Royal Navy: Type 31e Frigates

Lord West of Spithead Excerpts

Thursday 20th December 2018 Lords Chamber

[Lord West of Spithead (Lab)]

My Lords, I thank my noble friend Lord Berkeley for introducing this debate. I am delighted that we have noble Baronesses on the Front Bench. I thought that there might be more in the Chamber because noble Baronesses are able to launch ships, which is something that noble Lords cannot do, and of course they immediately become “ladies who launch”.

Appledore is just the tip of an iceberg because, without a full order book, I believe that other yards will go the same way. Let us look at the current UK ship orders. There are only two warships in build in the UK: HMS “Prince of Wales”, which is fitting out in Rosyth and is almost complete, and HMS “Glasgow”. Two other frigates are on order and they will follow on when “Glasgow” is moved out of the yard. So, as we speak, across the United Kingdom steel work is going on on only one frigate. That is a disgrace for a maritime nation such as ours.

There is of course the plan to award a contract for five Type 31e frigates by December 2019 and a contract for the second batch of five Type 26 frigates in the early 2020s. Indeed, I had understood that one bid for the Type 31e comprised Babcock at Appledore in north Devon, Ferguson Marine on the Clyde, Harland and Wolff in Belfast, with integration at Babcock Rosyth, Fife. So, as I understand it, one of the businesses is Appledore and it is a Babcock build, so the closing of Appledore seems strange. Perhaps the Minister can confirm that the plan includes that bid.

However, these plans are just aspirations, of course, and I am afraid that I am old enough to have seen many such aspirations dashed: two landing platform helicopters reduced to one; 12 Type 45 destroyers reduced to six; 13 Type 25 frigates reduced to eight; eight Astute-class submarines reduced to seven; and so on.

There is a strategic imperative to keep a minimal shipbuilding capability in this country, but the continual loss of yards such as Appledore puts that at risk. This is clearly understood in the case of nuclear submarines, although in the early 1990s the Government almost lost the United Kingdom that capability due to a lack of orders. Similarly, I think that the Government understand the requirement for our nation to design and build complex warships. However, there need to be a sufficient loading and a steady drumbeat of orders, not least to ensure that SMEs can survive, but at present these orders do not exist. Without them, that shipbuilding capability will be lost.

We need to maximise the shipbuilding load, and the fleet solid support ships—ideally three of them, rather than two—could help that dramatically. It would also ensure the use of 90,000 tonnes of British steel, helping to maintain another strategic requirement for a nation such as the UK. However, the national shipbuilding strategy was very clear that the fleet solid support ships would be subject to international competition.

The Treasury line is that we should go to competition beyond the UK for cost reasons, but of course it does not look at the real cost to the nation of not building them here. No account is taken by the Treasury of tax paid by the shipbuilders and workers in those shipyards. It does not look at the loss of apprenticeships leading to high-skilled jobs. There is no look at the costs of retraining and unemployment in specific regions if these yards have to close, nor at the knock-on effect of a loss of jobs supported by the shipyard workers in that region, as has already been touched on by the previous two speakers. The Treasury also, strangely, seems to equate a job as a shelf-stacker in a supermarket with a high-tech skilled job in a shipyard. I am afraid that I do not see it in that way.

The national shipbuilding strategy announced that warships would be built in the United Kingdom on the basis of a competitive tender between UK shipbuilders, and that competition would help to ensure value for money and productivity, as is correct. It also said that companies could choose where to undertake the work. I cannot fault any of that but there is a hollow ring about the national shipbuilding strategy’s master plan that provides a 30-year forecast of Royal Navy shipbuilding requirements. It is far too vague and very short on specifics.

It has been stated that the strategy provides industry with greater certainty about the Royal Navy’s procurement plans—I have already talked about how these things can change quite dramatically—so that industry has the confidence to invest for the long term in its people and its assets, which is a very good thing. However, it does not do that. Where is the increase in frigate numbers promised by the Government? On what dates will they be built? Ditto the dates for the replacement amphibious ships. Why not have shortened timescales for the Type 26 programme? Where are the follow-on SSNs to take the numbers back up to the minimum requirement for eight boats? More detail is required for the small shipbuilding programmes. The demand by other government agencies, such as the Border Force, HMRC and the police, should be addressed as part of this package. The strategic position post Brexit means that we need to start building as soon as possible. Our exclusive economic zone and territorial seas are, I am afraid, wide open.

If the Government want industry to raise productivity and innovation and improve its competitiveness in the domestic and overseas markets, they must ensure a minimum shipbuilding base loading. I am afraid that at present that is not happening.

