UK Sovereign Capability

Wayne David Excerpts

Tuesday 20th November 2018 Westminster Hall

[Wayne David (Caerphilly) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I offer my warmest congratulations to my hon. Friend the Member for Glasgow North East (Mr Sweeney) on securing such an important debate.

The defence industry is vital to the British economy, with a planned spend of £180 billion in the almost 10 years leading to 2026-27. That is a huge opportunity for the country’s economy, but one that has been lost because the Government have clearly rejected—despite their recent rhetoric—the idea of developing a sovereign capability for this country. Sadly, as we have heard this afternoon, the Government are increasingly buying kit off the shelf, principally from the United States of America. That is one reason why the Ministry of Defence has a deficit of £14.8 billion, according to the National Audit Office. Many MOD contracts are given without competition or openness, according to the single-source process, as my right hon. Friend the Member for North Durham (Mr Jones) made clear. The mechanised infantry vehicle contract was recently given to the Boxer without any competition or openness, and it seems that the AWACS replacement will go the same way.

Where there is competition, we see international tenders, as my right hon. Friend the Member for Warley (John Spellar) highlighted with the example of fleet solid support ships. We will be up against tenders from state-subsidised shipyards throughout the world, particularly in Korea, so it is not a level playing field. We could be ensuring that British industry and shipyards benefit from the investment coming from those contracts, but what do we see? Recently there was the announcement that Babcock was going to close Appledore shipyard in Devon, at a loss of nearly 200 skilled jobs. That shipyard has been open since 1885 and has the proud record of producing 350 vessels, but this Government are allowing it to be shut through inactivity. As the right hon. Member for Birkenhead (Frank Field) knows full well, nearly 300 workers at Cammell Laird are going to lose their jobs on the Mersey. There has also been a process of casualisation of the workforce, which will drive costs down but erode both employment and the skills of the workforce.

As the debate has demonstrated, we clearly need a sovereign industrial strategy for the defence industry. We need an industry that ensures a drumbeat of orders and provides jobs in all sectors of the defence economy, and as has been mentioned, we need to make particularly sure that our shipyards are fully provided with work and sufficient investment. We also need to think ahead and invest in technology as well as the skills of workers, and to be mindful of this country’s capacity to export, which sadly the Government are not.

I firmly believe that the shipyards and their workers should be at the very heart of this country’s industrial strategy. I believe that opportunities would present themselves if the Government decided, through the exercise of their political will, to bring forward a Type 31e frigate programme. If they decided, even at this late stage, to withdraw the international tender in order to ensure that the fleet solid support ships were built in British shipyards, there would be marvellous opportunities. That requires not just political will but an overarching perspective that looks beyond the short-term costs of the Ministry of Defence and instead at a holistic industrial strategy for the country, of which our industrial defence capability should be a central part.

In short, we need a Government who put the national interest first and do not look at pounds, shillings and pence in the short term, but have a long-term perspective that places British workers at the heart of an industrial strategy.

[Mr Philip Hollobone (in the Chair)]

Order. If the Minister could conclude his remarks no later than 5.27 pm, that would allow Mr Sweeney time to sum up. I call the Minister.

[The Parliamentary Under-Secretary of State for Defence (Stuart Andrew)]

Thank you very much, Mr Hollobone; it is a pleasure to serve under your chairmanship. I too offer my congratulations to the hon. Member for Glasgow North East (Mr Sweeney) for securing this important debate. I know that this is a matter close to his heart and an issue of great importance to him. I was somewhat depressed, however, by the fact that he said he will be 30 in January, given that I will be 47 next weekend, but there you go.

The right hon. Member for North Durham (Mr Jones) wondered how long I would be in post, and I am afraid that is one question on which I am not prepared even to speculate. I hope that I have proved, in the few months I have been in the role, that I am prepared to listen to all arguments—I will agree with some and disagree with others—and will take the time to absorb all the information. That is why I have spent a lot of time going around the country to listen to industry, the people working within it, and of course, the armed forces, to whom we are trying to supply important equipment. As the Minister, I am clearly responsible for procuring that equipment to ensure that we get the best value for our armed forces. It is also important to maintain the relationship with the UK industry and to promote exports and prosperity. Those issues are close to my heart. The debate has been informed by a clear recognition of the importance of the UK industry to our national security.

