Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 48 - 59)

MONDAY 20 MAY 2002



  48. Good afternoon, gentlemen. Thank you very much for coming along this afternoon. If there is anyone who would like to make a brief opening statement or just introduce the witnesses, please do so.

  (Mr Carrigan) We have not rehearsed because we assumed we were doing this separately as unions rather than as the CSEU. The unions here represent the bulk of the Confederation of Shipbuilding and Engineering Unions, and that is a national organisation borne out of all the shipbuilding and engineering unions over the past century or so. We represent the Scottish Committee of the CSEU, or the Confed as it is colloquially known, and it is a confederation of unions. We act very well together normally, except when clerks write to us and say we will give evidence as individual unions, so apologies if we have not got one single voice—as John would know,[5] we are not speaking in Unison today! However, we can strive for consensus. All of us have worked in the shipbuilding industry. I served my apprenticeship in the shipbuilding industry, as did Jim Moohan, full-time officer. Jamie and John work in the industry, Davie works in the industry and Hughie was a draughtsman in Yarrows a few years ago as well. So we all have experience of the industry and we are perhaps Clyde-built but coming from different unions. The one thing we would say is that we do not want to dwell on the past but it is clear that shipbuilding has a glorious past in Glasgow and, as a former pupil of Anniesland College, I am sure there are a lot of interesting tomes in here about naval architecture and so on. We recognise the history, the heritage and tradition. Certainly as someone who worked for around 10 or 15 years in shipbuilding, I can say there is a lot of camaraderie as well in the workforce, and it is probably akin to the mining industry in that regard, and we are proud of that. But we have to look forward, and the reason we are here is because we have concerns about redundancies on the Clyde. When I served an apprenticeship in the 1960s there were many yards and the AEEU alone had several thousand members, whereas today the AEEU have some 700 members, and that has happened in the past 25 years so you can see the decline in numbers. We were concerned about the strategy of the company. If you think of the former Yarrows, over the past six years there have been three different owners, or certainly three different liveries—General Electric, Marconi and now BAE SYSTEMS—and that has caused a lot of uncertainty. One of the points I would like to make is that while we are very much in line with what Ron Culley and Robert Crawford and Scottish Enterprise have said previously, we believe the Task Force have done an excellent job, have identified a lot of issues, brought forth a strategy, but nevertheless there is still uncertainty in the ranks of our members because they have seen different strategies from different companies over the past six years, and if a company decides to sell a part of the business or cuts off warship building, then things could change. The point is, we have heard promises before and we are a bit cynical—sceptical is probably a better word—about long-term strategies. We certainly hope it is right. We are optimistic in many ways but it would be wrong if we did not come here today and express some caution on the part of our members. In particular, there is concern in Scotland. If you remember less than two years ago, the existence of Govan was threatened. The Government helped and the local MPs were very active in the campaign to retain the Govan shipyard. We were successful in that campaign, there was a good campaign right across Government, all political parties, the local community, trade unions and workers themselves, and we were successful in ensuring there was a continued existence for Govan. At that time, the former Yarrows yard, Scotstoun, was seen as having good, reliable work, MoD work was something they were good at, they had proven themselves over many years, and the irony today is that today there is probably more certainty about Govan and more uncertainty about Scotstoun, and it would be wrong not to echo those fears in this Committee. We are certainly of a mind to say there is no distinction or difference in outlook, values, goals, between the workers in Govan and the workers in Scotstoun. There have been differences of opinion, as you would get when you get integration of two yards and two employers, when you get different terms and conditions with all those stresses and strains, but having said that over the past 12 months or so there has been an excellent bonding between the two workforces and they are interchangeable to all intents and purposes. What we do have is some concern about Barrow.

  49. Can I stop you there because we have a whole series of questions and we will probably come to some of these issues you want to raise. As time is limited we want to get on to those. Can I start off by asking you why you think BAE SYSTEMS Marine announced 1,000 redundancies on Clydeside in July 2001, when about half of that figure now looks to be more likely?
  (Mr Carrigan) It came as a surprise to me but not to my colleagues on the shop floor, because we had had informal chats with the company and I was expecting 2, 3, 400 redundancies, and when they announced 1,000 I was surprised. When we faced the company they said it was better doing it in one tranche rather than several tranches, and that was the reason they gave to me.
  (Mr Moohan) I believe like most companies they do now and again a restructuring process and they took the opportunity at the time the Type 45 programme was announced to put their house in order as they deemed fit. That, of course, on the back of winning the order was very disappointing from our point of view. We felt and still feel that we could ill afford to lose the skills of the 1,000 which were announced in July 2001, and our objective was to contain as many shipbuilding employees as we could in Clydeside for the short, medium and long-term future, and really to have a sound footing to move forward with the company.

