Shipbuilding Strategy

Luke Pollard Excerpts

Tuesday 23rd January 2018 Westminster Hall

[Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)]

I beg to move,

That this House has considered the National Shipbuilding Strategy.

It is a pleasure to see you in the Chair, Ms McDonagh, and good to see many experienced hands from defence debates assembling for yet another one. It is also a pleasure to welcome the Minister to his place and to the wonderful world of defence procurement.

I declare two interests. First, I introduce this debate not only as the Member of Parliament for Plymouth, Sutton and Devonport—Plymouth is a proud military city in uncertain times because of the possibility of defence cuts—but as a vice-chair of the all-party parliamentary group on shipbuilding and ship repair. It is good to see so many members of that small but illustrious group—a band of brothers and our sister from Berwick-upon-Tweed—in their places today. Secondly, as a proud GMB and Unite member, I have had the input of those unions into the debate, for which I am grateful. The combined skills and experience of shipbuilders, engineers and master craftsmen and women contribute hugely to the debate, and it is in defence of those jobs and skills and that industry that many of us are here today.

I am sure that the Minister’s new officials have brought him up to speed, but it might be useful if I recapped briefly why shipbuilding and this debate are so important at the moment. First, though, every hon. Member, on both sides of the Chamber, wishes him and the new Secretary of State for Defence well in their battle with the Treasury to secure more funding.

The UK spends too little on defence, and that has consequences for what the Ministry of Defence can spend on shipbuilding, ship repair and ship procurement, capabilities and weapons systems. The excellent report by the Select Committee on Defence, “Shifting the goalposts? Defence expenditure and the 2% pledge”, shows that the last Labour Government spent on average 2.5% of GDP on defence, and the figure did not fall below 2.3%. Many hon. Members, on both sides of the House, would like a return to that level of spending.

With defence inflation running at a greater level than consumer prices index inflation, the extra bit that the Treasury affords defence is being eaten away as the real-terms value of defence procurement is put under more pressure. I think I speak for most hon. Members when I say that we strongly oppose, on a cross-party basis, cuts to our amphibious ships based in Devonport, in the constituency that I represent, and plans to merge the Royal Marines, but that should be taken as a given in this debate.

That is the backdrop, but the military context is important as well. We live in very uncertain times. Russia is expanding her horizons, has invaded European countries and has largely got away with it. China has ambitions across the Pacific. And the Royal Navy’s ability to command the waves is severely constrained by a shortage of manpower, a privatised recruitment system that is not delivering, and ships tied up because of faults, personnel shortages and a lack of resources. There is a focus on the carriers and continuous at sea deterrence, but the rest of the Royal Navy is suffering, and my argument is that this House will not stand for it.

The national shipbuilding strategy was much delayed, but was at least a good start. It accepted in full Sir John Parker’s recommendations, so I am not sure why it took so long to be produced. Defence aerospace is not as fortunate as shipbuilding, because at least we have a strategy. Britain is good at shipbuilding, and the many warships on sea trials, in dock being built and being planned are testament to our naval heritage and the up-to-date skills of a superb workforce right across the UK. I hope that today’s debate will illustrate to the new Minister and his officials not that that plan is wrong per se, but that with scrutiny we can make it more robust and more valuable to industry and our armed forces.

I want to highlight two principal areas in asking for revisions to the document. One is the procurement of the Royal Fleet Auxiliary’s vessels, especially the new fleet solid support ships, and the other is the configuration, capabilities, roles and realities of the proposed Type 31e frigate. As I said, the first issue is the new RFA solid support ships. The proposed three ship orders, with the vessels coming in at 40,000 tonnes apiece, would match the 120,000-tonne construction contract for the new carriers so ably delivered by British workers across the UK and assembled in Scotland.