--- Later in debate ---

[Baroness Goldie (Con)]

My Lords, I congratulate the noble Lord, Lord Berkeley, on securing an important and very well-informed debate on the subjects of the Type 31e frigate programme and the Appledore shipyard. I welcome the opportunity that this debate affords to highlight the progress being made by the Ministry of Defence towards the important issue of delivering the Type 31e programme and the also important contribution that the programme is making to realising the vision of the National Shipbuilding Strategy.

In 2016, the defence sector had a turnover of £23 billion and £5.9 billion of export orders. The Ministry of Defence is the sector’s most important customer. Last year we spent £18.7 billion with UK industry, directly supporting 123,000 jobs in every part of the UK. The 2017 sector examination, carried out by the MoD, with which noble Lords will be familiar, produced the analysis which duly informed the National Shipbuilding Strategy. That analysis was guided by the expert advice contained in Sir John Parker’s independent review. I have not the time available to go into details of the recommendations, but suffice to say that we accepted all of those that applied to government.

I noted that the noble Lord, Lord West, challenged a part of the review recommendations, but I have to say that my impression is that the National Shipbuilding Strategy constructed largely in that review has been widely welcomed. The noble Lord perhaps predictably questioned the number of craft actually available for deployment at sea. We are now building state-of-the-art vessels, deploying the most modern technology. That is introducing a flexibility of operation and deployment that was not previously possible.

[Lord West of Spithead]

We are just coming up to the anniversary of the Battle of the North Cape where a very modern and high-tech German battleship was sunk because basically we had a battleship, two cruisers and 10 destroyers against it. They were not nearly as high-tech and modern, but numbers themselves have a strength.

[Baroness Goldie]

I am sure that the noble Lord and I could spend a happy hour or two engaging in a debate as to what constitutes an optimum naval facility, but I think it is acknowledged that, as with other areas of activity in the world, approaches and strategy in defence have had to adapt to what is now possible with the technologies available, which our predecessors did not have to hand.

Defence makes a contribution to the UK’s success as a major supporter of maritime equipment and systems through the work that it provides to build and support ships, both at the shipyards and in the wider supply chain. To continue to be successful, both the yards and the supply chain need to develop their global competitiveness for military and civil work. We need a modern and efficient shipbuilding industry. The importance of our Royal Navy to the defence and security of the UK and the significant level of investment by the Government in shipbuilding demand this.

The launch of the Type 31e programme represents a tangible first fruit of the National Shipbuilding Strategy. It is a pathfinder for the delivery of the new shipbuilding and capability vision set out in that strategy. As noble Lords are aware, under that Type 31e programme we will deliver a class of five ships at an average price of £250 million per ship. We want the first ship in service in 2023 and all five in service by 2028. The noble Lord, Lord Touhig, asked specifically about the costings of the programme, and I can say that we are confident that industry can rise to the challenge of building each Type 31e for £250 million; our growing defence budget, of course, is providing full funding for the remainder of the programme.

We believe that the industry can indeed meet that challenge. Following an intensive period of market engagement, a pre-qualification questionnaire was issued on 28 September 2018. I am pleased that the award of three contracts for a competitive design phase was announced to your Lordships’ House by the Minister of State for the Ministry of Defence, my noble friend Lord Howe, on 10 December 2018.

These contracts, as I said, are each worth around £5 million, and have been awarded to consortia led by BAE Systems, Babcock, and Atlas Elektronik UK. The contracts will fund the first stage of the design process, which will assess whether suppliers can deliver the Royal Navy’s threshold capability by the target date and within budget. I think the noble Lord, Lord West, asked about Babcock’s position in relation to the Appledore yard. It is a decision for Babcock to choose where it carries out the work, should it win that contract. That has to be a commercial decision for the company.

Concurrent with the award of the contracts for the competitive design phase, the Ministry of Defence has issued to each winning consortium an invitation to negotiate for the single design and build contract that we intend to place by the end of 2019. Conducting the competitive design phase, in parallel with the negotiations for the design and build contract, will allow us to award the contract earlier than would normally be the case in a major procurement. The noble Lord, Lord Touhig, asked whether regular updates would be provided to Parliament in connection not just with the 31e programme, but the Type 26 frigate programme. I am sure that the department will want to co-operate with whatever the reasonable demands of Parliament may be, and we would certainly want Members to be kept informed as to how matters were progressing. That will be a matter for discussion through the usual channels.

The approach to this contract is one that we all regard as an innovation. It is unusual; it is a contractual milestone, and is a testament to the Ministry of Defence’s positive engagement with the industry and the commitment to move the programme forward.