  50. Can you give us some indication of what efforts have been made by the trade unions to help protect work in the Clyde shipyards?
  (Mr Dolan) More flexibility across trade unions and across trade groups; more flexibility across the two yards when before there were two separate yards. So mobility and flexibility is what the trade unions are addressing now.

Mr Robertson

  51. There was an opinion voiced by Ron Culley about some misgivings he had about Barrow and working with the other two yards on a three yard strategy. He felt the infrastructure was not there to work together properly, could you comment on how you feel about the three yard strategy of the company over the next ten years, whether you think it is viable? Do you see any shortfalls?
  (Mr Dolan) We do not believe the three yard strategy is a forward-looking strategy because of the placings of the yards. A two yard strategy would be better. Apart from that, there is a problem with Barrow, and this is no disrespect to colleagues in Barrow as far as shipbuilding is concerned. They have concentrated solely on submarine building in the last 25 years, so there is a whole generation of shipbuilders who left shipbuilding and were not encouraged into the shipbuilding industry in Barrow, and this is causing us problems at this present time and we see further problems down the line.
  (Mr Moohan) The CSEU believe that when the partnership was created between Clydeside and Barrow, we had to take a long-term view of it, that to protect job security we had to go forward in a fashion which would protect each other's interests. We expected there to be difficult times in the future. I did mention in my submission that with the Type 45 programme we cannot afford any slippage. One of the failures in the past was there was no continuity with the programme, and that is why it is important, if there are peaks and troughs, which we hope there will not be in the future, we have the ability to have a movement of workforce between the three yards for their protection, so they can expand their horizons not only with the MoD but with the commercial market. So really the partnership we see operating hopefully in the long-term. We have had a few hiccups but hopefully those will disappear and we will have long-term job security and a partnership.
  (Mr Carrigan) As members of the Task Force we certainly signed up to the Task Force Report and it did say that the BAE SYSTEMS strategy is coherent and robust, and we would endorse that. There are differences in emphasis between us clearly. As I said earlier, there are some perceptions that perhaps the company will veer more towards looking after the Barrow workforce than the Clyde workforce at times of famine, but I am mindful of the fact that in Holland and Germany there is no reason why you cannot build ships in an assembly fashion in the way they build oil rigs. Our priority of course is to get work for the Clyde and that is what we are pushing for. We do not have any problem with Barrow being successful, but what we do not want is see the company's emphasis change towards Barrow and away from Scotstoun.

  52. So you would not see any likelihood of any work transferring from the Clyde down to Barrow?
  (Mr Carrigan) I think it is happening now, to be frank.
  (Mr Dolan) The problem we see with Barrow, believe us, is that if Barrow shipyard could have built ships both Scotstoun and Govan would be closed. That is a fact over the last three years, since this became a partnership with BAE SYSTEMS; if they could have cracked shipbuilding we would have closed. The advantage we have is that the company is now looking at a better strategy for the Clyde. That is a long-term view but we have a problem short-term.
  (Mr Webster) I do not like crying over spilt milk at any time, and I do not like looking back too often, and I am certainly not anti-Barrow, just pro-Clyde. Regardless what the view is in the trade unions, whether we are of one voice or otherwise, it would be totally fair to say—and I am talking daily on the shop floor with the guys in the shipyard, we have serious concerns about the strategy. It is nothing to do with being anti-Barrow but that something is seriously wrong. We are not in any way being vindictive. I will go with the plan that the Task Force, the Government and the company announced, this three yard strategy set-up—we thought it would be petty not to—but that does not mean to say we totally agree with it. I have grave reservations about it. I hope I am proved wrong because if I am wrong then we will all work happily ever after. If I am right, we will have problems with the MoD and the company will have to review the strategy. So I will put my hand up and say that we do have reservations and it is nothing to do with being critical of Barrow. The evidence supports that fact.

