Offshore Wind Supply Chain: Tyneside

Jim Shannon Excerpts

Wednesday 29th October 2025 Commons Chamber

[Mary Glindon (Newcastle upon Tyne East and Wallsend) (Lab)]

I thank Mr Speaker for granting the debate. I do not underestimate the challenges that the Minister and her colleagues face, because the transition is a monumental task. Tonight I will set out the case for further Government support being needed for the offshore wind sector in places such as Tyneside.

Smulders Projects UK, which I have worked with for many years, is a critical employer in the sector and in my constituency. Smulders is not only a key global player but the UK’s leading provider of offshore wind substations and foundation structures, including monopiles, transitional pieces and jackets. Those form the essential building blocks of the critical infrastructure required for UK renewable energy security.

Smulders, based in Wallsend, is one of many businesses along the Tyne that are markers of the Tyne’s proud and enduring legacy. Throughout history, the Tyne has stepped up when the country has needed it most. [Interruption.] Today it stands ready to aid the transition to renewables. Do excuse me, Madam Deputy Speaker; I am very proud of the Tyne.

[Jim Shannon (Strangford) (DUP)]

Will the hon. Lady give way?

[Mary Glindon]

I certainly will.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call Jim Shannon on the offshore wind supply chain in Tyneside.

[Jim Shannon]

I spoke to the hon. Lady before the debate and explained the connection between her constituency and mine, and why it is so important. I also want to encourage the hon. Lady, who has been a great friend of mine in the House in all the time I have been here. We share many things, including an interest in this subject matter, but we also share our faith. It is important that we have that relationship across the Chamber. Does she not agree that while Tyneside is a major hub for offshore wind supply, we must continue to invest in new and better methodology in renewable energy, such as harnessing tidal energy through Strangford lough and Newcastle University’s wave energy device, which contributes to the area’s role in marine energy innovation? These are things that we can do better together.

[Mary Glindon]

The hon. Gentleman has long been a friend of mine, and he not only speaks well of his own constituency and Northern Ireland, but is very supportive of all of us across the Irish sea. He is right in what he says, and I think we are both justly proud of what is being achieved by the universities and industries in our areas. That is why we are standing here tonight and making our plea to the Government.

This week, the Government set the budget for allocation round 7 to support new offshore wind projects. RenewableUK, along with other industry voices, has expressed concern that the amount allocated is likely to procure only a quarter of the 20 GW capacity available in this year’s tender. This is a very recent announcement, so I would be grateful if the Minister could set out how the budget aligns with the Government’s plans to maximise the number of green jobs in Britain.

Against the backdrop of AR7, there is real concern regarding the alarming drift towards UK offshore wind turbine foundation structures being procured from lower-cost regions such as the middle east, the Asia-Pacific region—APAC—and China. Recent examples of this include EDF’s Neart na Gaoithe offshore wind farm, Ocean Winds’ Moray West OWF and the Inch Cape OWF. For these UK projects, all the foundation structures were imported from lower-cost fabrication yards located in the middle east, Indonesia and China. I understand the approach taken by the previous Government and developers to drive down and minimise capital expenditure, but that approach adversely impacts the operations of our own UK companies, which are unable to compete on cost alone.

Recent mechanisms and initiatives such as the clean industry bonus included in AR7 are of course welcome, but there is a fear that these alone will not prevent the further drift of foundation fabrication away from the UK to these lower-cost regions. With reference to the AR7 clean industry bonus allocation framework, there are two CIB criteria that developers could meet. Criterion 1 refers to “investment in shorter supply chains”, where an investment may be made in a deprived area in the UK. Given the socioeconomic challenges that Newcastle upon Tyne East and Wallsend face, option 1 is a welcome incentive, and I look forward to the outcome of the AR7 projects, when announced. Criterion 2 refers to “investment in more sustainable means of production”, where investments may be made in one or more manufacturing facilities or installation firms that have either committed to, or set their science-based targets by, the application date anywhere in the world.

