Navy.

On the important matter of review that was raised, Sir John Parker will review progress in a year’s time. MoD directors are responsible for implementing the strategy outlined today.

An important issue was raised about apprenticeships. There are a variety of initiatives in place across the UK to allow individuals to develop the skills needed to deliver the ships. We hope that shipbuilding in the UK and the pledges that have been made today and which will come for the future will allow the industry to train skilled workers of the future. Our shipbuilding industry is in good heart, which is a very important and positive attribute to remember.

The issue of sourcing materials was raised, and again that is important. Sir John Parker referred to what he described as a “regional renaissance” of shipbuilding, which is an interesting description of what many of us know to be the case throughout the United Kingdom. I know that the Government will take an interest in discussions with shipbuilders as to how they source materials—and I think that there would be a desire, if it was possible, to source materials locally, to help local economies. But there will also be cases where specialisation and a specialised need means that that may not be an option. We have to understand that that is one of the practical obligations on shipbuilders to ensure that they have the materials that they need to produce the vessels of a quality that we require.

I hope that I have managed to deal with the main issues raised by the noble Lord and the noble Baroness, but if I have omitted anything I shall have a look at Hansard and undertake to write.