Nusrat Ghani
Main Page: Nusrat Ghani (Conservative - Sussex Weald)Department Debates - View all Nusrat Ghani's debates with the Department for Business and Trade
(2 weeks, 1 day ago)
Commons ChamberWith your permission, Madam Deputy Speaker, I shall make a statement on the UK shipbuilding firm Harland & Wolff. I am pleased to inform the House that, subject to approvals, a commercial deal has been reached that will protect jobs, drive investment and secure the future of the workforce. The deal will see Navantia UK, a specialist in shipbuilding, purchase all of Harland & Wolff’s shipyards.
As right hon. and hon. Members will know, Harland & Wolff is a major employer in Belfast, with additional important yards at Arnish and Methil in Scotland and Appledore in Devon. For more than 150 years, the firm has built famous vessels for notable shipping organisations and companies, including the Royal Navy, the Royal Mail and the White Star Line. This industry-led deal, which we expect to complete shortly, will secure all four of Harland & Wolff’s shipyards, protecting around 1,000 jobs right across the UK. I hope that this announcement will come as some relief to Harland & Wolff’s employees. I realise that this has been a deeply worrying time for them, and for everyone affected by the continued speculation over the firm’s future. I welcome Navantia UK’s intention to work closely with the relevant unions to protect workers’ existing terms and conditions. That is important for the hard-working employees and communities who have served the firm over many years.
I was first informed that Harland & Wolff was in serious financial difficulty on day one of the new Government. As the previous Government had open-book arrangements with the company, it was clear that the firm had significant and unsustainable debts. Members will be aware that, at that point, Harland & Wolff was seeking a Government guarantee or liquidity loan. Had that occurred, the British taxpayer would have been put at significant risk of losing millions of pounds, without the safeguarding of any yards, jobs or ships. I believe that the possibility of the Government providing such a guarantee or loan, which was much speculated on in the press, was preventing a market-based solution. The former Government’s inability to make a decision left the yards and the workforce in limbo. That is why I made it clear in my first weeks in this job that no taxpayer guarantee or loan would be provided. I was dismayed that when I did so Conservative Members opposed that, knowing as they did that with a guarantee or loan there stood a significant risk of losing an eye-watering amount of taxpayers’ money. That was deeply irresponsible.
Crucially, the deal that has been agreed will secure the delivery of the fleet solid support contract of the Ministry of Defence. The Government have worked closely with Navantia UK on the future of the FSS programme. We have agreed the absolute minimum of changes to the contract to ensure its continued delivery. Navantia UK is the prime contractor of the Team Resolute consortium, which is charged with building three logistics support vessels for the Royal Navy, and it will maintain the required portion of UK-only build as part of this deal. It is also worth saying that FSS is a vital component of the UK carrier strike capability, providing munitions, spares and stores. At a time when strategic alignment with our NATO allies is more critical than ever, the Government fully endorse this deal, which will also see Navantia UK invest significantly on commercial terms in Harland & Wolff shipyards.
Anyone familiar with Navantia UK will know that the firm boasts strong expertise in naval shipbuilding. I am pleased that, thanks to this agreement, it will continue to bring the next generation of technology to its operations here in the UK. This is quite simply a good deal for the Harland & Wolff shipyards, a good deal for its employees, and a good deal for British shipbuilding. It provides the best opportunity to sustain our essential sovereign shipbuilding capacity and capability, now and over the long term. Defence is at the heart of the industrial strategy that we have identified. Defence is one of our eight growth-driving sectors of the UK economy. That industrial strategy is unreservedly and unashamedly pro-business, engaging on complex issues that are currently barriers to growth and investment. National security is one of the foundations of our plan for change. Without it, we cannot deliver on our milestones to raise living standards across the UK, with good, skilled, productive jobs like those at Harland & Wolff.