  53. Would it not also be fair to say that it is not a three yard strategy for the Type 45s, it is a four yard strategy, because Vospers is also involved in the building of this ship. Nothing much has been said about Vospers' involvement in this, yet we stand and fall with the first six ships.
  (Mr Scullion) There was a big concern if we went down the road it was a Barrow or a Clyde or a South of England situation. I do not think that is the type of position we want to put across here to this Committee today. It is very important that people understand that the strategy of BAE SYSTEMS rests on the investment programme being delivered, and I welcome the fact that the Task Force is going to be keeping their eye on that, for want of a better terminology, in June and also towards the tail end of the year. It is very, very important to ensure there is continuity of work for our members, but it is also important to note that there is more than enough work at the present time from the Ministry of Defence to keep everybody happy if there is a planned, co-ordinated approach taking place. You have the auxiliary oilers, the eight landing craft, the two Alternative Landing Ships Logistics, the six Type 45 Destroyers, two or three submarines, two aircraft carriers, a casualty receiving ship, the future surface combatants, which will be the Type 33 replacement, you have maritime underwater capability review, you have all these options there and they will be coming to fruition in the next 10 to 15 years. That is more than enough work if there is a planned, co-ordinated approach taken to it by Government in conjunction with the strategy which BAE have put in front of the workforce.
  (Mr Torrence) Hughie is 100 per cent correct on strategy but the strategy has to encompass the fact that all warships have to be built in the UK. I do not know if you know but on Monday, at Govan, Swan Hunters opened two logistics ships, and if you cannot build the bow sections on time they put them out to tender, Govan tendered to build them, we can build them in time, but we lost that bid and the two bow units are going to Holland. That flies in the face of what the Defence Secretary said on 21 January, that the Government "insists that all new warships are built in this country".[6] You know the problem we had with the roll-on roll-off ferries which were supposed to be commercial ships, but now with a warship part of it will be built in Holland, and the Dutch have put it to Poland and Romania as well. So we have a very dangerous road here with warships which could end up in Europe or anywhere. What I am saying quite plainly, and backing up what Hughie said, is that we have a strategy here, we have enough warships to keep every yard in Britain going full-steam if we can insist they are built in the UK because that is the crucial issue at the moment. Before we go to commercial ships, we have to guarantee the warships are built in the UK.

  (Mr Moohan) On the two bow units which went abroad, it should be noted that they were 15 per cent over tender and I find that very disturbing because we are very cost effective. I am putting the marker down that they went 15 per cent over and I would like that to be investigated because it gives us a cost concern for the future if two bow units can disappear in that manner.

Mr Joyce

  54. I tried this question earlier and I did not really get much of a response and perhaps that was fair enough but I want to run this by you. The UK MoD is the largest single customer of British industry and it is clearly something that the shipbuilding industry depends on in its entirety, as far as I can see for at least another ten or 15 years exports depend on it as well because they come off the back of things being produced in the UK. Do you ever project forward on the implications of an independent Scotland? It is a very serious question and it is one of the key arguments in politics in Scotland. I would expect trade unions to have a sense of how that would affect the workers.
  (Mr Carrigan) I am not a civil servant so I can give you an answer on that. The answer is that the Confed of trade unions and all the unions here—and in fairness we should declare an interest—are affiliated to the Labour Party—


  55. I think we have to be very careful on this because we are going down a political route. You can give a quick answer but I am going to bring Michael Weir in soon.
  (Mr Carrigan) Secondly, we are in effect a lobbying organisation, in my view, and the reason why we still have ships on Clydeside and particularly Govan on Clydeside is because we were able to lobby a UK Government for MoD work. I think that would be much more difficult under an independent Scotland. It does not mean there will not be work coming from elsewhere but certainly from a UK warship position I think my own union's view would be that we would find it more difficult in the future to win MoD orders.

Mr Weir

  56. But would you not accept that an independent Scotland is also going to need ships and may need more specific types of ships, and it is a bit short-sighted just to say it is the UK MoD or nobody, given the history of the yards on the Clyde?
  (Mr Carrigan) I do not want to get involved in a defence debate—

  Chairman: And we are not going to!
  (Mr Carrigan) My understanding is that with the SNP if there is a need for ships, they would be different ships and smaller ships, they certainly would not be the aircraft carriers we are projecting over the next decade or so.

  57. How many aircraft carriers will be built by the UK Government after these ones?

  Chairman: I do not think the unions can answer for the UK Government.

