UK Submarine Supply Chain

Lord Walney Excerpts

Wednesday 10th July 2013 Westminster Hall

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

It is a pleasure, Mr Rosindell, to see you in the Chair this afternoon. I am pleased to have secured this important debate on the supply chain for Britain’s submarines. It is particularly timely given the expected publication, perhaps within the next few days, of the Trident alternatives review—the taxpayer-funded vehicle that one half of the coalition Government set in motion to prove that they were right all along about their idea to scrap Trident in favour of some sort of mini-deterrent. How the Government respond to the review will have a direct bearing not only on thousands of jobs across the country but on Britain’s standing as a cutting-edge manufacturing nation.

The submarines that are built by the skilled workers in my constituency are truly extraordinary. The Astute-class boat currently under construction and the Vanguards, which carry Britain’s nuclear deterrent, are among the most technologically sophisticated vessels on the planet. It is no exaggeration to describe them as more complex than the space shuttle.

Barrow is rightly proud of the role that its boats play in ensuring Britain’s security. As an aside, may I say how much I am looking forward to welcoming the Minister to Barrow shipyard next week for the laying of the keel of the six Astute-class submarines? It would be a serious mistake to think that submarine building happens only in Barrow-in-Furness. In fact, this is an enterprise that brings together at least 1,200 firms from every corner and nation of the United Kingdom. The high-tech components and parts, the cutting-edge design skills and the essential services are ultimately brought together in Barrow for the Royal Navy.

It was great to welcome the representatives of some of those firms to Westminster last week when I hosted, along with BAE Systems and the Keep our Future Afloat campaign, a well-attended reception to mark the importance of the supply chain. We were grateful to the Minister for attending and speaking so warmly about the importance of those jobs. The workplaces represented included Rolls-Royce in Derby, which produces the nuclear reactors that power the submarines; Sheffield Forgemasters, which rolls and cuts the high-quality steel for the boats; Babcock, which has employees across the country including Clydeside, Chesterfield and Ludlow; Thales from Glasgow, which makes the periscopes and other communication systems; Truflo Marine, a valve maker from Birmingham; Ultra Electronics from west London; Meltog, a tube-making firm from Leeds and MacTaggart Scott, a naval component engineers from Midlothian.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this important matter to the Chamber. He is talking about the manufacturing skills across England, Scotland and other parts of the United Kingdom. Does he feel that the retention of manufacturing skills is vital for our future and that the Government need to give a commitment to retaining the number of submarines, so that we can have a continuity of skills and supply?

--- Later in debate ---

[John Woodcock]

The hon. Gentleman is absolutely right. This is a finely balanced exercise. We are talking about enterprise stretching across the United Kingdom. Any gap, delay or reconfiguration of the programme could endanger the nation’s whole capacity to build submarines.

The firms that I have just mentioned account for at least 13,000 high-skilled manufacturing jobs—the exact sorts of jobs that everyone in this place agrees are essential if we are to rebalance the economy away from an over-dependence on the City of London and financial services. At Westminster last week, those firms made it clear just how vital the submarine programme is to them. Indeed, the chief executive of Forgemasters said that his iconic firm simply would not be able to continue trading if it lost its steel orders for naval submarines. Firms such as those, which are in almost every constituency, will be watching closely when the Trident alternatives review is published and as the debate continues on deterrent renewal in the run-up to the vote on main gate approval in 2016.

Of course the final decision on renewing Britain’s nuclear deterrent, and on what form it should take, cannot be made solely on the basis of jobs in the manufacturing sector. Quite rightly, it will primarily be an assessment of what is needed to guarantee the security of the nation against a nuclear threat in future decades. None the less, we must guard against superficially attractive half measures in the name of economising that will in fact save little or no money, seriously damage Britain’s high-tech manufacturing sector and jeopardise the country’s defences for many decades to come.

[Jonathan Lord (Woking) (Con)]

We know that the Liberal Democrats, the party of half-measures, are very half-hearted and mealy-mouthed about this issue, and it is no surprise to me that they are not represented here today. I think the direction of travel of my Conservative party, ably led and assisted by my hon. Friend the Member for New Forest East (Dr Lewis) here, is absolutely clear; we wish to have a Trident replacement. Will the hon. Gentleman give me some assurances that the Labour party, another potential party of Government, has the same view on this matter?