I personally favour a restricted tender for the ships, so that only UK shipyards could build them, as they will be carrying arms, munitions and supplies, but I concede that international competition is the most likely option that the Minister will choose for them. In such circumstances, not only must the UK industry be encouraged to submit a bid and not actively discouraged by the MOD, but we must ensure that the procurement does what the procurement for the MARS—military afloat reach and sustainability—tankers did not: it must truly value the social, employment and economic impact of the work for shipbuilding and supply chain communities right across the country.

[Mr Stephen Hepburn (Jarrow) (Lab)]

I am sure that my hon. Friend is aware that shipbuilding industries throughout the world are very heavily subsidised, in one way or another, by their Government. That does not happen in this country. Does my hon. Friend think that we could get a better, more level playing field if the Government addressed their mind to that?

[Luke Pollard]

I thank my hon. Friend for that intervention; I agree with him. In fact, our hon. Friend the Member for Glasgow North East (Mr Sweeney) has raised the concern that state aid from the South Korean Government was potentially part of the consideration of the value of the MARS tankers contract, which went to South Korea. That £452 million contract was potentially subsidised by the South Korean Government, who are building skills and employment in Daewoo shipyards in that country. Excluding a little bit of final outfitting in the UK, those jobs have been outsourced and offshored.

Contracts to build ships for the Royal Navy and Royal Fleet Auxiliary should be onshored. The ships should be home grown, British designed and British made, using British steel and British technologies, and preserving Britain’s sovereign defence capabilities to design, build and equip complex and important ships for our own use and for export. The MOD could give its friends in the Treasury the good news that between 34% and 36% of the contract value would be flowing back into its coffers in tax and national insurance—bad news potentially for Kim Dong-yeon, the South Korean Finance Minister, but good news for our Chancellor of the Exchequer, who I am sure is following this debate closely and with avid interest. He is, after all, a big fan of the armed forces.

If UK shipyards build elements of the ships, it could help to fill gaps in the order books of yards right across the UK and contribute to what I believe should sit alongside the shipbuilding strategy: a clear running order of contracts over the next 30 years for the Royal Navy and RFA; a pipeline of work; a reason to invest in world-class design and production facilities, not just on the Clyde, but in reanimated yards such as Appledore in north Devon and those of Harland and Wolff and Cammell Laird. Ipsos MORI research commissioned by the Department for Business, Energy and Industrial Strategy found that 100 shipyard jobs lead to an additional 32 jobs in the manufacturing sector within a 60-km area, so there is a multiplier effect from investment in UK shipbuilding.

[Dr David Drew (Stroud) (Lab/Co-op)]

Does my hon. Friend accept that at the other end of the scale, the commercial end, there are also very profitable yards? There are two in Stroud, funny as that may seem, at Sharpness and Saul. It is important that we understand that the whole shipbuilding industry needs support, but also recognise that it is a very integrated industry. Does my hon. Friend agree?

[Luke Pollard]

I thank my hon. Friend for that intervention. I do agree. The great strength of this debate on the national shipbuilding strategy is that we can praise the contribution not only of those yards that might be seen on the 10 o’clock news—the ones with the very large cranes and very large warships—but also all the supply chains to the smallest yards, and all those businesses that supply the kit that goes on the ships. That makes the UK a formidable power when it comes to shipbuilding. I am glad that the shipbuilding strategy hints at that, but perhaps it could go a little further in celebrating it.

That brings me to the second point, and recognising that many hon. Members want to speak, I will be brief. In my maiden speech in the House of Commons in June 2017, I called for more, and more capable, frigates. The Type 31e is not exactly what I had in mind. I am concerned that the shipbuilding strategy embeds the reduction of truly world-class frigates from 13 to eight. The Type 26 is a fine global combat ship, although one of the City class should be named after Plymouth—a campaign started by my Conservative predecessor and continued proudly by me. It is a good ship and a good programme that will serve UK interests well, but there are too few of the ships—to be precise, five too few.

