Defence Industry: Scotland

Martin Docherty-Hughes Excerpts

Tuesday 30th April 2019 Westminster Hall

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

It is good to serve with you in the chair, Mr Hollobone. It is always good to speak in this place about the valuable contribution made to Scotland and across the UK by the people who work in the defence industry. Their skills and diligence make their contribution to our economy invaluable—let us not forget that Scotland has record-low unemployment—and that is felt well beyond the sector in which they work. I am glad there is agreement across the Chamber on that point. I am thankful to the hon. Member for Rutherglen and Hamilton West (Ged Killen) for giving us the opportunity to demonstrate that point of agreement.

From the perspective of the Scottish National party, as we consider the starting point for the Scottish defence industry to move towards an economically and otherwise sustainable future after Scotland’s independence, there is much cause for optimism. I am no pacifist; my brother served in Iraq and in Afghanistan twice, and my nephew is a Royal Engineer. Our Benches are not filled with pacifists, although I cast no aspersions on the voting intentions of those who are.

In my role on the Select Committee on Defence, I have been lucky to visit many defence manufacturing sites in Scotland. I am glad to say that they are all historically rooted in their local communities, but nonetheless are well integrated into the wider European and global economies, with export profiles to match. For me, an independent Scotland operating in the strong framework of the European family of nations, with the broad shoulders of a global, capable trading bloc that already has trade agreements and over half a billion people, should be well placed to build on that position.

The most important aspect of ensuring that we have a sustainable and diverse Scottish defence industry—this is where we might find some agreement—will be the establishment of multi-year defence agreements, or MYDAs. I have yet to hear a single other member of the Defence Committee mention those at that Committee. Used commonly by our allies, MYDAs create a framework agreement among political parties for a common approach to defence procurement that gives security to industry and removes complex and long-term decisions from capricious politicians wedded to short-termism.

With MYDAs of five years or longer, an independent Scotland, which of course is my preference, or indeed the UK, would no longer have to face Governments halving the size of the Type 45 destroyer programme—I will leave it to others to find out which Government did that—or chopping up maritime patrol capability. That capability was discussed at the Defence Committee this morning; we are having to try to get an even older programme from the United States to replace it. Defence Secretaries who seek to sign blank cheques for programmes in the hope of being catapulted into No. 10 would no longer be able to saddle the procurement budget with £15 billion black holes.

The consensus about the excellence and skills of our defence industry employees should be reflected in an ability to work together to ensure their long-term future. Quite simply, the MOD has been used for far too long as a political football. We already know that a steady and reliable pipeline of orders can form the basis of a diversified and sustainable industry.

Earlier this year, I was lucky enough to join my hon. Friend the Member for Glasgow South West (Chris Stephens) on a visit to Thales electronics in his constituency. I was fascinated to see the outstanding tradition of periscope manufacturing being transformed to produce a new generation of optical sensors for the Royal Navy and other customers, including the navy of Japan. Technology designed and developed in Glasgow, with a broad economic reach across the whole of central and western Scotland and with the expertise of a lot of people from West Dunbartonshire, whose shipbuilding heritage is profound—of course, we do not have any shipyards left, but we will leave that for another debate—is used on a whole range of optical sensors for use across the military and civilian fields, not only in the UK but by our allies.

Similarly, SNP Members were delighted by the welcome news that Raytheon, recognising the strength of the skill base in central Scotland, has decided to invest in a new facility in Livingston, primarily to design and manufacture power systems for military and defence radars. Building on a history of excellence in manufacturing in the military domain to provide civilian applications is precisely what this debate is about, as I am sure the hon. Member for Rutherglen and Hamilton West intended.