[John Woodcock]

Indeed I can, and I thank the hon. Gentleman for his contribution. As he knows, it was the previous Labour Government who took the difficult but right decision to press ahead with Vanguard renewal. We set in place that programme, and we were disappointed that, following the coalition agreement, a delay was put on main gate and the in-service date. That has stretched the programme to its limit, but the Labour party remains committed to a minimum credible deterrent as long as other countries have it. Once one makes that call and genuinely believes it, as we do, the argument that I am setting out today is that there is only one logical conclusion, which is to renew Vanguard on the programme that is under way at the moment, or indeed even to speed it up.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

My apologies for being slightly held up; the Defence Committee over-ran by a couple of minutes. I had the great privilege of visiting the yard with my hon. Friend a few weeks ago. Given the experience of the Astute programme, will he share with the Chamber the consequences of introducing another delay?

--- Later in debate ---

[John Woodcock]

My hon. Friend touches on a key issue. I will come on to that in a moment if I may, because I have some important questions on which the Minister can give us some reassurance.

[Dr Julian Lewis (New Forest East) (Con)]

I thank the hon. Gentleman for his generosity in giving way. I should like to revert to the point raised by my hon. Friend the Member for Woking (Jonathan Lord), whom I thank for his kind remarks, which I did not deserve. Will the hon. Gentleman cast his mind back to the last Defence questions, when the hon. Member for North Durham (Mr Jones) made the excellent point from the Dispatch Box that if the alternatives study says that the choice is between a full-time deterrent and a part-time deterrent of, say, only two submarines, then at least we should get round to signing the contract straight away for the two submarines? I was encouraged by that and I shall be pressing the Secretary of State for a meeting to discuss that proposal so that Trident cannot again become a political football between the Liberal Democrats and the two major parties that support it.

[John Woodcock]

I thank the hon. Gentleman for his wise words on this issue, which we hear so often from him. There could well be a number of reasons why it makes sense to bring forward the main gate decision. Indeed, if that requires a new coalition for that one issue in this Parliament, then I know that many of us, from across the House and in this Chamber today, will be prepared to be a part of it.

I will make a little more progress. Although it seems that the Trident alternatives review is set to dismiss such options as a land-based, air-based or surface ship delivery system, and indeed to give up finally on the Liberal Democrats’ mini-deterrent fantasy of adapting Astute-class submarines to carry nuclear-tipped cruise missiles, recent media coverage has suggested that the review may set out proposals to abandon the UK’s posture of continuous at-sea deterrence, which for decades has ensured that at least one British deterrent submarine is operational at all times.

We read that that could take place either when the Vanguard submarines reach the end of their life or perhaps even within the next few years, if the extensive leaks to the national newspapers can be believed. Colossal savings could be realised, says the unnamed brain-box who briefed the Financial Times in May. We are also told that we could build half the boats and save half the capital costs. As the submarines are predicted to cost, on average, about £2.5 billion each, that must mean a £5 billion saving to the Exchequer. Also, we are told that £1 billion a year could be saved by downgrading Britain’s nuclear capability to a part-time deterrent. Perhaps we could even keep Britain’s nuclear warheads in a cupboard, as the hon. Member for North Devon (Sir Nick Harvey) has curiously put it in the press. Alternatively, perhaps the main gate decision could not be brought forward but further delayed, and the proposed in-service date for the new submarines could be put back yet again.

Unfortunately, I am afraid that like so much that the Minister’s coalition partners transmit on defence issues, all of that is complete bunkum. For starters, does the Minister agree that it is nursery school logic to believe that we can save half the capital by building half the boats? The outlay on the submarine fleet is not simply a matter of purchasing these submarines; it is also about investing in the ability to design and build them. Those costs are fixed, whether we order two, four or more submarines—I am not necessarily suggesting that we order more than four submarines. Therefore, can the Minister confirm that he anticipates that the first of class would cost effectively double the average across the fleet, and that the fourth boat would be the cheapest of the batch? Can he also confirm that there would be significant savings from placing a four-boat order from the outset, rather than ordering two with the option to order two more? Also, can he confirm that if the Government were inclined to press ahead with the main gate decision in this Parliament, as was originally planned, there could be further substantial savings for the British taxpayer?