The top-up light frigates have an ill defined military role, a confused capability and a price tag that gives this the potential to be the Snatch Land Rover of the Royal Navy—a comment by the Royal United Services Institute’s director of military sciences. I have a different name for that class: corvettes. I am genuinely concerned that over the next few years this class of ship will be the focus of much critiquing, as it fails to hit established frigate standards and looks less capable than the Type 23 frigates that the ships replace.

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

On the point about an undefined task, we had it from the Minister—I have had it in a written answer—that the ship will not be able to do any NATO tasks, and it will not be able to do any carrier protection work, so can my hon. Friend suggest what the role of this vessel will actually be, apart from being a glorified fishing protection vessel?

[Luke Pollard]

My hon. Friend is spot on. The confusion about the role of this warship is at the heart of the problem with the shipbuilding strategy. It looks like we put the cart before the horse in defining a price tag but not a role. It is essential that in the next couple of months the Ministry of Defence comes forward with that, to provide all defence-leaning Members of Parliament, on both sides of the House, with a reason to celebrate this warship, not critique it, because I worry that the critique will not support it and help its attractiveness as an export product. We should turn those weaknesses of the Type 31 into its strengths and promote a corvette class, not a poorer frigate. That would give the Royal Navy two carriers, two amphibious assault ships retained and not cut, six destroyers, eight proper frigates, five corvettes and the new offshore patrol vessels. That is still too few ships, but a line we should not go below, or accept further cuts or reductions against.

The shipbuilding strategy suggests that UK yards will build five Type 31s as replacement for the Duke class, and pitch for competition for 40 to export. As Darth Vader warned Director Krennic in “Rogue One”—a film I am sure we have all watched:

“Be careful not to choke on your aspirations”.

I truly want to believe the MOD when it says that there is a market abroad for 40 Type 31s, built in Britain, but I cannot see where that might be.

[Chris Stephens (Glasgow South West) (SNP)]

Given that we do not know the capability, and given the comments made by the hon. Member for North Durham (Mr Jones), is there not a question as to who we would export these Type 31 frigates to? Does the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) agree that the view of many in the shipbuilding industry is—to quote his hero Darth Vader again—that we want these ships, not excuses?

[Luke Pollard]

As a Luke, I am not sure Darth Vader is quite my hero, but the point the hon. Gentleman makes is a good one. There are 14 other ship manufacturers globally providing a light frigate option of between 2,000 and 4,000 tonnes. That is an awful lot of competition when the customers are ill defined. Let us look at some of those competitors for the Type 31 frigate: there is the French and Italian FREMM class; the Spanish Navantia F-105; the Danish StanFlex; Germany’s F-125 Baden-Württemberg class; and South Korea’s Incheon class, let alone the myriad cheaper platforms built by China and other far-eastern nations.

[Mr Kevan Jones]

It is a fact that Britain last exported a frigate over 40 years ago. When I raised that with the new procurement Minister at Defence questions, all I got was an accusation of talking down the British shipbuilding industry. Does my hon. Friend agree that as a matter of urgency the MOD needs to clarify exactly where it sees the market for these 40 frigates?

[Luke Pollard]

I agree with my hon. Friend. Clarity around the role, capabilities and market for the Type 31 is absolutely critical in building a strong case—a marketing dossier—that says, “British Members of Parliament support this ship and will actively go out and sell it,” because I am concerned that we cannot even advocate for the Type 31 for UK military use, let alone military use for those abroad.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

Does my hon. Friend agree that an increasing pattern in the procurement of ships around the world for naval purposes is that the proposition for bidders, such as Fincantieri and BAE Systems, is that those ships will be part of an industrial offer to the customer country, in that they will be built in their country, so the potential for build in the UK for export is extremely limited, and part of the competitive drive is to move that work into the country purchasing the ships as part of an industrial offer?

[Luke Pollard]

My hon. Friend perfectly sums up where this is going. It is clear that we need to look at what those jobs will be. Will they just be in design, or will they be in build in the UK?

