UK Maritime Sector

George Howarth Excerpts

Thursday 16th September 2021 Westminster Hall

[Sir George Howarth (in the Chair)]

Before we begin, can I encourage Members to wear masks when they are not speaking? This is line with current Government guidance and that of the House of Commons Commission. Please also give each other and members of staff space when seated and when entering or leaving the room.

[Mr Kevan Jones (North Durham) (Lab)]

I beg to move,

That this House has considered the UK’s maritime sector.

It is a pleasure to see you in the Chair, Sir George. May I first draw the House’s attention to my declaration of interests? I am also chair of the all-party parliamentary group for shipbuilding and ship repair. I thank the Backbench Business Committee for allocating time for the debate, and the 16 Members from across all parties in the House who supported the application.

It is right that we meet today, in London International Shipping Week 2021. This is an opportunity to discuss the maritime sector, which is worth some £46 billion to the UK economy, ranging from shipbuilding and ship repair to ship brokerage in insurance, in which we are world leaders. It is an opportunity to speak up for the sector, which we need to do. I am a passionate believer in a bright future for this country, and the sector supports 1 million more jobs than air and rail. Further, 95% of UK imports and exports are transported by ship.

During the pandemic, we took it for granted that we could order on Amazon or similar sites, and that the package would arrive, but few people consider how that package actually comes to their doorstep. I know Mrs Jones certainly does not give much thought to that. However, it is important, and other aspects are in play—48% of our food supplies come through the maritime sector, as does 25% of our energy needs.

The sector is vital to the resilience of our economy and is also a wide-ranging industry. Ports, for example, generate £600 million in private sector capital each year. It is a source of highly skilled, well-paid jobs. There is an important issue here across the industry, which is mentioned in the briefing note I received from the National Union of Rail, Maritime and Transport Workers: we must invest in those skills and ensure that we have not only individuals with the right set of skills, but the right numbers of workers. As the RMT quite rightly points out, its membership is an ageing population. It is important that we focus on that and make the sector attractive to young people as an industry to come into.

Internationally, the sector will be worth around £3 trillion by 2030 and it is a great source of exports from the UK. Indeed, many businesses throughout the UK are providing not only products for the marine sector around the world, but services. My own region, the north-east, has a long tradition of service industries working around the world. When the Dubai flight from Newcastle recommences at the end of November, marine engineers will be flying all round the world to service ships, but their companies are based in the north-east. It is important that we recognise that fact.

The sector’s problem, certainly in shipbuilding and in other areas, is that there is a view among the public that this is a smokestack industry—an industry of yesteryear. It is quaint that we are involved, but the sector is not the future. Well, nothing could be further from the truth. I do not know how we can do this—the debate obviously allows Members to highlight the issues—but we must promote the sector and say that it is not only important to our economy in the present but can be more important in growing our economy in the future. That is where the Government come in; they have a key role to play in.

Let me turn to the shipbuilding and ship repair sector, where there have been welcome moves by the Government, such as the national shipbuilding programme. We have a shipbuilding tsar—the Defence Secretary—and to be fair to him, I think he is committed to this, but does he actually believe that we can be a world-leading shipbuilding nation again? I think we can, with the right support.

It is a mistake to think that there is any shipbuilding industry around the world that is not reliant on the state—either directly owned by the state or provided with huge subsidies. We should not get into the mindset that if we have to put money into the shipbuilding and ship repair industry or help it with finance, that is somehow a bad thing. It is a good thing if we can grow the industry. The Koreans do not bat an eyelid at putting in huge amounts of money, nor do our European neighbours—the Norwegians, the French, the Germans or anyone else.

The other key issues are port infrastructure, which will be important, and skills. I will talk later about research and development, because the next thing that will change radically in this area is the green agenda. This country has an opportunity to get ahead and be world leaders there.

I welcome the national shipbuilding strategy, but we are still waiting for the refresh, which was promised in August. Its main emphasis—this is self-evident to anybody who knows the industry—is that the industry needs a drumbeat of work running through it. The strategy committed to a 30-year drumbeat of work, but we must ensure that that is a reality, and the Ministry of Defence, which is obviously constrained by the Treasury, is still not laying out that clear pathway for the industry. We saw that with fleet solid support ships, which I will refer to later.

There have been some welcome moves in defence and elsewhere, whereby people are looking at how the UK shipbuilding industry underpins prosperity. The Royal United Services Institute study of aircraft carriers said that 36% of the money that went in came directly back to the UK taxpayer in tax and national insurance, and that is not counting the knock-on effect of the local economic boost generated in those areas. We should not just look at the top line when we are considering contracts; we should look not just at the price, but at how that money comes directly back to the Exchequer.