UK shipbuilding alone supports some 42,500 jobs nationwide and adds £2.4 billion to the economy every single year. We recognise how important it is, as a vital pillar of our civil and defence industrial base. That is why my Department, together with the Ministry of Defence and the National Shipbuilding Office, is doing everything that we can to bolster our world-class shipbuilding industry. That includes the significant progress that we are making on key procurement programmes. We have a major contract with BAE Systems, which has increased the order from three to eight Type 26 anti-submarine warfare frigates on the Clyde, and a contract with Babcock for five Type 31 general purpose frigates at Rosyth. Those projects have already brought significant recapitalisation investment to shipyards throughout the UK, and there are further procurements to be won, ranging from Border Force and local councils to marine in-port service vessels at His Majesty’s naval bases.
The Government are absolutely committed to supporting vibrant, growing and successful shipbuilding and fabrication industries across the country, and I pay tribute to the skilled, diligent workforces who have made these industries what they are today. Thanks to the deal that has been announced, workers in Belfast, Arnish, Methil, Appledore and right across the country can be confident that the Government are squarely behind them, that UK ship- building is secure, and that together, as a United Kingdom, we will lead the sector into a better future. I hope that all workers in all four yards are now able to enjoy this Christmas with their families, as they should. I commend this statement to the House.
I thank the Secretary of State for an advance copy of his statement. The famous yellow gantry of Harland & Wolff stands tall, not only on the skyline of Belfast but in the history of our nation. It is difficult to overstate what Harland & Wolff means to people in the communities of Belfast, Appledore, Arnish and Methil. Extended families across the country will welcome today’s confirmation that the shipbuilding contract that we awarded in government will now proceed. There remain, however, many unanswered questions, which I would be grateful if the Secretary of State could answer. If he cannot answer them at the Dispatch Box today, I would be grateful if he or the Defence Secretary would write in the coming days.
First, at a time of enormous geopolitical uncertainty, can the Secretary of State confirm that there will be no change to the in-service date of the three fleet solid support ships, with the first ship entering service as expected in the fourth quarter of 2028? Secondly, what funding or commitment, if any, has been provided by any part of the Government to Navantia to secure this finalised deal? If so, which budget will that be appropriated from? Has he received state aid clearance for the transaction and, if not, could he clarify the process by which that will now be obtained?
The Secretary of State said in his statement that the Department has agreed the
“absolute minimum of changes to the contract,”
but the statement provides absolutely nothing whatsoever as to what that actually conceals. Can he guarantee, as Navantia promised as part of its original bid for the contract, that no less than 60% of the whole supply chain activity will take place in the UK? Will he confirm that there are no additional work packages beyond those originally envisaged moving from Belfast or anywhere in the UK to Puerto Real in Cádiz? Above all, will he assure the workers and their families who are watching that the final assembly and systems integration, which is where much of the high-value work sits for all three of those vital ships, will take place in Belfast, rather than in Navantia’s parent shipyards in Spain?
The Secretary of State will appreciate that it is sometimes hard, though one tries, to take him at his word after the number of impacts on business over the past few months. The wider context—though welcome in respect of this particular contract and these defence jobs—is the large-scale uncertainty that our defence companies, contractors, workers and employees face about the timetable for the Government to reach 2.5% on defence spending. They do not have the certainty that Harland & Wolff workers now do this Christmas. We do not even have a timeline for a timeline as to when that 2.5% will be hit, and we have seen a degree of equivocation on exactly when the strategic defence review will be published. Again, I would be grateful if the Secretary of State clarified that or if a colleague wrote to me.
It is, at the end of the day, action not words. We welcome this deal for Harland & Wolff and the certainty that it will provide to workers and their families, and I thank the Department officials for their work on that, but there are still many questions to be answered.
I call the Secretary of State. Having served in his Department, I too will be paying close attention to the answer.
I agree with the shadow Secretary of State on the iconic nature of this business; its role in British history and in the community, particularly in Belfast; and the esteem in which it is held. I do feel he could have thanked us for cleaning up another mess that the previous Government left us, although perhaps that is too much to ask. After all, they could have made the decisions to allow the market-based solution with support from Government that we have been able to achieve. Despite those caveats, I welcome the fact that he welcomed the news and recognised it as a substantial good news story for many workers as we go into Christmas and for the next years.
