Letter to the Clerk of the Committee from
the Ministry of Defence (10 July 2001)
I am writing to let you know that Secretary
of State will be making a statement to the House, this afternoon,
along the following lines, to update the House on the progress
that has been made on the shipbuilding procurement strategy for
the Type 45 Destroyer.
At the end of last year BAE SYSTEMS Marine made
the Ministry of Defence an unsolicited proposal to build all twelve
Type 45 Destroyers and a number of other warships. The unsolicited
proposals have been carefully examined together with a number
of other options. The Ministry of Defence has also called on the
services of RAND to take a fresh look at procurement strategies
for this programme in the context of the future warship programme
as a whole.
For the current procurement strategy to work,
the shipbuilding companies need to work closely together during
the development and manufacture of the first batch of ships already
on order. Co-operation of this sort has not been encouraged by
the existence of the unsolicited proposal or by the prospect of
the companies having to compete against each other for the second
batch of ships.
The Secretary of State has been keen to resolve
these problems, as has industry. Working with the companies, the
Ministry of Defence has developed a revised strategy, which allocates
work on the ships between the two shipbuilders for the whole class
of Type 45 destroyers. The First of Class ship would be assembled
and launched at Scotstoun. The focus of design support to the
whole Class will remain there, with continuing participation by
both shipbuilders. The remaining ships would be assembled and
launched at Barrow, Vosper Thornycroft at Portsmouth, and BAE
SYSTEMS Marineon the Clyde and at Barrow in Furnesswould
both make and outfit substantial sections of each ship. The yards
would continue to build the same sections throughout the programme
to increase efficiency.
The Secretary of State has not accepted BAE
SYSTEMS unsolicited proposal to build two Auxiliary Oilers. There
is no military capability requirement for ships of this sort.
The cost to the defence budget could not be
justified and the Secretary of State has concluded that we cannot
sensibly pursue this.
The Type 45 strategy does however involve a
commitment now to six shipsdoubling the number on order.
The larger volume of guaranteed work will allow industry to make
long term investment decisions.
The revised procurement strategy provides better
value for money to the taxpayer, gives a welcome level of stability
to our warshipbuilding industry and preserves the possibility
of competition for a number of subsequent programmes. It allows
us to achieve the delivery of the new destroyers to the Navy,
as planned, starting in 2007.
This is good news for shipbuilding on the South
Coast, the Clyde and at Barrow.
This approach gives Vosper Thornycroft a defined
and significant role in the Type 45 programme. The company will
be able to move their operation, as planned into the Portsmouth
Naval Base and invest in new shipbuilding facilities there. It
also provides a solid foundation from which to sustain their export
business and enter competitions for future naval programmes. The
company believes that this substantial quantity of high quality
Type 45 work should sustain a steady level of some 650 jobs well
into the current decade.
Type 45 work, together with the first three
ASTUTE Class submarines and the order for two Alternative Landing
Ships Logistic announced last year, should support BAE SYSTEMS
Marine shipbuilding for the rest of the decade. Based on the company's
own estimates, once this total construction programme is up and
running, work on this package should sustain a steady level of
some 1,200 jobs on the Clyde and around a further 900 jobs at
Barrow in Furness. We understand in the light of this work package
that the company has no plans to close any of its yards.
Overall, this approach maintains shipbuilding
capacity on the Clyde, on the South Coast and at Barrow. There
is the opportunity for both BAE SYSTEMS Marine and Vosper Thornycroft
to invest and compete not only for future Ministry of Defence
business but also export orders.
The Type 45s will be the biggest and most powerful
air defence destroyers to service in the Royal Navy. The procurement
of the first six ships is good news for Britain's armed forces
and good news for British shipbuilding.