UK Sovereign Capability

Lord Field of Birkenhead Excerpts

Tuesday 20th November 2018 Westminster Hall

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

I beg to move,

That this House has considered UK sovereign capability.

This is a subject that I have spoken about frequently since my election and is close to my heart. I grew up in a shipbuilding family, so from a very early age I became acquainted with the concept of feast and famine orders in shipbuilding in this country. I also developed an awareness of what we need to do to maintain a sovereign capability, not just in shipbuilding but across the full spectrum of defence.

I will be 30 years old in January. Britain’s defence industry landscape has diminished considerably since I was born. Look at shipbuilding. I attended my first ship launch—of HMS Lancaster—when I was one year old. There were a number of shipyards around the UK that built surface vessels, including Swan Hunter in Tyneside and Cammell Laird—

[Frank Field (Birkenhead) (Ind)]

In Birkenhead.

[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.

--- Later in debate ---

[Mr Sweeney]

The Minister might have been hopeful that I was absolving him of all blame in the matter, but I did not quite mean that; I meant that it was not entirely the fault of the Ministry of Defence, because there is a combined silo mentality across Government. My right hon. Friend makes the important point that in shipbuilding and in major defence procurement programmes, there has been a failure to understand the total prosperity effort across the UK. Royal Caribbean would never approach financing the building of a cruise ship in the way that the Ministry of Defence finances its frigates. The MOD does not achieve anywhere near the sort of efficiencies that commercial operators such as Cunard or Royal Caribbean achieve.

The MOD and the UK Government’s considerations ought to be about what maximises industrial and economic benefit to the UK as a whole, but they have failed to incorporate that into their processes for making these critical decisions. To give a classic example, modelling done by the Confederation of Shipbuilding and Engineering Unions makes it clear that if major shipbuilding programmes were procured in the UK, the return of wage and supplier payments to the Exchequer would effectively achieve a 20% net material discount. The prosperity of those programmes would flow back into the UK economy instead of being bled out into another country.

[Frank Field]

The hon. Gentleman described the order for eight frigates earlier. Before the first world war, there was the great cry for dreadnoughts—“we want eight and we can’t wait.” Whatever the size of the Government’s programme, is not one of the problems the reliability of the dates for when they start commissioning the programme, which is very important for the longer-term future of shipbuilding? Is it not also about, with this phase, the confirmation that they will give a role in bidding—and therefore a chance of winning—to yards such as Cammell Laird’s, which has done so well recently in helping to build defence orders, but also in winning a major merchant contract, which I think is the first for a British yard in 20 or 30 years?

[Mr Sweeney]

The right hon. Gentleman makes a very important point. Britain became a pre-eminent naval power because its industry was pre-eminent and because it was an innovator. That is what we need to get back to. The national shipbuilding strategy is trying to achieve that, but it falls short on how it will deliver it, because it militates against the very objectives it is trying to achieve. Industry needs certainty of capacity, so that it can invest with a degree of vigour in shipbuilding.

I talked about HMS Lancaster and the launch of the Type 23 frigate, which was my first ship launch, as a babe in arms, at Yarrow’s in Scotstoun. Sir Bob Easton was chairman of Yarrow’s at that time and made it quite clear that the Type 23 frigate was being bid in batches of three. It was Swan Hunter versus Yarrow. In 1990, Bob Easton said, “I am currently employing 2,500 people in my shipyard. I can employ them until the end of 1991. If I don’t get an order next year, I am making 1,000 of those people redundant, and that is the stark reality of what I am facing. It is not just about the jobs. I would like to invest in a new covered shipbuilding facility. I would like to invest in modernised plant machinery, but the business case does not stack up, unless I know for sure that I am going to be building all of those Type 23 frigates.”

The same issue is playing out today. The national shipbuilding strategy harks back to the same mentality, driving the same behaviours. Whether it is Cammell Laird or BAE Systems, they will not be able to say that they have a prescription for a world-class frigate factory, as it was dubbed, or a modern dock hall covered facility. They will not be able to make that business case stack up. They will not be able to put their shareholders’ money into that and to finance it, unless there is the certainty on the horizon that they will be building the entire programme, and unless there is legal certainty that that will happen. Without that certainty, companies cannnot make the investment and we therefore cannot get the operational efficiencies that deliver the savings and the cost reductions that would enable the Royal Navy, ultimately, to build a larger fleet. That is the virtuous cycle that we ought to be striving towards. Unfortunately, the strategy document undermines it.

When it comes to Type 31, the same point is still an excellent one. By bidding it in blocks and spreading it around the country, we lose the critical mass and do not get the certainty that would allow a shipyard such as Cammell Laird’s to invest in building a production line of Type 31 frigates, in parallel with a production line of Type 26 frigates. Ultimately, we want to get to exactly what the Americans do. They have been building Arleigh Burke cruisers since the 1980s; they have built the exact same ship in a consistent way for the last 30 years or more.

--- Later in debate ---

[Mr Sweeney]

Yes, Anniesland. I was one of those shipyard workers at the time. I agree that certain understandings were given about investment. Indeed, the bulk of Scotstoun shipyard was demolished on the premise that it was going to be rebuilt as a new modern dock hall. I was personally involved in the project to design it; my personal investment in that project is second to none. However, it has to be recognised that the Clyde has certainty to the 2030s, although we need to go further in making the most of the opportunity we have.

I understand from the MOD that its ultimate aspiration would be to build Type 26 frigates in perpetuity if it could—if it had that certainty of financing and planning. Then we could be certain that the Clyde would always be the centre of production for those larger frigates. That would mean that other yards around the UK, such as Birkenhead, could focus on smaller projects, such as the Type 31, which could form a critical mass of a learning curve and a productivity enhancement, and secure the investment that would make it excellent at building those ships and more likely to win overseas orders as a result.