The debate has also given us an opportunity to remind ourselves of the extensive work that has already taken place to foster innovations and a competitive defence sector. The UK defence industry, working alongside our armed forces, plays a crucial role in delivering UK national security objectives. It is crucial to protect our people, project our influence around the world and promote national prosperity.

Every day since I took office, it has been a privilege to see the difference that the UK defence industry makes, whether that be the people, the equipment being provided, the training, the support, the infrastructure or the technology. Those elements are all there to help our nation’s defence. I think we are all proud to have a world-leading defence sector. The figures speak for themselves: in 2017 alone its turnover was £22 billion, with £9 billion of exports, and it supports over 140,000 jobs.

The report by my hon. Friend the Member for Ludlow (Mr Dunne) showed that defence plays an important part in our economy. It is crucial to strong manufacturing technology and has a broad footprint in every corner of the United Kingdom. As a customer, we are always aware of the need to get the right capability for our armed forces, while ensuring value for money for the taxpayer. The key to that is a thriving and globally competitive defence sector that is an important part of a wider industrial base.

Helping that industry to grow and compete in a global market is a key objective of the defence industrial policy refresh that was published last year. The three strands to our approach are, first, to improve the way defence delivers wider economic and international value and national security objectives; secondly, to help industry be internationally competitive, innovative and secure; and thirdly, to ensure that it is easier to do business with the Ministry of Defence, which is an issue I have heard about particularly from small and medium-sized businesses.

We are committed to maximising value for the UK by taking into account potential economic impacts, strategic international interests and national security objectives. In the defence industrial policy refresh, we committed to a more systematic approach to considering prosperity and international and industrial security and ensuring that we are early in developing high-value business cases. Earlier, more holistic decisions will improve how we inform choices for military requirements and ensure that the acquisition strategy and commercial engagement support a full range of desired outcomes.

Hon. Members made a number of points; I will try to go through them all, but I suspect I will run out of time. If I do, I commit to write to each Member with an answer. First, I note the comment of the right hon. Member for Birkenhead (Frank Field) about the merchant contract that was secured. If we can make our shipyards as competitive as possible across the globe, they will be more likely to secure more of those contracts. That is precisely why we have the national shipbuilding strategy. The hon. Member for Glasgow North West (Carol Monaghan) mentioned in an intervention that we had let down some shipyards. I want to emphasise that we have committed to 20 years’-worth of work for those shipyards. We are in the first batch of the three frigates, costing around £3.7 billion. The commitment to the remaining ones is there; we want to follow a process so that we learn from the first three and get the advantage of a better ship and better value for the taxpayer.

The hon. Member for Plymouth, Sutton and Devonport (Luke Pollard), whose constituency I was pleased to visit, talked about the Type 26s. Hopefully America is listening. I had the privilege of being in America recently, where we tried to push the point he made. We need to push wherever we have the opportunities. We should recognise the successes we have had with Australia and Canada. There is still a bit of time to go, but we are working hard on that. I hope industry will be given the confidence to look for contracts all over the globe, so that we can provide security.

The hon. Member for Glasgow North West asked for reassurance about state aid. The response that my predecessor gave her stands for the future contracts—I hope that reassures her. My hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who has left her place, mentioned tax and prosperity. We have to take into account the recently refreshed Treasury Green Book guidelines as part of our procurement process. The forward plan is exactly what the national shipbuilding strategy is about; it sets out the 30-year forecast of what the Royal Navy’s requirements will be, so we can give the industry the greater clarity it needs.

Appledore shipyard was an issue that arrived on my desk fairly early on. We engaged with Babcock and looked at all sorts of possibilities and options, but the timescales for the Type 31e and the FSS build would not have sustained the jobs at Appledore—or Cammell Laird, in fact.

[Wayne David]

The Minister mentioned the Type 31e. Let us not forget that the Government deliberately delayed the programme and put it out to tender again, having withdrawn the initial programme.

[Stuart Andrew]

There were issues with the start of the procurement process. We have reset that, and I reassure the hon. Gentleman that we are sticking to delivery of the first one by the end of 2023. We have made that commitment; this is an ambitious project, and we are determined and working incredibly hard to ensure that we catch up any time that may have been lost. Each time I have updates, I get more optimistic about how we are progressing.

Many Members have talked about the FSS. It is not quite true to say that the Norwegians are building theirs—they are not, actually. They are being put out to international competition and are being built in South Korea. Australia and New Zealand have taken the same approach as us. We have been clear that a warship is as characterised in the national shipbuilding strategy.