Defence Spending

Debate between Paul Sweeney and Anne-Marie Trevelyan

Tuesday 16th July 2019 Westminster Hall

[Anne-Marie Trevelyan]

I completely agree. Both I and the hon. Gentleman have pushed that campaign. I would not dare to suggest that I want another general election in a hurry, but we attempted to put that in the Conservative manifesto at the last election to bring about a change. I will continue to do that as and when the appropriate moment arises.

The hon. Gentleman is absolutely right: the MOD is not like any other Department of State. It has these 20-year programmes, which should be funded in a different way—a more intelligent and stable way. We need to get the Treasury to hear us and realise that the financial models need to be separate so that, exactly as he says, those programmes are treated as national endeavours. In the same way we funded Crossrail through a separate fund so it could roll forward as effectively as possible, despite the often challenging technical issues as we create state-of-the-art kit, we should give those working on these programmes the best financial framework to work within.

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

The hon. Lady is making a very effective case for multi-year spending and the need to reappraise entirely the Green Book principles. Does she agree that, in this instance, the restrictions on multi-year spending for programmes—particularly the Type 26—put at risk our sovereign capabilities, such as the electric motors factory in Rugby, which manufactures critical components for anti-submarine frigates? That may have been lost had the MOD not responded. We cannot continue to fight a war of attrition; we need a strategic approach.

[Anne-Marie Trevelyan]

I completely agree. We must continue to hammer home the importance of sovereign capability and work with industry to build opportunities. I say again, despite the criticism of the right hon. Member for Warley, that there will be opportunities once we have left the European Union to think more coherently than we have before—I think we have chosen not to do that—and for us parliamentarians to challenge the system more aggressively on the question of what sovereign capability should look like in the long term. Getting our shipbuilding strategy right will be critical to ensuring that we have throughput of work and know that, if we get into times of crisis, we have the supply chain we need within our borders.

UK Sovereign Capability

Debate between Paul Sweeney and Anne-Marie Trevelyan

Tuesday 20th November 2018 Westminster Hall

[Mr Sweeney]

In Birkenhead, as my right hon. Friend says. We also had Vosper Thornycroft in Southampton, and Harland and Wolff in Belfast, to name just a few, but today the landscape is much diminished. The Clyde is the only UK location capable of building complex warships, and even its capabilities have been significantly downsized. In 2013, when I was working in that very shipyard, more than 1,500 jobs in the shipbuilding industry were lost, and the BAE Systems shipyard in Portsmouth—formerly Vosper Thornycroft—closed.

Some 75% of shipbuilding jobs in the UK have been lost since the 1980s. That downsizing was predicated on a realisation that Britain did not have a naval fleet big enough to sustain the industrial base that existed at the time. Rather than drip-feeding orders to yards that would never be at full enough capacity to invest in world-class infrastructure, the idea was to cut our cloth accordingly, so in 2009 the then Labour Government signed a terms of business agreement with BAE Systems. The concept was to introduce a proper and rigorous strategy for shipbuilding in the UK. In return for rationalisation and transformation, the industry would be guaranteed a certain drumbeat of industrial capacity that would give it the confidence to invest in reaching the upper quartile of the world.

When I started working in the shipyards as a young graduate, one of my jobs was to study every other shipyard in the world that was building complex warships, benchmark us against them, determine what they were doing right and develop a prescription that would allow us to design a world-class shipyard in the UK. That seemed a laudable aspiration, because if we could build an infrastructure in the certainty of a pipeline of orders, we could build ships that achieved world-class performance, saving the taxpayer money. It was such a great idea that other countries followed the same model—most notably Canada, which developed its own national shipbuilding strategy and, indeed, employed the very same person from the Royal Navy who developed our strategy under the terms of business agreement.

Sadly, when I corresponded with the Minister for defence people and veterans last November, he informed me that the terms of business agreement had been extinguished in return for the signature of the Type 26 manufacture phase 1 contract. It was then superseded by the national shipbuilding strategy, which in the meantime was used as cover to significantly reduce the scope of ships that the UK had been qualified to build, and that had given certainty to UK industry. The very first page of the strategy document states:

“It is only by building ships that we will once again become good at building ships”.

Well, quite. That seems like a laudable aspiration and exactly what we all want to achieve, but unfortunately the strategy itself undermines that effort, restricting the scope of orders that can go through UK shipyards by limiting the exclusivity of UK build to frigates, destroyers and aircraft carriers.

The 2009 terms of business agreement made very clear the range of ships that were to be built exclusively in the UK without competition, including aircraft carriers; amphibious vessels; all forms of frigates and destroyers; mine countermeasure vessels, including all design and major subcontracted work; all minor naval vessels, including patrol ships; and complex auxiliary ships, which at the time meant the vessels for joint sea-based logistics and joint casualty treatment. That certainty would have enabled British industry to invest in world-class facilities that delivered world-class performance for UK shipyards, achieving the competitive advantage that we had so long striven for. Given that other countries are successfully employing the very same model—Canada now plans to build 15 Type 26 frigates, as opposed to Britain’s much diminished effort of just eight, if we even get them—it is self-evident that we are doing something very wrong by undermining that effort.

It seems to me that the national shipbuilding strategy, particularly the Type 31e frigate project, is a classic example of the Government misidentifying the root cause of the problem that they are trying to solve. The UK prosperity agenda and the effort to make our industry better would be much better served by providing certainty for industry to invest in being world class. That would achieve the opening gambit set out in the strategy document.

[Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)]

Does the hon. Gentleman agree that one of the challenges for the prosperity agenda, and for the Royal Navy’s aspiration to be part of making us a global maritime nation again post Brexit, is that the Treasury does not have a model that helps the Ministry of Defence to plan for that or values the impact that building in the UK rather than abroad would have on the coffers of UK plc?

[Mr Sweeney]

I thank the hon. Lady for that pertinent intervention, which drives home the point that I am trying to make. I am highlighting the landscape as I see it now, which is not what we want to achieve and is not optimal. That is not necessarily the fault of the Ministry of Defence, but of what Sir John Parker’s report refers to as the “total enterprise” of shipbuilding, which very much includes the Treasury as financial controller.