Shipbuilding: Use of British Steel for Royal Navy

Viscount Younger of Leckie Excerpts

Tuesday 30th November 2021 Lords Chamber

[Lord West of Spithead]

To ask Her Majesty’s Government what plans they have, if any, to require shipbuilders in the United Kingdom to use British steel in ships and submarines built for the Royal Navy; and what percentage of steel in the Dreadnought class submarines and Type 31 class frigates is expected to be provided by UK plants.

[Viscount Younger of Leckie (Con)]

My Lords, sourcing steel is a matter for our prime contractors. The special steel required in the manufacture of submarine pressure hulls and the thin plate required for shipbuilding cannot be sourced in the UK. Nevertheless, we encourage the sourcing of UK steel wherever it is technically and commercially feasible and publish our future pipeline of steel requirements, enabling steel manufacturers better to plan and bid for government opportunities.

[Lord West of Spithead (Lab)]

I thank the Minister for his answer. I have to say I am a little disappointed by that. There is a need for a sovereign capability to build ships, and part of that is the steel that is used to build them. It is disappointing that the refreshed shipbuilding strategy that we have been promised for a long time now is still not out, even though there has been the spending review, and we were told that it would come out shortly after that. I hope that, when it comes out, it will point out very clearly that ships such as the fleet solid support ship will have to be built in the UK, and that we have a whole rolling programme of shipbuilding, as that is essential for our ship programme.

The Minister mentioned that we are not able now to provide all the types of steel required for nuclear submarines, but only a few years ago we were ahead of everyone in the world in our ability to produce these types of steel. Is this an area that we are actually going to resolve so that we can provide the steel required for the nuclear submarine programme from steel within this country? Are we considering bringing forward the clean steel fund by some two years so we can actually produce clean steel in this country to meet all the green targets that we have been set?

[Viscount Younger of Leckie (Con)]

There is quite a lot in the noble Lord’s question, but I will start by saying that shipbuilding in this country is a good story. Investment will double over the life of this Parliament, rising to £1.7 billion a year, and this will allow us to increase the number of frigates and destroyers beyond the 19 that we currently have by the end of the decade. The noble Lord mentioned the FSS, or fleet solid support, and he will know that all three ships must be delivered by 2032. The date for the initial operating capability and in-service dates will not be determined until the full business case is submitted. That ties in with another question, which is on the refreshed strategy, which will be rolled out and published very soon.

[Lord Haskel (Lab)]

Is the Minister aware that British steel producers are at a disadvantage because they pay a local carbon tax that is not paid by Chinese or Russian producers? We have been aware of this loophole for some time. To address this, will the Government introduce a carbon border tax? This is important not only for British jobs and British security but also to help address climate change.

[Viscount Younger of Leckie (Con)]

The noble Lord makes a good point, and the Government recognise the vital role that the steel sector plays in our economy and across all areas of the UK. We continue to work through the steel council to support its decarbonisation, and it is a core part of our ambitious plan for the green industrial revolution. The net-zero strategy, which the noble Lord will be familiar with, published in October this year, reaffirms our commitment to work and to setting targets for ore-based steelmaking to reach near-zero emissions by 2035.

[Baroness Smith of Newnham (LD)]

My Lords, I applaud the idea of supporting British steel, but British Steel as a company is owned by the Chinese Jingye Group, is it not? In which case, what on earth difference does it make whether we import our steel from China or it is produced here by a Chinese-owned company?

[Viscount Younger of Leckie (Con)]

As I said earlier, this Government are committed to creating the right conditions in the UK for a competitive and sustainable steel industry. We publish our future pipeline for steel requirements, enabling UK steel manufacturers to better plan and bid for government contracts.

[Lord Hannan of Kingsclere (Con)]

My Lords, a patriotic Government should want our armed services to have the best and aptest steel in the most economical way, so as to free up the rest of their budget for more kit and more materiel. Will my noble friend the Minister confirm that whether it is sourced from the UK, Germany, Turkey or the Netherlands, we will always endeavour to ensure that our service men and women get the best possible equipment?

[Viscount Younger of Leckie (Con)]

My noble friend makes a very good point. In October 2020 the ONS published a report on UK steel procurement across government. It showed that the reported proportion of steel procured within the UK for public projects was 77%, up from 40% in the previous year.

