Shipbuilding

Russell Brown Excerpts

Monday 19th March 2012 Commons Chamber

[John Robertson (Glasgow North West) (Lab)]

My speech tonight might be about shipbuilding, but it is fundamentally about commitment—to a tradition, to an industry and to the people who rely on it. I am glad to have secured this debate and hope to catch the Chancellor’s ear when he makes his future plans. I hope it is not too late, but I doubt it.

I must begin by mentioning how disappointed I was at last month’s decision to award a £452 million contract for support tankers to the South Korean ship company, Daewoo, at the expense of the UK sector. Not only was this sneaked out in a written statement, but a Westminster journalist reported that the Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff) said, “It’s okay, we’ve got away with it. It’s only on the BBC website”. I hope that the Minister will put the record straight today about these reported comments and about why the decision was made.

The four military afloat reach and sustainability—MARS—tankers, from which military helicopters will be able operate, are due to enter service from 2016. Owing to the timing and nature of the contract, it is especially tough on the UK sector. For example, there will be gaps in order books after the carriers and Type 45 destroyers are finished. Placing orders for those four ships in UK yards was essential to retaining those skills and capabilities in the UK. I remind the Minister that retaining that capability is also a strategic issue, so the Ministry of Defence is risking UK defence capability by placing this order in South Korea, as well as undermining the UK shipbuilding industry.

There have been suggestions in the past that South Korea has won orders at prices below production cost, and the EU has reported South Korea to the World Trade Organisation for its behaviour.

Speaking as a local MP, I would say that given that there are at least three years before the steel work on the carriers being built in the shipyards in my constituency and that of my hon. Friend the Member for Glasgow South West (Mr Davidson) is finished, these contracts mean that there would have been enough time to find work to keep other highly skilled workers busy until the Type 26 frigates came along at these shipyards. Instead, however, as a result of losing out on this contract, the shortfall will lead to the loss of 1,000 jobs. Given that unemployment in my constituency is up 66% since February 2008 and in Glasgow city by 80% since summer 2007, we can see that this is of major concern not only to me but to the people of the city of Glasgow. That will be mirrored in other areas of the country.

What really annoys me, however, is that these four MARS tankers for the Royal Navy were deemed to be “warlike” ships. As a result, under the previous Government’s procurement rules, they would have been built in the UK. I secured that commitment from the previous Government in 2003 at a meeting of the Scottish Affairs Select Committee, when they guaranteed that all “grey ships” or “warlike ships” would be built in the UK.

My local GMB shipbuilders’ trade union certainly considers these tankers for the Royal Navy to be “warlike”, so like the Type 45 destroyers, the aircraft carriers and the future surface combatant ships, the Type 26 frigates, they should be built in the UK too. The reason is that they could be put into a war zone to refuel warships and to provide support for amphibious and land forces close to the shore. They need to be equipped with proper defences to protect the Royal Navy personnel on board, the helicopters that operate from them and, of course, the ships themselves—let us not forget them and the men in them. For that reason alone they should be built in the UK.

I fear, however, that the commitment that I secured from the previous Government is being broken and that the current Government are sending out signals that they will continue to break it. In fact, I believe that it is the Government’s policy to break it. This fear is supported by the equipment, support and technology Green Paper published on December 2010. It stated that the Government intended to buy more defence equipment off the shelf. As defence companies in the UK cannot afford the costs or accept the risks of developing major pieces of defence equipment without Government support, the clear implication of the Green Paper is that the Government mean to buy more equipment from foreign suppliers. Moreover, there is no mention of arrangements for licensed production, suggesting that the Ministry of Defence envisages buying more from the company’s own production line—another potential blow for UK manufacturing.

At the end of August 2011, the Government announced an order of 14 Chinook helicopters from Boeing, at a cost of £1 billion, which was fully in line with the approach I have outlined. At the beginning of October, AgustaWestland announced that it would make 375 staff redundant, owing to a shortage of work. That means that the Government are setting a dangerous precedent, which may have changed the commitment that I received from the previous Government on “grey ships”. With fewer than 10,000 highly skilled workers in the shipbuilding industry, any further loss of commitment to support the yards will result in the total collapse of UK shipbuilding and the loss of a highly skilled and motivated work force. Investment over the last few years has created a fantastic opportunity for UK shipbuilding to be recognised as it was a number of years ago—highly respected for quality, efficiency and cost-effectiveness. Many navies in the world are looking at our Type 45 destroyers with envy. They are without doubt the best ships of their class and type anywhere in the world.

The Government say that no UK yard made a bid for the MARS ships. However, I am the chair of the all-party shipbuilding and ship repair group, and a meeting was held last week. I have approached companies that should have bid, but did not do so, for which there were two good reasons. First, they were discouraged from doing so; and secondly, the decision had already been made on cost. Will the Minister comment on that, verify whether those are the facts, and if so, say what he will do to rectify the situation?

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

In view of my hon. Friend’s discussions with the all-party group, will he tell the House why those companies appear to have been discouraged?