UK Maritime Sector

Lord Beamish 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.

[Anthony Mangnall (Totnes) (Con)]

I am sorry to interrupt. The right hon. Gentleman makes an excellent point about the skills that we need to create a workforce who can work in the sector. I am interested in his thoughts on retrofitting, because a lot of merchant vessels out there need to be retrofitted with modern technology that allows us to meet our green ambitions. That goes hand in hand with the way in which we want to train a new generation of skilled workers, especially on tackling climate change.

[Mr Kevan Jones]

The hon. Gentleman speaks with a great deal of knowledge, and he raises an interesting point. I think the understanding is that we cannot ever compete with the Koreans or others in the far east, because they will do the work cheaper. He knows as well as I do that the country that is doing more retrofitting than anywhere else is Norway. Let us be honest: Norway is not paying poverty wages to its workforce, and it has different overheads from other countries, so if Norway can do it, we can do it, but we need a strategy for that. I will come to green shipping in a minute, but the hon. Gentleman is right to say that there is a huge market. New green technology will come in, but a lot of it will be retrofitted to existing vessels.

That brings me to research and development. What we need from the Department for Business, Energy and Industrial Strategy is an R&D fund that is ringfenced for the industry, because that would ensure that we got the innovation we need. One area that I have spoken to several Members about is hydrogen, which will need a large amount of R&D. Some good companies are already doing that type of work, but we perhaps need to provide them with Government assistance and access to capital.

We have some great brains thinking about green technology in shipping, but I fear that we will get foreign investment coming in to buy out some of those companies and to provide the capital, but they will then take all that abroad. What we need to do—it can be done by the Government—is give support to the new technology here in the UK, so that we can retain not just the technology, but the jobs that will be done now and in the future in a host of areas in green shipping, as well as the new technologies that will come through. I accept that some of those might not work, but we should be brave enough to invest. It is not a great scandal if, at the end of the day, something does not work. It is important that that is done, which is why marine research and innovation need to be at the forefront of any initiative we undertake.

We have the maritime enterprise working group, but it remains on a non-permanent basis. I do not wish to criticise the Minister, because he is passionate about the sector, and about aviation as well. If I remember correctly, he is a bit of a plane spotter when it comes to knowing different types of aircraft. He announced the £20 million investment in the clean maritime demonstration competition, which he described as a turning point. That was welcome, and it is great that he did it, but he must get more money out of the Treasury for the sector. If we do not get more money to the sector, we will be at a disadvantage.

The opportunities are there. We talk about the carbon targets that we want to meet, which are good. If we do this right, however, we can get jobs out of it as well, so it is important that we invest now and that we ensure that the talk about net zero and so forth has some real teeth. It would be sad if we had new and innovative companies working in the sector, but the technology went abroad, and we ended up importing it or allowing other countries to develop it. That technology will be very important.

Within this new agenda, we must take a legislative stance as well. We are a world leader in working with the International Maritime Organisation and others on standards and regulations for the future. Those will be new concepts, so ensuring that we have regulations and international governance that are in our favour, not that of the Chinese and others, will be important. I do not underestimate the Chinese in particular, in terms of their wanting to have international rules that favour their industries rather than ours, so it is important that we play a key part in that process.

I will finish where I started. This is an industry of the future. We need to talk more about it, and we need to invest in it. Yes, the private sector involvement is hugely important, but if Government money and strategies can be put in place at the key point, they could be huge levers, not only to lever in more private sector capital, but to grow the sector. Perhaps we just need to say to people, “Just think when you are ordering things—how do they get to your doorstep?” That is the basis of it.

I am a passionate advocate for the sector. It is not yesterday’s industry; this is the industry of tomorrow. What it needs is a direct and clear strategy, and money behind it. Now is the time to provide those things.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Transport (Robert Courts)]

It is very good to see you in the Chair, Sir George. It is also a great pleasure to follow the hon. Member for Wythenshawe and Sale East (Mike Kane), who always manages to quote poetry in his speeches and make me feel a very flat speaker in contrast.

I congratulate the right hon. Member for North Durham (Mr Jones) on securing this truly timely debate on the UK maritime sector. He speaks with enormous enthusiasm, experience and expertise on the matter, and I am grateful to him for everything that he has put before us today. I entirely share his passionate enthusiasm for the sector and agree that it has a very bright future. I thank him for his comments. As it happens, I agree with a great deal of what he said—not quite everything, but a great deal.

[Mr Kevan Jones]

Careful—the reshuffle is not over yet. [Laughter.]

[Robert Courts]

That is a good and timely point. The Government will be relieved to know that we do not agree on quite everything.

I can think of no better moment to discuss this issue than during London International Shipping Week. The right hon. Member is absolutely right that, to quote another of his phrases, the maritime sector is not some “quaint” industry that plays a historic role in our past. This is very much an issue of the present, as we see in London International Shipping Week, which is the second-biggest international gathering this year, I understand, after COP26. It is the highlight of the maritime year and shows that not just the capital but the whole of the UK is the best place in the world to do maritime business.