Mr Lyons

  58. Can I turn to the question of procurement. Are there any suggestions from yourselves on how we can improve the process of procurement? Keeping in mind what has been said earlier, two bow units going to Holland, is there any way we can look at restrictions on work going abroad and making sure they are built in UK yards?
  (Mr Carrigan) Very much so. We have had various meetings with Geoff Hoon and various ministers within the MoD and have put proposals to them, as indeed have our national officers within the Shipbuilding Forum. As Hughie said earlier, there is a lot of work within the MoD and if the orders are given out in the correct fashion there is enough work for the main shipbuilders over the next 10 years. What can we do on procurement? In our view there is unnecessary competition. We are all in favour of value for money for the taxpayer, and it would be wrong for any particular company, including BAE SYSTEMS, to assume they have a monopoly on orders, we acknowledge value for money, but the way the MoD have moved under the Smart Procurement objectives indicates there is a lot of money spent unnecessarily on what we consider to be false competitive arenas. The Task Force looked at that in detail and have made recommendations to the DTI and the MoD that they should look at this in greater detail. There is a lot more which can be done, certainly in the foreign naval areas. There is more which can be done in terms of subsidies and support, and export credit guarantees and so on. We think that is something which the Scottish Grand Committee should pursue.
  (Mr Scullion) The question of procurement is key really, particularly when it comes to the possibility of design work going abroad in the first instance, as happened with the ALSLs.[7] The information which we have received is that the design work which went to Holland only constituted 5.5 per cent of the actual order cost, but in extending that, there were lost opportunities to employ British workers and the circulation of the cash within the UK economy. You referred to the Scottish Enterprise submission, in paragraph 10 they do state quite specifically that if Clyde is to retain a significant role in shipbuilding, it is the design skills which will be crucial in the future. As a consequence of that design order going to Holland for the ALSLs, in conjunction with the equipment procurement decisions which were taken and the subsequent sub-contracting deals which took place, in excess of 40 per cent of the order, that is £65 million out of a £120 million contract which is paid by the UK, is going abroad.[8] That is something which we believe is fundamental to the future. If we are talking about a build in the UK policy, that should be from the cradle to the grave, from the concept straight through to build, launch and the through life of the ship. That is the true meaning of "build in Britain" as far as we are concerned in the warship industry.

  (Mr Webster) In preparing for this meeting today we wanted to paint a clear picture for the Committee to take back not just to the House but the public, otherwise we would be doing ourselves a great disservice. Having come through the quagmire of the ro-ro affair which almost brought Govan to its knees, and I have to say the sham in relation to whether it could become a military ship or not resulted in us losing out to Germany, I would like to re-emphasise the meeting with Geoff Hoon in January where he indicated—and this concerns me—there was a view by some of the Chiefs of Staff that to take almost all the capability of shipbuilding in the UK and put it out to tender was an option some of the Chiefs of Staff regarded as possible. I have to say, and this is not alarmist, this is factual, the situation regarding the two bows of Swan Hunters and allowing them to go to Holland may seem minor, but it would be a watershed and disaster for shipbuilding. If that is allowed to happen we have broken the whole concept on which the UK builds military ships. Although Geoff Hoon said he did not personally support that, I think we are entitled to ask the Committee to go back to the Defence Secretary and ask him if he will reiterate the commitment he gave regarding keeping the capability in the UK. Furthermore, I also have to say it is not just protecting shipbuilding in the UK, I am seriously alarmed at the situation that if we continue to allow a naval capability and the defence industry to go out of the country, it is a volatile world out there, we see it around about us, and today's allies might be tomorrow's enemies. Hypothetically should we bank on foreign capabilities and cheaper markets we risk losing the capability to build naval ships if the UK. It would be a brave man who would state at a future time that we were no longer in a position to do that work in the UK. If any Government leaves this country stripped bare of the capability to defend itself, it may be okay right now but in the long term they are totally abdicating their responsibilities. That might not be popular but if you look at it, what I am saying is true. That situation regarding the bows has to stop right now. It is a very serious situation. Please understand that.

  (Mr Dolan) The bows going to Holland is not just the Government's responsibility, it is BAE SYSTEMS and that should be discussed because they have a major responsibility for the future of shipbuilding on the Clyde. The Government must have an investigation into BAE SYSTEMS and their prices. We have lost out on a couple of orders which would have kept the people who were made unemployed recently in a job if BAE SYSTEMS had put in realistic prices. We were warned by the Ministry of Defence on a number of occasions to go back to BAE SYSTEMS and tell them to get their house in order as far as prices were concerned. Someone has to talk to BAE SYSTEMS about that.

  Chairman: We will be having BAE SYSTEMS before this Committee soon when we will ask them questions.8[9]

Mr Robertson

  59. Are you suggesting, John, that the tendering by BAE leaves a lot to be desired?
  (Mr Dolan) Yes, I am. BAE SYSTEMS know the prices. Let me make this quite clear, we are not very highly paid for tradesmen, none of us sitting at this table are highly paid, so the bid that goes in, I do not know what they are doing with it, I believe it should be investigated.

5   The invitation to give evidence from the Committee which was sent on 5 February 2002, requested a joint team from the GMB, AEEU and MSF Unions. Back

6   See Ev 67. Back

7   See Ev 67. Back

8   See Ev 67. Back

9   See Ev 37. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 15 July 2002