I turn to the hon. Gentleman’s specific questions. On the delivery of the fleet solid support contract, the issues that the previous Government left us may have some material impact, although there is no large, foreseen delay to the delivery of the project at this stage. On the support to the business, there is no support going directly from Government to the business to subsidise the transaction. There have been amendments to the contracts supported by my Department and the Ministry of Defence. He asked for the details. I will not reveal it in the House because of the commercial sensitivity, but I will find out whether there is a way to share that with him. On whether the deal is compliant with the Windsor framework and our commitments as a country under those arrangements, I am satisfied with all that. Despite the fact that we will always respect those arrangements, we are the UK Government and we make decisions for every part of the UK, with the regulatory approvals, and I seek no one’s permission to be the Secretary of State for Business and Trade across all the UK.
On additional work packages, there are no additional promises from the Government, although he will know that there is a 30-year supply pipeline for shipbuilding in the UK and many opportunities, particularly in sectors such as energy, maintenance and fabrication, and a whole range of functions where Members across the House would want to have a strong, diverse and competitive shipbuilding and maintenance sector.
Finally, on defence spending, the hon. Gentleman had a bit of a try-on. He asked what assurances the sector can have. The biggest assurance I can give is that we only ever hit that 2.5% under Labour Governments. The fact is that we have a Labour Government with that commitment to the defence sector and its role—the ability to deliver maximum economic benefits for the UK, as well as that vibrant and important defence role—and we will continue to deliver on the way to that.
Congratulations to the Secretary of State. This is excellent news for the people of Appledore and of Northern Ireland and for workers across the Harland & Wolff supply chain. He might want to confirm that the peril of providing a Government guarantee was the possibility of entailing a huge payout to a US-based hedge fund, which was the largest creditor for Harland & Wolff. What is happening to the contract value for the FSS deal? It was priced at about £1.6 billion. Has that contract value now gone up? Crucially, what does the Secretary of State envisage for Harland & Wolff after that enormous contract is safely and soundly delivered?
I thank the Select Committee Chair for his kind words. I am delighted that we have been able to secure this future for Harland & Wolff. His assessment is right that the largest creditor to Harland & Wolff when we took office was Riverstone, a significant US hedge fund. He is right to say that had we gone ahead with that Government guarantee or loan, there would likely have been no real return to the taxpayer—no guarantee of jobs, shipyards or ships being built. That money would have gone to the creditors. Actually, in the commercial market-based solution that we have been able to broker, all creditors have behaved responsibly, but, understandably, if anyone thinks the Government will come along and give them free money, they will hold out for that option. That was why it was so important to make that decision early on to secure this far better outcome.
On the specific question, and I should have directed my answer to the shadow Secretary of State, the hon. Member for Arundel and South Downs (Andrew Griffith), there is no change to the UK-based content of the contract. As I said in the statement, there have been some changes on commercial terms, although they are relatively minor based on the overall value of the contract.
On the future, I can tell the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) that the deal we have brokered guarantees not only all four yards, but the jobs in the Belfast yard for three years and jobs in the three other yards for two years. We therefore have a chance not just for new investment coming into those yards, but for the long-term future to be secured for a pipeline of work and energy and defence contracts, which is a vibrant and successful opportunity for the future.
I call the Liberal Democrat spokesperson, who has up to two minutes.
This is an outstanding Christmas present for the 1,000 employees from Devon to the Isle of Lewis who will benefit from this decision and the deal that has been pulled off by the Government. In the west country, we have a low-wage economy, and in the Appledore dockyard, which is not too far from my constituency of Torbay, this will go down extremely well, so congratulations are in order. That is in sharp contrast with the failure of the previous Administration on implementing an industrial strategy, supporting our shipping industry and growing our economy over many years. The position that the Conservatives are taking now is utterly shameful. How can we hardwire that long-term support for our shipping industry so that we see growth in this area and support for industries such as steel manufacturing?
