Shipbuilding
Debate between Mark Prisk and John Robertson
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I congratulate the hon. Member for Glasgow North West (John Robertson) on securing the debate, and on his heartfelt remarks. He knows the shipbuilding industry in its entirety well. I am sure that he will not be surprised to learn that I do not agree with all his conclusions, but I nevertheless respect the fact that he takes a considerable interest in the industry.
I should like to set out the UK’s current market position on defence and, indeed, on the broader issue of marine engineering, because that is crucial to underpinning many of the engineering businesses to which he referred. I shall respond to his specific concerns on defence, and explain the Government’s strategy for helping marine engineering in the round to grow over the next few years.
I want to put this in context. The foundation of UK marine manufacturing and shipbuilding derives from our historical position in relation to merchant shipping and to the defence of our nation. Today, the equipment that we develop in this country is still highly favoured by ship and boat owners around the world. The marine industries manufacture and provide important support services in not only the naval market but the leisure, commercial and offshore renewable markets, and generate some £10 billion for the UK. Furthermore, the UK is still the fourth largest shipbuilder in Europe in terms of gross value added. However, the global market is not static, as the hon. Gentleman acknowledged. Today, our expertise and facilities are being adapted for new clients and new markets. Of course, that also means that they face new challenges from new competitors who were not there 10 or 15 years ago.
Our worldwide reputation for naval ships, marine equipment and systems, marine science, ports and infrastructure, ship repair and recycling is now migrating into a broader sphere, which includes offshore renewables manufacture, super-yachts and high-value sailing yachts. Let us take, for example, South Boats, which designs and builds aluminium catamarans on the Isle of Wight. It sells to a market for the operators of offshore wind farms in the whole field of support and crew transfer vessels. Four years ago—in 2008—its turnover was in the region of £8 million, but it exported merely 5% of its output. By 2011, the turnover had increased to £23 million, with 21% exports. That is an example of positive signs in shipbuilding and ship repair, but it is not the only one.
Let us take the revival of the Cammell Laird Birkenhead shipyard. The firm that went into administration in 2001 was bought back by former employees and now once again, I am pleased to say, is a thriving shipbuilding and ship repair business. It specialises in commercial repair and upgrading heavy fabrication engineering, but also operates in military refit markets. It is located, as we know, in an area where there is a major cluster of marine service expertise. It is currently responsible for the maintenance of vessels from the Royal Fleet Auxiliary, which recently saw service in Libya, and is working on a number of commercial conversion projects.
What is encouraging about this—it is something to which the hon. Gentleman specifically referred—is the important commitment to training. The current chief executive at Cammell Laird, John Syvret, started as an apprentice shipwright. Today the company employs 70 apprentices alongside a core work force who average almost 700 direct staff. These are good signs for the prospects, and, indeed, the ambition of shipbuilding in the UK, but we recognise that this company, among others, has to compete in a tough and challenging global market.
We have, of course, seen this country and others facing a substantial financial crisis in past years, and many of the markets that shipbuilders sell into have either just come out of recession or, in some cases, are still in it. That is why when we started as a Government we wanted to put manufacturing back at the heart of our economic strategy. It is why we believe our job is to make sure that we maximise industries’ competitive advantages. That is why we are ensuring that we have one of the most competitive tax regimes—not just in the G7 but in the G20. It is crucial to get that long-term investment that is important to industry generally and to shipbuilding specifically. This also explains why we are investing in skills, as with the substantial expansion of apprenticeships. It is why we are investing in key infrastructure, with our £200 billion package of civil engineering projects incorporated into our national infrastructure plan.
John Robertson
The Minister, with his limited time, is generous in giving way. Does he agree that the reason why we have these apprentices and why we are investing in skills is that we have lost those skills over the decades, so it is more by necessity than design that this is happening?
Mr Prisk
The hon. Gentleman is absolutely right to say that we have seen a wind down so that over the next 10 to 15 years there will be a substantial loss through retirement of a whole generation of engineers. We do not see this is a necessity, however, but as an important part of shifting the balance of the economy. We want to see a strengthening in apprenticeships, so I would go further than the hon. Gentleman suggested. We believe that supporting supply chains and technological innovation is the way in which shipbuilding in the UK and elsewhere can keep ahead, so we need to make those investments.
Let me deal specifically with defence, on which the hon. Gentleman focused—not surprisingly in view of his constituency. It is, of course, a significant market for the UK’s shipbuilding sector. Supporting this, the Royal Navy is in the middle of a major building programme of both warships and submarines. Looking at the broader industrial issue here, partnering and industrial collaboration are key elements of the programme.
The warship programme is a significant investment, including six Type 45 destroyers, five Astute class submarines and two Queen Elizabeth class carriers, and they are all being delivered by UK shipyards. Subject to Ministry of Defence approval, new contracts are anticipated for two further Astute class submarines, the future strategic deterrent submarine and a new generation of frigate—the Type 26 global combat ship. The Type 26 frigates will form the backbone of the Royal Navy until the middle of this century and, I suspect, beyond. It is clearly too soon to speculate on precisely where the ships will be built, but I will say that the programme provides a real opportunity for strong ties to be formed between the United Kingdom Government, the Royal Navy and British industry as it progresses.
The work on the Queen Elizabeth class carriers, which it is important to consider in this context, has brought about a reinvigoration of the apprenticeships programme on the Clyde. Some 270 apprentices will be employed by BAE Systems, and 154 by Babcock in Rosyth.
Mr Prisk
I must tell the hon. Gentleman, with respect, that the debate was initiated by the hon. Member for Glasgow North West. I do not know whether he asked permission to intervene, but it appears that he did not, so I will now turn to the broader strategy.
If we are to achieve sustained improvements for the sector as a whole, we shall need a joint industry and Government strategy, whether it is in defence or on the civilian side. That is why, last year, we created the Marine Industries Leadership Council as a forum for the industry. We have launched the first ever strategy for the growth of the marine industries, which seeks to draw on the strengths of the whole sector. Having been a member of the Government for two years, I was surprised to learn that this was the first ever integrated UK strategy for the growth of the marine industries. Our goal is that by 2020, the UK marine industries will be renowned for the quality and value for money that they provide in their products, services and systems. A specific part of the goal is that we ensure that by 2020 the marine industries and maritime services sector sees the value of its contribution to our economy rise to £25 billion, up from £17 billion. That is a clear and important tangible goal, and I hope it will give some comfort to the excellent work force in the constituency of the hon. Member for Glasgow North West.
John Robertson
Does the Minister not accept, however, that the rules we in this country play by are not the same as those that other countries play by when bidding for orders to build our ships? There is not a level playing field. We allow companies from other countries to make bids when we know—particularly in respect of South Korea in the past—that money that has been given for development has been ploughed into the shipbuilding industry, to enable other countries’ companies to make ships cheaply.