Maritime business is very varied. As my hon. Friend the Member for Totnes (Anthony Mangnall) rightly pointed out, services are a major part of it as well. It is, of course, seafarers and shipbuilding, but it is also the much wider services side of things. He is quite right to draw attention to that.

I reassure my hon. Friend the Member for Waveney (Peter Aldous) that he need not fear: the maritime sector is not overlooked and never will be, certainly for as long as I am in this position. I appreciate that I do not know how long that will be, as everyone would say. Perhaps the greater reassurance is that, for as long as the Prime Minister, for whom this is also a major priority, is here, the sector will not be overlooked.

I start with the issue of decarbonisation, which has clearly been a major part of the debate today. I would suggest that this country is leading the way on this. We have announced the winners of the clean maritime demonstration competition, a £20-million fund to develop novel zero-emission technologies. It is the biggest competition of its type that the Department for Transport has run, so I ask hon. Members to bear that in mind. The right hon. Member for North Durham mentioned hydrogen; my hon. Friend the Member for Thurrock (Jackie Doyle-Price) mentioned Windship. They have asked for demonstrators, essentially. That is what we are seeking to do: to decide and demonstrate what the likely technology is going to be.

We can disagree—we will have to agree to disagree—on whether this is turning point, but I suggest that it is a welcome way forward. I know that hon. Members all accept that, and London International Shipping Week is a great time to showcase the competition. It shows the innovation that is required and that exists, and it also the investment that we are putting into it from both industry and Government—it is key that it is a partnership. We hope that the demonstrators will be a springboard for bolder projects that are yet to come.

It is absolutely clear that there is no shortage of ambition in the sector with regards to greening the sector. That is important for the two reasons that hon. Members have stated: for emissions, clearly, but also, as the hon. Member for Glasgow South West (Chris Stephens) said, for protecting the environment—cleaner in both senses. He is quite right to draw attention to that, and I am grateful to him for doing so.

I will spend a little bit longer talking about shipbuilding, which has been a major part of today’s debate. Shipbuilding will very much be a part of our next chapter. The UK has a long, illustrious shipbuilding heritage. The hon. Member for Strangford (Jim Shannon), who is no longer in his place, spoke movingly and vividly of Harland & Wolff, and the hon. Member for Glasgow South West spoke passionately for Govan, one of the great shipyards of the UK. Together, we have built some of the greatest, most iconic vessels that have ever graced the waves. Shipbuilding remains an integral part of our manufacturing sector, sustains thousands of jobs across the UK and brings millions into the economy, as we have heard.

[Mr Jones]

Will the Minister give way?

[Robert Courts]

Once I have agreed with the right hon. Gentleman one more time, if I may. He asks whether we believe that we will become a world-leading shipbuilder. Yes, we will.

[Mr Jones]

Will the Minister inform the House whether he has any indication of when the refresh of the national shipbuilding strategy will be produced? I know that is in the hands of the Ministry of Defence, and the MOD’s idea of summer—or any season, frankly—bears no relevance to anything that we would think, but I would appreciate some indication because the industry is keen to get on with it.

[Robert Courts]

I cannot give the right hon. Gentleman the precision he would like, but it will be before the end of the year. I hope that provides some indication of going forward.

The industry has historically suffered around productivity and under-investment, and we need to become more competitive on the international stage. Government support is, of course, vital to achieving that aim. It is key that we work in partnership with the sector to reinvigorate its fortunes and those of the wider supply chain, which we have heard so much about today. With that in mind, the new post of shipbuilding tsar—who is, of course, the Secretary of State for Defence, as the right hon. Member for North Durham knows—has been created. That is to support UK industry to enable it to step up and become more productive and innovative. As part of that, a vital step forward has been announced this week: the creation of the National Shipbuilding Office.

The right hon. Member for North Durham spoke of the Carrier Alliance. He is quite right that it has been a fantastic project and that it showcases the best of the UK, but I would suggest that it is also slightly different, given that it is a once-in-a-generation major product. We are looking at something that requires ongoing, routine investment in shipyards and that leaves a legacy, because we need to build on the legacy of the shipyards to have that drumbeat of ships that we all wish to see and to provide that for the future.

That is what the National Shipbuilding Office is looking to do. It will be the strategic centre driving this change across Government and the industry. In other words, it will do precisely what my hon. Friend the Member for Waveney rightly asked for—as, indeed, did the hon. Member for Strangford—and avoid the siloing that my hon. Friend the Member for Thurrock rightly referred to.

That is what the National Shipbuilding Office is intended to do. It is to bring together all the Departments that hon. Members have referred to, but then add industry to ensure that it is a key team effort. That will, of course, support innovation—to ensure that skills are also aligned—and the supply chain. It will outline the vision for the UK’s shipbuilding enterprise, and the strategy that I referred to in answer to the intervention from the right hon. Member for North Durham.