Turning to Appledore shipyard, it is, of course, a matter of deep regret that Babcock has decided to close the yard, which has such a lengthy and distinguished history. My noble friend Lord Arran spoke eloquently of the yard and its importance to north Devon. The noble Lord, Lord Burnett, with his extensive local knowledge, spoke cogently about the local community and economy, and my noble friend Lord Attlee spoke warmly of the yard and its capacity. I acknowledge all these comments.

Your Lordships will be aware that the Ministry of Defence spent £1.7 billion with Babcock last year, and the Appledore yard played an important role in manufacturing blocks for the nation’s two new aircraft carriers. I wish to acknowledge the skills and commitment of the Babcock workforce at Appledore, to which the noble Lord, Lord Berkeley, rightly paid tribute.

Babcock has also started work on a £360-million contract to be the technical authority and support partner for the Royal Navy’s new aircraft carriers and the fleet of Type 45 destroyers. However, following the completion of four offshore patrol vessels for the Irish navy, to which a number of your Lordships referred, Babcock has been unable to secure further work for its Appledore yard. The decision to close the yard has been taken by Babcock in the face of this long-term workload gap. It is Babcock’s commercial responsibility to make that judgment and take these decisions.

In this connection, I think it was the noble Lord, Lord Berkeley, who asked about UK fishery protection vessels. My understanding is that these are the responsibility of Defra, and the Royal Navy fisheries protection squad supports Defra, whose responsibility that function is.

The Ministry of Defence has explored a range of options with Babcock to secure the future of the yard, which included bringing forward a £60-million package of Devonport-based refit work. Unfortunately, no practical value-for-money solutions have emerged. I think it was the noble Lord, Lord Burnett, who asked me about the wider issue of a humanitarian ship for use by DfID following the decommissioning of HMS “Ocean”. The MoD remains able to provide a range of ships, including frigates, landing platform docks and survey ships of the Royal Navy and the Royal Fleet Auxiliary, to support DfId’s humanitarian work.

I am aware that it has been canvassed that the Ministry of Defence could bring forward work on the Type 31E or the fleet solid support ship programmes to support Appledore. Babcock is involved in both programmes. But neither programme is able to provide Appledore with the immediate work, or the certainty of imminent future work, that Babcock would need to retain the yard. As I have said, we expect to award the single design and build contract for the Type 31E in December 2019, while a contract for the fleet solid support ship programme, which is in the early stages of an international competition, is not anticipated before 2020. The future of the yard, following Babcock’s withdrawal, is ultimately a matter for the landowner. I understand that Babcock has said that it is working to offer new opportunities, including transfers to Devonport, to as many of its 200 employees as possible.

I think it was the noble Lord, Lord Burnett, who asked what the Government were doing about the current situation. The Department for Business, Energy and Industrial Strategy is engaged with local and national stakeholders regarding plans for the future of the Appledore site. The department is also looking to engage with the current owner of the site to offer support in finding a buyer. More widely, the Devon and Cornwall Business Council is setting up a taskforce to look specifically at this issue, and I understand that it met for the first time last week.

I was very encouraged and pleased to hear from the noble Lord, Lord Berkeley, that there is hope that a buyer may be found for Appledore. The Government will, of course, welcome any development that may preserve jobs at the site. However, I must emphasise that any such plans for the future of the yard following Babcock’s withdrawal are ultimately a matter for the landowner and the commercial interests involved. I think it was my noble friend Lord Attlee who asked about the plant currently at the yard. That is an important point, but it is a decision for Babcock. I assure your Lordships that the Government recognise the impact that the closure of the yard will have on local communities.

The noble Lord, Lord Berkeley, raised the issue of a new Scillonian ferry. I have been a very happy holidaymaker to the Isles of Scilly on one occasion—although I have to confess that I flew there; I did not go on the “Scillonian”. It is important for potential visitors to be encouraged to travel to the islands and to have the means of doing so, and that is a matter for the new transport board for the Isles of Scilly and the Isles of Scilly Steamship group, to reflect upon. Their vision may include a plan for the replacement of assets such as the “Scillonian”, but even with the buy-in of all, that is not a precise way forward. A lot of planning will have to emerge and become clear from such a vision, if that is what is ultimately intended. I should make it clear that the provision of a new ferry is a commercial decision for the new transport board. It is difficult to see anything in the possible provision of a new ferry that could help alleviate the immediate lack of work at Appledore now.

The Government remain committed to ensuring that services to and from the Isles of Scilly are maintained and secured for the future. However, we must be clear that these have to operate on a commercial basis. We do not wish to interfere where there are commercial solutions to any transport challenges faced. We expect that to become clearer once the transport board has established its future vision. I thank the noble Lord again, and all contributors, for an interesting and helpful debate.