There is real concern that this approach opens the door to unfair competition from lower-cost regions such as China, APAC and the middle east, specifically for the supply of critical offshore wind infrastructure such as wind turbine generator foundations, jackets, transition pieces and monopiles. Therefore, outside the AR7 framework, and given the criticality of this infrastructure to our energy security, will the Minister set out what additional measures or guarantees can be put in place to ensure that a significant portion of offshore wind infrastructure is secured and fabricated by UK companies such as Smulders? It is essential that businesses in the UK continue to invest, innovate and introduce new technologies and processes to optimise efficiency as well as competitiveness, as my hon. Friend the Member for Strangford (Jim Shannon) said. However, it is becoming increasingly difficult for UK companies to compete equally with overseas yards on such an uneven playing field.

On the Tyne, not only are supply chains held back by unfair competition; they are also constrained by physical barriers. The power cables over the Tyne are an obstacle to businesses securing work for large renewable energy structures, which risks possible net gross value added benefits of up to £1.2 billion. The height restriction in place is 87 metres. However, wind turbine jackets for AR7 and future rounds will be in excess of 100 to 120 metres high. It means that Smulders cannot bid for certain contracts despite having world-class facilities and the sharpest minds ready to go. It has been proposed that the removal of the cables will be completed in 2032. I have campaigned since 2017 for a solution to this issue—2032 is too late. The jobs of the future have become the jobs of today, and this is an international race. Yards in the middle east will not wait for 2032, APAC will not wait, and neither will China.

In July, I welcomed the Secretary of State’s commitment to engage with me and Ofgem to try to accelerate the work. I look forward to meeting the Energy Minister next month to discuss it further. I would be grateful if the Minister reaffirmed the Department’s support for bringing forward this work and reaffirm that the Government will press the National Grid for an earlier completion date.

I turn to the issue of ensuring a more consistent revenue stream for our domestic fabricators. We have seen disruption, delay and postponement in the promised pipeline of offshore wind projects because of failures during earlier leasing and allocation rounds. Projects from AR5 and AR6 are all now complete, or very near to completion. Unfortunately, however, insufficient projects were approved and insufficient contracts were awarded to the UK to ensure a continuous pipeline of work for companies such as Smulders. The result of that failure is a very real two-year chasm in UK offshore wind manufacturing. From the start of 2026, effectively, zero UK offshore wind projects will be in fabrication.

The next tranche of projects will be dependent on the successful outcome of AR7 and the clean industry bonus incentives offered to developers. The results from AR7, however, will not be known until quarter 1 in 2026, thus creating a two-year gap. This is the effective period from project approval and contract award, to finalising engineering and procuring materials before industry can start cutting steel. Optimistically, that could begin in quarter 3 or quarter 4 of 2027, with offshore infrastructure in place again two years after that in the final quarter of 2029. However, the first power generation from AR7 projects before August 2029 is a stretched target.

Smulders has already invested over £100 million at its Wallsend facilities based on previous Government assurances of continued UK offshore wind fabrication projects. What level of operational or other support is the Government willing to provide to established tier-1 fabricators such as Smulders to secure the jobs of over 600 well-paid workers during this two-year gap in fabrication?

I was delighted to hear the Secretary of State’s commitment during party conference to a clean energy jobs plan, which will see the sector grow from 430,000 jobs today to 830,000 by 2030. That will include tens of thousands of new roles for engineers, welders, electricians and construction workers. I support the Government’s ambition for further growth. The skills for these jobs are being developed and nurtured by companies in Tyneside, as well as by the Energy Academy in my constituency, which is set to expand following the combined authority’s commitment to invest £8.5 million in the college. Well-paid, secure jobs can be created through the awarding of contracts to existing UK tier-1 fabricators.