Those are examples of multinational companies that have chosen to locate in Scotland because of the skills, quality and work ethic of those who come through our schools and universities. Very few other small states have such a plethora of world-class higher education departments, and we can only hope that the end point of the Brexit process does not dislocate them from common European funding mechanisms. That points to the fact that the common assumption that the strength of Scotland’s defence industry is mainly in the maritime sector may change in the future. These are encouraging developments, and I only hope that the potential development of cyber and electromagnetic capabilities in Scotland leads to much growth and diversification. Again, that was discussed at the Defence Committee this morning.

Let me draw my remarks to a close by reiterating my agreement with most of what was said by other Members, who spoke about the abilities of those who work in the defence sector in Scotland. We are grateful for the contribution they have made and will continue to make to the health of our economy and to our neighbours and allies. Let me reassure them that, as least from my perspective, independence continues to be the best way forward for a sustainable future away from the historical underinvestment by successive UK Governments in defence in Scotland. Finally, we hear much about the 2% of GDP that the UK spends on defence, but Scotland does not get its fair share of that. Perhaps the Minister can tell us why not.

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[Douglas Chapman]

That is the line pointed out every time we have this discussion, but it really is time for an adult conversation. The figures in the “Trouble Ahead” report show that £3.5 billion is spent every year on the nuclear deterrent. There are conventional deterrents that we can use, and we must also look at how else we could utilise that money if we were not spending it on nuclear weapons.

[Martin Docherty-Hughes]

Does my hon. Friend agree that, as was said at the Defence Committee this morning, if we had that £3.5 billion to spend on hybrid warfare—a war that exists—that would be a better deterrent than nuclear weapons, which have no long-term impact?

[Douglas Chapman]

My hon. Friend has hit the nail on the head. There are huge pressures on the defence budget overall, but the Minister knows that if he had another £3.5 billion to spend every year on conventional weapons and the approach and posture suggested by my hon. Friend, that would put a big smile on his face. Perhaps then we could get some RAF contracts back into Scotland.

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[The Parliamentary Under-Secretary of State for Defence (Stuart Andrew)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing the debate and for the tone of it. My hon. Friend the Member for Stirling (Stephen Kerr) is right that it has been a considered debate about how we might diversify the defence industry in Scotland.

Before I address some of the specific points that have been raised, I want to emphasise the importance of the UK’s defence industry, both in delivering world-class military capabilities to our armed forces and in contributing to the UK economy. Last year’s report into the contribution of defence to UK prosperity by my right hon. Friend the Member for Ludlow (Mr Dunne) showed that defence benefits every single part of the United Kingdom. It is a sector with an annual turnover of £22 billion supporting some 115,000 jobs. Scotland shares in that national success by benefiting directly from every pound spent on our defence, which is in itself the biggest defence budget in Europe. The report highlighted the range and diversity of the defence industry across the whole of the UK, including in Scotland, and the UK Government’s support for the defence industry in Scotland.

Last year, defence spend with industry in Scotland amounted to £1.65 billion, supporting some 10,000 jobs and equivalent to £300 per capita, which is above the UK average. The hon. Member for West Dunbartonshire (Martin Docherty-Hughes) said that Scotland wants its fair share, but as a Yorkshire MP I would say that £300 per head in Scotland compares very favourably with the £60 per head that we get in Yorkshire and the Humber. I think it is we who want our fair share.

[Martin Docherty-Hughes]

There is a difference between a nation and a region, clearly.

[Stuart Andrew]

There are many Yorkshire people who would argue very differently.

We invest in shipbuilding in Scotland to maintain world-class capabilities for our Royal Navy, recognising the incredible expertise of the Scottish shipbuilding sector. With a history that dates back more than 150 years, it has long been the envy of the world and today remains a global leader. As we have heard, in the past few years Scotland has played a major part in the building, assembly and successful delivery of HMS Queen Elizabeth, the most powerful surface vessel in British history. The MOD has also placed a £3.7 billion contract to build the first three state-of-the-art Type 26 global combat ships on the Clyde, where all eight will eventually built. The first of these City-class frigates has been named HMS Glasgow and the last will be HMS Edinburgh. Coupled with our order for five offshore patrol vessels, this work will sustain some 4,000 jobs in Scottish shipyards and throughout the supply chain until the 2030s. No other industry in the UK can boast such a pipeline of future work.