A good example of the way the country can showcase its real innovation is the new national flagship, which is a sign of the Government’s determination to support prosperity, jobs and skills in the UK shipbuilding sector. The right hon. Gentleman mentioned Wights, the shipyard company on the Isle of White. I was at the boat show in Southampton yesterday, and met with RS Sailing, which is developing a green, electrically powered, rigid inflatable boat, and with the marine division of Barrus and Bruntons Propellers—highly efficient propeller technology—to give a few examples. The Society of Maritime Industries event, earlier this week on HMS Albion, brought together all those industries, and others.

Companies such as that, with technology such as that, could be showcased in this new national flagship, which is a sign of the Government looking to provide a showcase for technology, and be part of the drumbeat of ships, so they would understand when the Government were procuring new vessels. A major part of that is the MOD’s Type 31s and Type 26s, all the way through to our naval support vessels. However, we also have civilian vessels—ice patrol, ocean surveillance, and, of course, research. The RRS Sir David Attenborough is the latest example of those very high-quality ships being produced by the UK. A new fleet of Home Office cutters is also being considered, should funding be confirmed, with the intention of securing UK value for that.

I will talk about the DFT’s fleet for a moment, too. That fleet is often overlooked, although it is one of the largest civilian fleets. It is operated by our general lighthouse authorities to ensure that navigational aids remain operational in all circumstances, and that seafarers are made aware of dangers such as wrecks. That role is often understated, but it is terribly important, as the right hon. Member for Orkney and Shetland (Mr Carmichael) might agree; I am sure it is important in his constituency. I will take the opportunity to thank everyone who works for Trinity House, the Northern Lighthouse Board, and Irish Lights, for their professionalism in extremely difficult times, and for keeping people safe. We are also commencing projects to build new vessels for Trinity House and the Northern Lighthouse Board. Both will go out to formal tender shortly.

A great deal of vessels, in terms of number and breadth, are available in the Government’s pipeline, and there is no reason for that not to include fishing, as my hon. Friend the Member for Waveney rightly pointed out.

I will say a word or two about skills. Skills are clearly part of the Government’s levelling-up agenda and a massive part of the industry. Today, as we also heard from my hon. Friend, the Maritime UK coastal powerhouse event takes place. Coastal communities are very much part of levelling up and of the industry we are discussing today. We need to ensure, as my hon. Friend the Member for Totnes rightly pointed out, that we have the skills we need not just to recover from covid-19, but to look to the future and to ensure we have the skills we need for the industry. That is a key part of the Maritime 2050 strategy, which the Department produced about two years ago. It brings together, in conjunction and consultation with industry, the plan for the future.

A key part of that plan is the Maritime Skills Commission. Professor Graham Baldwin was appointed as chair, alongside 18 commissioners, and it has £300,000 in funding. One of its recent focuses has been green skills, to which my hon. Friend also drew attention. The Seafarer Cadet Review was also published in June.

I am grateful that hon. Members mentioned East Coast College and South Devon College, which are looking at STEM—science, technology, engineering and maths—skills in their own ways in their parts of the world. That is critically important work, close to all our hearts.

My comments must be slightly constrained by the fact that a spending review has been announced recently. The Government will announce how we will continue to invest in public services, and the Department for Business, Energy and Industrial Strategy is working up a business case for a home shipbuilding credit guarantee, which is part of the spending review considerations. We continue to look at what other financial support might be available to work jointly with industry.

The hon. Member for Glasgow South West asked me about public procurement. There was a Green Paper, and those responses are being considered by the Cabinet Office. The DFT will continue to review the tonnage tax regime.

I am conscious that my speaking time is running out, although there are a great many other things I would like to talk about. My hon. Friend the Member for Totnes rattled off a list of things, each of which could make for a great debate in its own right—flag, tax, supply chain. I would love to have debates on those subjects; maybe he will apply for some. I do not suppose it is my job to encourage the holding of debates, but I just have.

I should also give a plug to the debate on the cruise industry scheduled for next week, which I am sure my hon. Friend the Member for Thurrock will attend if she possibly can. I appreciate the support of and constructive criticism from all Members. We have had an interesting, helpful and constructive debate.

[Mr Kevan Jones]

I thank the Minister, who has a real passion for the sector and for aviation. We have had a good, well-informed debate. The main point is clear: this is about people and the skills we need for those people. We cannot take those for granted and we must invest in them. As was pointed out by the right hon. Member for Orkney and Shetland (Mr Carmichael), we must ensure that people are not only well trained, but properly remunerated.

The other side of the issue is procurement, where the default position in the sector should be to procure and buy from UK yards—I make no bones about it. There is no excuse for not doing that; no other country in the world does not do it. The idea that we are considering buying ferries from Turkey is nonsensical.

That has to be the default position, and the Treasury should remember that the money comes back into the UK economy. We must ensure that the Treasury gets the fact that money spent in UK shipbuilding and in the UK maritime sector is money that will not only grow the sector, but procure jobs for the future.

I shall finish where I started, with a point on which I think we all agreed today: this is not an industry of yesterday; it is an industry of the future. We must make sure it is, and make sure it is attractive for young people to come in to, so that we not only get the well-paid jobs and skills, but benefit the broader UK economy.

Question put and agreed to.

Resolved,

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