Similarly, with running costs the savings would not be anything like the amount that the antis boast it would be. Will the Minister confirm that at least 70% of those costs are fixed, covering the fuelling and basing facilities, and that they will be the same whether Britain operates patrols around the clock or takes the submarines on the occasional fishing expedition once or twice a year? What is his estimate—if he can share it with the House—of the annual savings that would accrue from stepping down from a class D posture?

Also, given the high fixed costs, does the Minister agree that abandoning class D would mean a disproportionate downgrading of the deterrent’s capacity to deter the grotesque horror of a nuclear war, by removing the guarantee that currently exists, namely that any nation that launched a nuclear attack on the UK could be hit by a counter-strike no matter what damage our country sustained? Furthermore, does he agree that it would be highly perverse if those who pursue disarmament—admittedly for absolutely laudable motives—were actually to increase the risk of nuclear conflict in future decades through their unilateral gestures, rather than making the world safer? Also, if I can tempt him to speculate, does he think that it was that woolly thinking from the Liberal Democrats that has left the party in the extraordinary position of having no representation at all in the defence ministerial team at this vital moment?

[Dr Julian Lewis]

Thank goodness for that. [Laughter.]

[John Woodcock]

Well, let us see.

On the timing of main gate, will the Minister confirm that a further delay to the build process is effectively ruled out by his Department’s assessment, which was communicated to me by the Secretary of State at the last oral questions, that the Vanguard hulls would be rendered unsafe if their life was extended beyond the current 35-year plan, which of course is the longest period that any British submarine has ever been in service?

Finally, building two boats rather than four means that work across the UK supply chain could grind to a halt as early as 2031, six years earlier than is currently expected. Without more submarines to build, Barrow’s unique specialised work force will break up, as they did the last time there was a gap in the submarine drumbeat. However, as we have just discussed, the consequences would be felt in every part of the United Kingdom. That would leave us with two expensive choices. Either the Government, and taxpayers, would have to pick up the tab for the sustained unemployment of that work force, and consign to history the nation’s capacity to build submarines, with the loss of valuable skills and export spin-offs that would occur as a result, or alternatively—this is surely more likely—the Government of the day would bring forward the next submarine programme. That programme would involve the successors to the Astute class submarines, which of course have not been built yet, sooner than those vessels are actually needed from a military naval capability assessment, to keep the industrial drumbeat going. Can the Minister confirm that because that would mean that the bulk of capital spending on that next generation of boats would be required as early as the Parliament after the next one, bringing that spending forward—by bringing forward the successor to the Astute class—would completely wipe out the savings from ending continuous at-sea deterrence?

Bluntly, that is the choice that we would face if the decision was made to abandon class D. We would have to be prepared either to put at grave risk a significant part of Britain’s cutting-edge industrial base or to bring forward a significant amount of spending well before it would actually be needed.

Everyone in this House has a responsibility to guard against siren voices peddling false economies. The submarine supply chain is one of Britain’s great unsung assets, providing high-skilled manufacturing jobs that will rebalance the economy. We must not sacrifice those 13,000 jobs on the altar of cuts that would end up saving nothing significant at all but would leave the country vulnerable in future decades.

--- Later in debate ---

[Mr Dunne]

I am grateful to my hon. Friend for reinforcing the commitment of the Conservative party, from the highest levels, to continuous at-sea deterrence. I was not aware that he had requested a meeting with the Secretary of State. I am happy to take that up, and if the Secretary of State is unavailable I am happy to meet him as a fall-back, in the first instance.

The Astute programme is crucial to sustaining the skills and the work force that we need. Through that programme, we are undertaking the planning required to prepare for the successor submarines that will replace the Vanguard class from the late 2020s. Hon. Members will be aware that we are taking the steps necessary to be ready to start building the first submarine as we lead up to a main gate decision in 2016.

The hon. Member for Barrow and Furness asked whether this decision could be advanced, saying that this might help both cement the decision and, potentially, reduce the cost. Another lesson that we have learned from shipbuilding programmes is that unless the design is mature enough at the time that the investment decision is made—in other words, if a decision is rushed—additional frictional cost could be built in, through changes to the design programme after the contract has been priced, which can delay the programme and add significantly to the cost thereafter. We do not want to repeat the mistakes made at the time of the Astute contract being laid, by making a premature decision on the successor design.

[John Woodcock]

That is a good point. Could we have main gate and then do the pricing at some point later?