[Lord Boyce (CB)]

My Lords, can the Minister say how many countries have committed to acquiring the Type 26 and Type 31 frigates? How many ships are involved? Has this led to a drop in the unit price cost of those ships and will the foreign orders affect the in-service dates of the ships that are for the Royal Navy?

[Viscount Younger of Leckie (Con)]

The Type 26 construction programme is sufficiently flexible. The noble Lord will know that there are some delays owing to the late delivery of the propulsion gearboxes. The cost of the contract awarded in 2017 to manufacture the first batch of three Type 26 frigates is £3.7 billion. On current plans, HMS “Glasgow” will be in the water by the end of 2022.

[Lord Coaker (Lab)]

My Lords, is it not an appalling state of affairs that, with the Government spending billions of pounds on boosting our naval power, we have to go abroad for much of our steel, as the Minister has just told this Chamber? What people want to hear is what the Government are going to do about it. Rather than describing the problem, can he say how we are going to boost the British shipbuilding industry so that British naval ships are built with British steel?

[Viscount Younger of Leckie (Con)]

Of course, the noble Lord makes a good point: it would be great if ships could be made from British steel. However, as I said earlier, the steel required for the ships being built—both the surface ships and submarines—is highly specialised. He will know that, for example, the fixed steel required for submarine hulls is made in France with Industeel. The steel for the surface ships is there for the UK steel industry, but at the moment it is sourced from abroad.

[Lord Jones of Cheltenham (LD) [V]]

Is the Minister aware of the issue of the procurement of steel for HS2, which was the subject of a Written Question I submitted recently? It appears that UK steelmakers were unable to supply the appropriate high-quality steel to the necessary timescale, so the order went to a French company. Are the Government confident that UK steelmakers have the capacity to fulfil orders for the steel needed for these vessels? What are they doing to promote joined-up thinking in government-sponsored projects such as these new ships and HS2?

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

This goes some way off the maritime sector, but I can say that we have established a joint industry and BEIS steel procurement task force, which launched on 12 March 2021. Its aim is to work with the sector to promote the unique selling points of UK steel and explore how best to support the industry and position it for success in forthcoming major public contracts. This surely plays into the noble Lord’s question on HS2.

[Lord Lancaster of Kimbolton (Con)]

What are the consequences of any further delay in the delivery of the Dreadnought-class submarines?

[Viscount Younger of Leckie (Con)]

I hope I can reassure my noble friend that the Dreadnought submarine programme remains on track for the first of class, the eponymous HMS “Dreadnought”, to enter service in the early 2030s. As this programme progresses, we continue to review life-extension options to ensure that the Vanguard-class submarines continue to operate safely during the phased transition from Vanguard to Dreadnought.

[Baroness Stuart of Edgbaston (CB)]

I welcome the Minister’s aspiration for us to have sufficient steel available to satisfy the needs of our shipbuilding industry, particularly for the Royal Navy. Is the Minister persuaded that we have the appropriate skills base to then build those ships? In particular, I urge him to take a good look at maritime shipyard welding apprenticeships, as there will be some real skills shortages affecting ability to deliver.

[Viscount Younger of Leckie (Con)]

The noble Baroness makes a very good point about skills. This will certainly be a major part of our refresh strategy, which, as I said, will be published soon. Having our own skills in this country, particularly in digital and engineering, is extremely important so that we have the right skills to build the right ships faster, using the skills we have.

[Baroness Jones of Moulsecoomb (GP)]

If the Government are not prepared to develop a border tax for all the carbon emissions coming into this country, which we do not account for—that is why we have all this false accounting about how we have reduced our carbon emissions—the very least they could do is to make sure they know the quantity of the carbon emissions coming in and start putting some sort of monetary amount on this, so that we know the cost of importing.

[Viscount Younger of Leckie (Con)]

The noble Baroness makes a good point. The Government recognise the importance of research and development into the UK steel sector’s transition to low-carbon steel production. She will know that we have provided over £600 million in relief to make electricity costs more competitive, and created the £315 million industrial energy transformation fund to support high energy use businesses. There is more I could go into, but the noble Baroness will know that we are on this.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, the time allowed for this Question has elapsed.