Shipbuilding Strategy

Stephen Hepburn Excerpts

Tuesday 23rd January 2018 Westminster Hall

[Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)]

I beg to move,

That this House has considered the National Shipbuilding Strategy.

It is a pleasure to see you in the Chair, Ms McDonagh, and good to see many experienced hands from defence debates assembling for yet another one. It is also a pleasure to welcome the Minister to his place and to the wonderful world of defence procurement.

I declare two interests. First, I introduce this debate not only as the Member of Parliament for Plymouth, Sutton and Devonport—Plymouth is a proud military city in uncertain times because of the possibility of defence cuts—but as a vice-chair of the all-party parliamentary group on shipbuilding and ship repair. It is good to see so many members of that small but illustrious group—a band of brothers and our sister from Berwick-upon-Tweed—in their places today. Secondly, as a proud GMB and Unite member, I have had the input of those unions into the debate, for which I am grateful. The combined skills and experience of shipbuilders, engineers and master craftsmen and women contribute hugely to the debate, and it is in defence of those jobs and skills and that industry that many of us are here today.

I am sure that the Minister’s new officials have brought him up to speed, but it might be useful if I recapped briefly why shipbuilding and this debate are so important at the moment. First, though, every hon. Member, on both sides of the Chamber, wishes him and the new Secretary of State for Defence well in their battle with the Treasury to secure more funding.

The UK spends too little on defence, and that has consequences for what the Ministry of Defence can spend on shipbuilding, ship repair and ship procurement, capabilities and weapons systems. The excellent report by the Select Committee on Defence, “Shifting the goalposts? Defence expenditure and the 2% pledge”, shows that the last Labour Government spent on average 2.5% of GDP on defence, and the figure did not fall below 2.3%. Many hon. Members, on both sides of the House, would like a return to that level of spending.

With defence inflation running at a greater level than consumer prices index inflation, the extra bit that the Treasury affords defence is being eaten away as the real-terms value of defence procurement is put under more pressure. I think I speak for most hon. Members when I say that we strongly oppose, on a cross-party basis, cuts to our amphibious ships based in Devonport, in the constituency that I represent, and plans to merge the Royal Marines, but that should be taken as a given in this debate.

That is the backdrop, but the military context is important as well. We live in very uncertain times. Russia is expanding her horizons, has invaded European countries and has largely got away with it. China has ambitions across the Pacific. And the Royal Navy’s ability to command the waves is severely constrained by a shortage of manpower, a privatised recruitment system that is not delivering, and ships tied up because of faults, personnel shortages and a lack of resources. There is a focus on the carriers and continuous at sea deterrence, but the rest of the Royal Navy is suffering, and my argument is that this House will not stand for it.

The national shipbuilding strategy was much delayed, but was at least a good start. It accepted in full Sir John Parker’s recommendations, so I am not sure why it took so long to be produced. Defence aerospace is not as fortunate as shipbuilding, because at least we have a strategy. Britain is good at shipbuilding, and the many warships on sea trials, in dock being built and being planned are testament to our naval heritage and the up-to-date skills of a superb workforce right across the UK. I hope that today’s debate will illustrate to the new Minister and his officials not that that plan is wrong per se, but that with scrutiny we can make it more robust and more valuable to industry and our armed forces.

I want to highlight two principal areas in asking for revisions to the document. One is the procurement of the Royal Fleet Auxiliary’s vessels, especially the new fleet solid support ships, and the other is the configuration, capabilities, roles and realities of the proposed Type 31e frigate. As I said, the first issue is the new RFA solid support ships. The proposed three ship orders, with the vessels coming in at 40,000 tonnes apiece, would match the 120,000-tonne construction contract for the new carriers so ably delivered by British workers across the UK and assembled in Scotland.

I personally favour a restricted tender for the ships, so that only UK shipyards could build them, as they will be carrying arms, munitions and supplies, but I concede that international competition is the most likely option that the Minister will choose for them. In such circumstances, not only must the UK industry be encouraged to submit a bid and not actively discouraged by the MOD, but we must ensure that the procurement does what the procurement for the MARS—military afloat reach and sustainability—tankers did not: it must truly value the social, employment and economic impact of the work for shipbuilding and supply chain communities right across the country.

[Mr Stephen Hepburn (Jarrow) (Lab)]

I am sure that my hon. Friend is aware that shipbuilding industries throughout the world are very heavily subsidised, in one way or another, by their Government. That does not happen in this country. Does my hon. Friend think that we could get a better, more level playing field if the Government addressed their mind to that?

[Luke Pollard]

I thank my hon. Friend for that intervention; I agree with him. In fact, our hon. Friend the Member for Glasgow North East (Mr Sweeney) has raised the concern that state aid from the South Korean Government was potentially part of the consideration of the value of the MARS tankers contract, which went to South Korea. That £452 million contract was potentially subsidised by the South Korean Government, who are building skills and employment in Daewoo shipyards in that country. Excluding a little bit of final outfitting in the UK, those jobs have been outsourced and offshored.

Contracts to build ships for the Royal Navy and Royal Fleet Auxiliary should be onshored. The ships should be home grown, British designed and British made, using British steel and British technologies, and preserving Britain’s sovereign defence capabilities to design, build and equip complex and important ships for our own use and for export. The MOD could give its friends in the Treasury the good news that between 34% and 36% of the contract value would be flowing back into its coffers in tax and national insurance—bad news potentially for Kim Dong-yeon, the South Korean Finance Minister, but good news for our Chancellor of the Exchequer, who I am sure is following this debate closely and with avid interest. He is, after all, a big fan of the armed forces.

If UK shipyards build elements of the ships, it could help to fill gaps in the order books of yards right across the UK and contribute to what I believe should sit alongside the shipbuilding strategy: a clear running order of contracts over the next 30 years for the Royal Navy and RFA; a pipeline of work; a reason to invest in world-class design and production facilities, not just on the Clyde, but in reanimated yards such as Appledore in north Devon and those of Harland and Wolff and Cammell Laird. Ipsos MORI research commissioned by the Department for Business, Energy and Industrial Strategy found that 100 shipyard jobs lead to an additional 32 jobs in the manufacturing sector within a 60-km area, so there is a multiplier effect from investment in UK shipbuilding.