We need a whole-Government approach to ensure that, when we procure ships, we look to the UK. There was an announcement last week or the week before about Border Force’s new cutters. The existing ones were built in Holland, and I think one was built in Finland or Estonia. That is a £200 million contract, and the default mechanism should be to get them built in the UK. If 30-odd per cent. comes straight back to the Exchequer, that is an opportunity.

A throughput of work is important because that allows industry and business to invest. It is a way to draw in capital to the industry. The problem is that the Ministry of Defence is still in competition mode, which no other country in the world is into, so we have a farcical situation with a fake competition going on between four consortia for the FSS contract. We had a great example of how to do it when we procured the aircraft carriers. Yes, there was a shotgun marriage between various UK yards to provide them, but it worked.

Let us look at those contracts. There was a lot of controversy about the cost, but the build was on time, on budget and world beating. There is nothing like it. We should be proud of that. That was an opportunity to get a consortium of companies together to produce world-beating ships, but what did we do? We broke up the alliance afterwards, which was absolutely shocking. It should have continued.

From the point of view of the taxpayer, should we give out contracts to various companies no questions asked? No, we should not, but we should have a partnership approach rather than competition. The partnership approach should ensure that we have a skills agenda and that we get value for money. Also, the partners put their own shareholder capital into the business. I was speaking to businesses this week at DSEI, the defence and security equipment international exhibition. They do that, but they want certainty. We have the strategy in a nice glossy document, but there is an old mindset of false competition. If we can get that drumbeat of work running through the industry, we will be world beating not only in providing great first-rate ships for our Royal Navy, but in being able to compete for work regarding other vessels. That will be key.

I am not talking about only the bigger yards. The Wight Shipyard Company, which recently won a Queen’s award for international trade, is a small company on the Isle of Wight that produces great vessels. Companies such as that should be the first call, rather than throwing contracts open to international competition, because no other country would do that. There is certainly an opportunity to look at that sector for Border Force ships. Again, that would give security to individuals.

We need some joined-up thinking. We need to ensure that the Treasury not only looks at every single contract, but that the work is there for the long term. The easiest thing in terms of the build programme would be to get on and order the FSS vessels. If we did that, we would have a throughput of work in Rosyth and other places, and we would retain skills. An important thing in the shipbuilding report is that if we are to retain skills or get an influx of new skills into the industry, we need a continuation of work. What we do not want is stopgap areas where we are not employing new apprentices and the workforce get older and older. That point was made by the RMT about its members who work on ships. Oversight is needed. What other skills do we need and in what areas? That is a role for Government as well.

--- Later in debate ---

[Mr Carmichael]

I thank the hon. Gentleman, who is characteristically generous. Others in the House, him included, have been working on the issue as well. It comes back to the first point I made: as a former Prime Minister used to say, sunlight is the best disinfectant. People like us, talking about issues like that, on occasions like this, do allow pressure to be brought bear, which ultimately leads to progress being made.

The right hon. Member for North Durham spoke about the need for a more proactive, and less competition based, approach to the awarding of contracts. In principle I agree with him, and I understand what he is saying when offering comparators from Europe and around the world.

To sound one note of caution, as the hon. Member for Glasgow South West (Chris Stephens) knows, we have a difficult recent history of this north of the border. Two ferries are being procured from a shipyard owned by the Scottish Government: the replacement for the Glen Sannox and Hull 802—so called because, although it is now heading towards five years overdue, it still does not have a name. Partnership between Government and industry of the sort that the right hon. Member for North Durham is talking about worked very effectively with the procurement of the aircraft carriers and is something we should be taking seriously. However, the rigours of private sector involvement are needed to ensure that these ferries are obtained on time and give value to the taxpayer, as well as giving longer-term security for the workforce in the domestic shipyards we have left.

We saw this week that, in the tender for the construction of the two ferries to serve Islay and Jura, two of the shipyards tendering are in Turkey, one is Romanian, and one is in Poland. Not a single shipyard in Scotland or anywhere else in the United Kingdom is now being invited to tender by the Scottish Government. That shows that we need to have the strategy that everyone else has spoken about. If we have a gesture here on a difficult news day there, we do not do any favours for the people who work in these shipyards, never mind island communities such as Islay and Jura.

[Sir George Howarth (in the Chair)]

Order. I will call the Front Benchers at 2.30. The right hon. Gentleman has already taken up more time than will be allowed to a Front-Bench spokesman, and there are other speakers trying to get in. There is no time limit, but I would ask him to bear that in mind.

[Mr Carmichael]

I have effectively, Sir George, covered the material that I intended to cover. With your restrictions in mind, I am happy to conclude.

[Sir George Howarth (in the Chair)]

I now feel obliged to impose a time limit of seven minutes on Back-Bench speeches. That should enable everybody who wants to speak to get in.