For UK companies, the outcome and results from allocation round 7 are critical to their continued operations in this country. More crucially, the outcome of the foundation contract awards will ultimately determine the long-term success or failure of our businesses—and, I believe, the future of the UK offshore wind fabrication sector. Only foundation contracts awarded domestically can provide the necessary volume of serial, repeat fabrication needed to achieve the Government’s clean jobs target, and secure the necessary skills required for a high-paid clean energy sector. I repeat my call on the Government to take further steps to ensure that a substantial allocation of AR7 foundation fabrication is awarded here in the UK.

As I said, at its peak, Smulders supports over 600 high-skilled and well-paid local jobs in Tyneside and across the region, and its primary concern is to secure those jobs in the long term. It is in the national interest for UK businesses to succeed with those projects, as they are creating highly skilled and dependable jobs that will not only strengthen the offshore wind industry but support training in skills required for associated industries such as defence, nuclear and the wider engineering sector, as well as supporting other major British infrastructure initiatives. The drifting overseas of such work threatens domestic jobs, future economic investment and the UK’s long-term security.

This is a critical juncture for the UK offshore wind sector, so will the Minister meet me, representatives from Smulders and the wider Tyneside supply chain to discuss urgently the concerns that I have set out about the areas in which industry needs further support, and so that we can present our aspirations for the clean energy future? Although the transition presents challenges from all angles, it presents even more opportunities. The Tyne is open for business, and it stands ready to play a defining role.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Katie White)]

It certainly is!

I congratulate my hon. Friend the Member for Newcastle upon Tyne East and Wallsend (Mary Glindon) on securing a debate on this important issue, and on her passion, authenticity and representation of her area. I do not think that any of us are in doubt of those qualities tonight.

I know that this matter is close to the hearts of many Members and their constituents, particularly in our industrial heartlands. This Government are on a mission to make Britain a clean energy superpower, delivering clean power by 2030 and accelerating to net zero. Offshore wind is the beating heart of that mission. The sector is already providing secure clean energy, as well as thousands of skilled jobs, bringing growth and opportunities to communities such as those in Tyneside.

The sector is also an international success story. At the end of June, the UK was generating 16.7 GW from offshore wind. That is the highest amount in Europe, and worldwide we are second only to China—a country with a population roughly 20 times the size of ours. We have consented 4.2 GW since we came into office, and we have 75 GW of capacity in the pipeline, which equates to a 450% increase on our current, world-leading amount. We also have the second most installed floating offshore wind capacity—after Norway—and, at over 25 GW, the largest pipeline of floating offshore wind projects in the world. And yet we are confident that the best is yet to come.

From north-east England to Scotland and the Celtic sea, incredible things are happening across the country in this industry. The Government are determined to do everything we can to help our offshore wind sector to thrive and to deliver for the British people. The contract for difference scheme is vital to our mission to make the UK a clean energy superpower. Allocation rounds 7 to 9 are crucial for the delivery of our goal of clean power by 2030 and for protecting households from volatile fossil fuel prices.

On Monday, we confirmed that a total budget of £900 million is available for fixed-bottom offshore wind in allocation round 7—an increase on the previous allocation round’s initial budget when comparing on a like-for-like basis. That is the initial budget for fixed-bottom offshore wind, but we have the ability to view unsuccessful bids and adjust the budget later if we deem that doing so is good value for consumers. We have fundamentally reformed the offshore wind system to get better value for money. Under the old system, the Government set a budget and had no further control over quantity and price.

We recognise the importance of robust domestic supply chains both in supporting the continued growth of this industry and in ensuring that British workers and communities benefit from the jobs that are created. The Government have therefore set out a package of support, worth up to £1 billion, for offshore wind supply chains. This includes £300 million from Great British Energy to provide upfront public investment, £400 million from the Crown Estate to support new infrastructure, including ports, manufacturing, and research and testing facilities, and £300 million from the offshore wind industry to deliver new investment into supply chains such as advanced turbine technologies and foundations.