We need to recognise that the Royal Navy needs to sell the best in-class version of the Type 31 if it is to be a compelling export product; it should be a floating showcase, an example par excellence, not a cut-back, scaled-down, bargain-basement, cheap as possible, poorly-armed, combat-light, barely acceptable platform. We need clarity on whether the export version will be built here or abroad. Britain is building ships. Britain is building corvettes and offshore patrol vessels. Babcock is building the Irish navy OPVs at Appledore: the Samuel Beckett-class OPV is lightly equipped, but capable. BAE Systems is building OPVs: the Batch 2 river-class ships and the Khareef class for Oman. They have similar armaments, but with the ability to add Exocets and a medium helicopter. Those ships could well form the basis for the Type 31 Arrowhead or Leander-class options—extended OPVs, rather than frigates in their own right.

My hon. Friend the Member for Glasgow North East mentioned customers and where they will be. Australia and Canada are looking to procure new frigates in the coming months, but they are more in the market for a Type 26 all-rounder anti-submarine warfare frigate, rather than Type 31s. I appreciate that the Minister has inherited someone else’s homework and ambitions, but where will the 40 export orders come from and can the Type 31 really win 40 orders? I am naturally cautious about suspiciously round numbers, and this shipbuilding strategy suggests not only a suspiciously round £250 million per ship, but that there will be 40 exports. As aspirations go, it is good to be bold, but I would prefer us to be realistic about the delivery of this ambition, especially against the backdrop of post-Brexit uncertainty and volatility in the value of sterling.

As with the national security review, I fear that the national shipbuilding strategy puts the cart before the horse. We know the price tag, but not the capabilities. We know the final bill, but not what foes will be faced, what waters will be patrolled or what role it will have. Clarity is our ally if we are to make a strategy that is truly joined up and deliverable. In very uncertain times for our armed forces, this strategy should offer us hope of long-term thinking. I say to the Minister that the paralysis and the pitched battles of the national security review are understandable, but they do not have to lead to the paralysis announcements from the MOD.

I encourage the Minister to announce the base porting arrangements for the Type 26s and the Type 31s, providing clarity for future investment in base ports. Devonport offers a genuine world-class base, as he would expect me to say. I also encourage him to announce that the fleet support ship contract will be open to UK bids, and that no UK shipbuilder will be discouraged from entering by the MOD in order to curry favour for other contracts, especially the Type 31. I also encourage the Minister to announce that the social, economic and employment impact of the contracts will be assessed as part of the contract decision making process. Bring forward greater detail about the Type 31—its capabilities, roles and operations—and be clear about how it will be built in the UK.

There is a huge opportunity to be ambitious here, an opportunity to build and sustain a revitalised shipbuilding industry providing good, well paid and high-skilled employment across the country, backing British supply chain jobs, creating apprenticeships and, importantly, providing the Royal Navy and the Royal Fleet Auxiliary Service with the ships they need for Britain’s sea power to rule the waves once again. A strong defence is worth fighting for, and we know that a strong defence cannot be done on the cheap.

--- Later in debate ---

[Luke Pollard]

It is good to have a second Plymouth MP here in a Defence debate. I am grateful for the contributions we have heard from all parts of Westminster Hall. I hope it is the start of a productive conversation between the Minister and the all-party group on shipbuilding in particular, but also with Members.

The importance of a drumbeat of orders has been reinforced time and again, and the Minister has heard that. Clarity on the capability of the Type 31s is key, and I would be grateful if the Minister removed the ban on Royal Navy personnel speaking at the all-party group. I would also be grateful if, one year on from the Sir John Parker review, the Minister looked at how the review could be reinforced with feedback from Members of Parliament representing shipbuilding and ship repair communities across the country. There is a collective will in the House to make it work, and the honest conversation we can have here will be an important part of that.

Question put and agreed to.

Resolved,

That this House has considered the National Shipbuilding Strategy.