I add my congratulations to the Government for getting this agreement over the line, but when will we get their defence industrial strategy? So far we have had only a rather lengthy statement of intent. We need to reindustrialise our defence industrial base in order to face modern challenges, and that is particularly essential given the threats we face from the east of Europe at this time. That is very difficult to do in government, because the Treasury hates his stuff, as the Secretary of State may already have discovered, but we will hold him to account on what he described as leading this sector into future growth, and indeed on reindustrialising our steel industrial base and so on, so that we have the self-sufficiency that is vital for the defence of the country.
I encourage the Secretary of State to be brave in responding to the point about the Treasury.
Absolutely, Madam Deputy Speaker. I very much welcome the question and would like to put on the record that I have only good things to say about His Majesty’s Treasury at all times. [Laughter.] It is true; I mean that. The hon. Gentleman is absolutely right to say that there is great imperative—with a particular degree of responsibility in the defence part of the industrial strategy—in the challenges we face. It is imperative not just that we work closely with colleagues in the Ministry of Defence on procurement issues and Government-to-Government sales, in which my Department plays a major role, but that we address wider regulatory issues.
As the hon. Gentleman may know, the Department recently did work on environmental, social and governance criteria to ensure that they do not prevent investment into defence companies. There are issues with small and medium-sized enterprises in the defence sector struggling to access bank accounts—not through a prohibition on defence, but perhaps because of a lack of understanding about such commercial contracts being different from those in other parts of the economy. There are a whole range of issues that we must get right, but I think that, in the main, Members across the House share his aspirations and objectives. He has been a voice of expertise and authority on these issues throughout my time in Parliament, and I am grateful for his engagement on them.
I recognise the role that shipbuilding has played in my hon. Friend’s city. I grew up in Sunderland —part of what was once one of the major civil shipbuilding locations in the world—and I recognise the identity and pride that comes with that industrial heritage. In many cases, people feel that it is something of the past, but in this statement we are stressing exactly what she said about the contemporary contribution and the opportunities for the future, about which we should be excited. There are a whole range of increasing needs to shipbuilding expertise, particularly in the energy sector—offshore wind, for example, creates a range of demand for different types of maintenance and supply vessels—so this should be an optimistic story for the future. Sometimes I feel that the wider British public perhaps do not understand the number of jobs or the economic benefit that come from such a sector, so it is always good to make that case from the Dispatch Box—as my hon. Friend does every day from the Back Benches.
I call John Cooper, a member of the Business and Trade Committee.
I congratulate this Front-Bench team and the wider Government on landing this deal in the face of what the Secretary of State has euphemistically called the “headwinds” —I would call them a full-force gale—created by the Budget. Did Navantia raise concerns about the forthcoming Employment Rights Bill? It swings the pendulum very much in favour of trade unions, which, as we know, are very often red in tooth and claw. Was that an issue in landing the deal?
I am grateful to my hon. Friend for his comments on the deal and for his observations about the questions from the Opposition Front-Bench spokesman about the 2.5% target. On the modern industrial strategy that we are creating, we have had an incredible response to our Green Paper—some 22,000 individual answers to the questions it asked—showing that there is a huge appetite from industry across the board, both in the UK and abroad, to engage with what the Government are seeking to do. Again, I stress that that should always be on a cross-party basis; there is nothing in that Green Paper that anyone of any political stripe should be able to oppose. It is based on our national interest and the goal of being more competitive and business-friendly, succeeding to a greater degree on the world stage.
This week, we had our first meeting of the Industrial Strategy Advisory Council, with some tremendous representatives with expertise across the board—UK industry, academics and business figures. It is an incredibly exciting time. This is just one component of our growth mission, but clearly an important one, alongside areas of work for me such as the small business plan that we are putting together. I genuinely believe that everyone should be excited about the future.
I call Alison Griffiths, a member of the Select Committee.
Madam Deputy Speaker, I am sure you will have noticed that the Secretary of State did not answer one question, which was whether he would clarify that the final assembly and systems integration will take place in Belfast, rather than in the Navantia shipyards in Spain.