[Jim Shannon]

I welcome the Minister to her place and wish her every success and happiness in her role. I will try not to be too hard with my questions. She referred for the contracts for difference scheme. I know it is something that Northern Ireland has to do itself, but at this early stage will she please engage with the relevant Minister in the Assembly, and perhaps help us to move our scheme forward?

[Katie White]

I will ensure that the Minister for Energy is aware of his issues and feeds them in. I am sure he will—I believe he is a friend of the hon. Gentleman.

This is a genuinely transformative package of investment, and by providing that support, as well as clarity in our plans, we are giving investors and developers the confidence to invest in the future. It is expected that the £1 billion package of investment will directly and indirectly mobilise billions more, as well as supporting thousands of jobs in our industrial heartlands. We have also introduced a clean industry bonus to reward projects that invest in coastal communities, industrial heartlands and cleaner supply chains.

As my hon. Friend the Member for Newcastle upon Tyne East and Wallsend said, criteria 2 of the clean industry bonus rewards investments in cleaner supply chains, measured by sign-up to the science-based target initiative for decarbonisation. It so happens that the overwhelming majority of qualifying suppliers are in the UK or the European Union—very few suppliers outside the region qualify under criteria 2. It was great to see the clean industry bonus auction smash bid expectations earlier this year, and we look forward to seeing the investments come in after auction round 7, showing that when the Government lead with ambition, industry is ready to match it.

We also know that we will need even more skilled workers to achieve our mission in the years ahead, and with our analysis suggesting that the offshore wind sector alone could support up to 100,000 jobs by 2030, we are determined to ensure that our industrial communities benefit. That is why we have set up the Office for Clean Energy Jobs, which will provide training and support to the workforce in the clean energy and net zero sectors. Our priority is creating good jobs in Britain’s industrial heartlands, including a just transition for the industries based in the North sea. On 19 October, we published our clean energy jobs plan, which sets out how the Government will work in partnership with industry and trade unions to help workers in all parts of the country to benefit from these opportunities, supporting our existing workforce to find new opportunities, training up the next generation, and supporting our young people to get good, unionised jobs.

Let me turn to our support for the north-east. Tyneside is ideally placed to service the offshore energy sector, including one of the world’s largest offshore wind markets. The Tyne has the capacity to become a major hub for the installation and maintenance of offshore wind farms, and to service the supply chain that will grow from it. In 2023, the UK Infrastructure Bank invested £50 million in the Port of Tyne as part of a debt refinancing package of up to £100 million. That finance was provided to regenerate and redevelop land, building a base for a growing number of clean energy industries in the area, including offshore wind, advanced manufacturing and other renewable activities.

In September, the Port of Tyne announced that it is investing £150 million to transform 23 acres into the Tyne clean energy park, adding 400 metres of deep-water quayside to support offshore renewables, clean energy and advanced manufacturing. According to the Port of Tyne, the redevelopment could create up to 12,000 jobs and deliver £5.6 billion to the economy. I look forward to working with my hon. Friend to help us realise that potential. On the transmission cable over the River Tyne, I confirm that the Government are open to discussing the progress of the proposals to underground the cable with National Grid. The decision for approving the project lies with Ofgem as the independent regulator, which must demonstrate that there are benefits to consumers when approving network projects.

To sum up, our offshore wind sector is a British success story of which we should all be proud. Thanks to the perfect conditions provided by the North sea, as well as our legendary offshore workforce and supply chains, we are perfectly placed to keep leading the way. But this Government are not content with simply winning the race for clean power; we want to build the industries of the future here in Britain and, in so doing, we want to create a new generation of good, skilled jobs for the communities we depend on and to ensure that the economic benefits of the clean power transition are felt in Tyneside and in every corner of our country.

I know that the Minister for Energy had a fantastic visit to the Smulders UK yard in Wallsend in the summer, and he will be happy to meet my hon. Friend the Member for Newcastle upon Tyne East and Wallsend.

Question put and agreed to.