[Frank Field]

A strategy like that, with unit costs coming down, would allow us to compete seriously in the export market.

[Mr Sweeney]

Unit costs ought to come down but the problem is that the way that the shipbuilding strategy is defined makes it more likely that the cost reductions will not be maximised. That is a great shame, because it undermines the aspirations of the strategy.

I am a vice-chair of the all-party parliamentary group on shipbuilding and ship repair, and we hope to bring forward a report on the strategy very soon. It will highlight some of the opportunities to improve it, because we all share the same aspiration. We want to see a world-class industry in the UK that has the certainty to invest. We want a world-class product that is cost-effective enough to grow the size of the Royal Navy.

Oral Answers to Questions

Lord Field of Birkenhead Excerpts

Monday 22nd October 2018 Commons Chamber

[Gavin Williamson]

We do need to have a very clear national carrier strategy, because this is not just an important part of projecting power, but a key part of our national deterrence and of making sure that nations all around the globe understand that Britain has the capability to defend herself and to protect our international interests.

[Frank Field (Birkenhead) (Ind)]

Will the Secretary of State commend Cammell Laird for winning for the second time its support order for the Royal Navy? Given the level of technology in the yard, is it not well placed for the new frigate orders? Although we are careful about taxpayers’ money and will not give him the hospitality that Huddersfield has offered, will he please come?

[Gavin Williamson]

I am getting a lot of invites and feel privileged to have so many. I congratulate Cammell Laird very much on its successful bid. It goes to show how vital money spent by the MOD is to many local economies. I shall endeavour to visit Cammell in the near future, but if I do not, the Under-Secretary of State for Defence, my hon. Friend the Member for Pudsey, will certainly do so.

Oral Answers to Questions

Lord Field of Birkenhead Excerpts

Monday 11th June 2018 Commons Chamber

[Guto Bebb]

My hon. Friend is well known for his championing of issues to do with the Royal Air Force. It is important to say that the Ministry of Defence is currently going through a process of considering the replacement for that capability, and we are also considering the situation with regard to Sentinel moving forward. A decision will be made in due course, and he will be informed at that point.

[Frank Field (Birkenhead) (Lab)]

When the Minister sits down after this series of questions, will he remind the Secretary of State, who I see is not listening, that he has been to a number of yards that will compete with Cammell Laird, but not to Cammell Laird itself? When he is deciding on the shipbuilding programme, he needs to be seen to be fair as well as awarding us orders.

[Guto Bebb]

I thank the right hon. Gentleman for his question. The process will be seen to be fair, because it will be fair. This is a real commitment that we are providing to the shipbuilding sector. We are absolutely committed to it, and we have adopted the shipbuilding strategy. I hope that he will have confidence in the process.

National Shipbuilding Strategy

Lord Field of Birkenhead Excerpts

Wednesday 6th September 2017 Commons Chamber

[Sir Michael Fallon]

I congratulate my right hon. Friend on his election to the Select Committee; I look forward to discussing these matters when I am next summoned to appear before the Committee. I also thank him for the work that he has done, since leaving the Department, on the reserves, and the need for us to improve the offer that we make to them. We are studying that report.

I will certainly consider my right hon. Friend’s specific proposal: we have no immediate plans to sell off the Type 23s, and we have a bit of time in hand to consider whether there is sufficient merit in it.

[Frank Field (Birkenhead) (Lab)]

I welcome the Secretary of State’s announcements, which made it clear that the monopoly control that certain yards have exercised over the whole of his order book is now broken. Does he accept that Cammell Laird, with its workforce of expertise and loyalty led by an inspiring leader, John Syvret, is in pole position to win these orders, but that it will have to win them? May I invite him to visit the yard when his diary allows, so that he can give its entire workforce the good news that he has given to us today?

[Sir Michael Fallon]

I am grateful to the right hon. Gentleman. It is true that the monopoly that the Clyde has enjoyed for so long in warship building is ending, but, equally, the Clyde yards—we are talking not just about BAE Systems; there is the Ferguson yard as well—are perfectly free to compete for this work, in addition to the work on the heavy frigates that they are already building.

I, too, am aware of the renaissance of the Cammell Laird yard, which I visited during my time as industry Minister. I would have to be careful about visiting it again, because I am not sure that I can start to accept that it is necessarily in pole position, but I think that the renaissance of such yards in England provides opportunities not just for Birkenhead, but for A&P on the Tyne, Appledore in Devon, and Harland and Wolff in Belfast. There is now a huge opportunity for those yards to step forward and see whether they really can build the frigates on time and within budget.

Mull of Kintyre Review

Lord Field of Birkenhead Excerpts

Wednesday 13th July 2011 Commons Chamber

[Dr Fox]

I am grateful to my right hon. and learned Friend for his thanks for the decision that has been made. It is right, I think, that the RAF took the decision that questions of negligence and blame should be set aside in order to try to get to the truth of the cause of any particular accidents. It is very regrettable that it has taken such a long time to get to the situation today. However, it is none the less a tribute to many Members in this House who have felt that an injustice was being done. It shows the House of Commons at its best when pressure from the House of Commons can cause an injustice to be overturned.

[Mr Frank Field (Birkenhead) (Lab)]

May I congratulate the Secretary of State on showing the guts to get his Department’s public stance to where justice demanded it should have been for many a year? While he has naturally concentrated on the families of the two pilots, 27 other families are also involved. Will he think of ways in which the views of this House might be conveyed to them as well?

[Dr Fox]

The right hon. Gentleman makes a very important point. We have tried to share some of this process with those families. I understand that for many of them this will have been a difficult reopening of a sad and painful process. I hope, however, that although it has been reopened, we have, with the conclusions that we have come to today, given them proper closure by reaching a just and equitable verdict.