Many other businesses are investing in Scotland, and I have heard many people congratulate and praise them. They include Babcock, BAE Systems, Rolls-Royce, Leonardo, Thales, Raytheon and QinetiQ. Denchi Power is an innovative smaller company, based in the far northern coastal town of Thurso in Caithness, which from its factory overlooking the beautiful islands of Orkney provides much of the essential advanced battery and charging technology and subsystems for the UK’s combat radio systems. These companies demonstrate the diversity of size and geography of the Scottish defence supply chain.

In the air, Leonardo manufactures state-of-the-art radar systems in Edinburgh. I had the great privilege of seeing some of the fantastic work it is doing there, and it is world beating. We want to see more of that as part of the combat air strategy. At RAF Lossiemouth, work has commenced on a new £132 million strategic facility co-funded by the MOD and Boeing. Up to 200 local jobs will be created at the peak of construction and we expect over 400 new jobs in the operation, once the P-8A fleet is based there permanently.

On land, companies across Scotland have provided and continue to logistically support high-technology subsystems on the Army’s critical warfighting platforms. These include Challenger 2 main battle tanks, Warrior infantry fighting vehicles, Foxhound patrol vehicles and the new AJAX reconnaissance fleet. The hon. Member for Glasgow North East (Mr Sweeney) asked for an update, and I can tell him that there is an ongoing competition on package 2 between the two contenders, and we are waiting for their revised bids, which we expect to have soon. The winner will be announced later this year. As it is a live competition, there is not much more I can say at this stage, but it is ongoing.

It is right that there is more that we can do, and I am absolutely determined that we do it. Scotland also benefits from the defence innovation initiative. The Defence and Security Accelerator finds and funds exploitable innovation to support UK defence and security quickly and effectively. It brings together the private sector, academia and Government organisations to find innovative solutions to some of the challenging problems facing defence. In the last year, DASA has launched 14 new themed competitions and run five cycles to open call. It has received nearly 800 proposals from over 480 organisations; some 228 proposals have been funded, of which over half are from small and medium-sized enterprises, with over £36 million of funding allocated. DASA’s competition events and outreach work are supported by a team of regionally focused innovation partners. This year DASA has been building relationships in Scotland and liaising with Scottish Enterprise, Textiles Scotland and the Universities of Glasgow, Strathclyde and St Andrews, to name but a few.

We also heard about space; Scotland has a great opportunity in that sector. Scotland is developing innovative defence technologies in that area, which is one reason that the Government’s flagship cyber-security event was hosted by the National Cyber Security Centre in Glasgow last week. Raytheon, which I met this morning and which specialises in the development of cyber-technologies, has recently announced new investment in a hi-tech manufacturing facility in Livingston, as we heard in the debate, as part of the diversification of its portfolio and its investment in British jobs. That is exciting news that will build on the support that it already gives.

More broadly, the hon. Member for Rutherglen and Hamilton West is right that space funding is an area that we need to develop carefully and take every possible opportunity from. That is why our space strategy, setting the direction for the defence space sector, will be published shortly. I regularly meet companies across the country, including many in Scotland, to talk about the space sector. I can assure hon. Members that it is something we are taking very seriously, because we know it will provide a great deal of opportunity in the future.

On 14 March this year the Defence Secretary reaffirmed his commitment to increasing defence’s contribution to UK economic growth, setting out a new package of measures to drive productivity and innovation in the sector. We held prosperity conferences and SME workshops, and we want to engage with as many people as possible. Many Members who have an interest in defence have arranged for me to meet businesses. I am happy to do that because we want to engage with as many of them as possible, so that we can take advantage of what they offer for the security of our nation, and so that every part, including Scotland, benefits from the wider prosperity that defence spending can bring.