Scottish Grand Committee
Wednesday 12 February 2003
(Westminster)
[Mr. Edward O'Hara in the Chair]
2.30 pm
The Chairman: The first business this afternoon is a statement on warship building in Scotland. There is no time limit on the statement and subsequent questions, but when deciding when to bring questions to a close I must take account of the fact that the ensuing Adjournment debate must end at 5 pm.
Pete Wishart (North Tayside): On a point of order, Mr. O'Hara. Have you had any indication of why we received notice of the statement so late in the day? My office received it some 20 minutes ago. Do you know why it was delivered so late?
The Chairman: I hear what the hon. Gentleman says, but that is not a matter for the Chair. If he wishes to take it up, there are other channels through which he may do so. Shipbuilding
2.31 pm
The Minister of State, Ministry of Defence (Mr. Adam Ingram): I am pleased to be able to attend today to make a statement on the Ministry of Defence's shipbuilding programme in Scotland. As hon. Members are aware, following the strategic defence review, the Ministry of Defence embarked on the biggest warship building programme for more than a generation. The new strategic environment set out in the review recognised the need for an expeditionary capability, and that is reflected in the current shipbuilding programme. That programme will ensure that we continue to have the best capability to defend the United Kingdom and its interests and to act as a force for good in the world.
On 30 January, my right hon. Friend the Secretary of State for Defence announced a way forward for a future carrier programme. The significance of the announcement for the future of Scottish shipbuilding can hardly be underestimated given that Rosyth and the Clyde were named as two of the four preferred yards to carry out the manufacture and assembly of those two new aircraft carriers. It is a massive and technically challenging programme, with the two ships alone costing around £3 billion. The vessels will be the largest and most powerful ever produced for the Royal Navy and, at around 60,000 tonnes, will be about three times the size of our current carriers. They will rank alongside the most formidable and complex weapon systems deployed by any country in the world.
An alliance will be formed led by BAE Systems as the preferred prime contractor with responsibility for project and shipbuilding management, with Thales UK assuming a major role as the key supplier of the whole ship design. The Ministry of Defence will be part of that alliance. Work is now ongoing with both companies to establish the detailed contractual arrangements that will underpin the alliance. They
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will be based on proper customer and supplier relationships, working collectively to achieve challenging targets. Risk will be allocated to the party best suited to manage and mitigate that risk, and the rewards will be shared. It is in the interests of all parties for the programme to succeed. We remain fully committed to achieving our declared in-service dates for both ships of 2012 and 2015.
It is premature to speculate on exactly how much work will come to Scotland as a result of this announcement. The precise arrangements will be the subject of negotiations between the alliance and the yards to determine the best value for money and workload capacity. However, we estimate that some 10,000 jobs will be created or sustained throughout the United Kingdom as a result of the programme. It represents an outstanding opportunity not only for the Clyde and Rosyth, but for the engineering and manufacturing sectors throughout Scotland. Moreover, at this stage the involvement of other yards has not been ruled out, and Scottish shipbuilding could benefit still further.
I should stress that this is just one aspect, albeit a very large one, of the warship building programme initiated by the Government. This is the largest such programme of new construction for the Royal Navy to be undertaken in decades, and the Scottish shipbuilding industry has taken a central role in it. Scottish shipbuilding has a worldwide reputation for manufacturing high-quality ships. That is due in large measure to the dedication, skills and application of the work force, and I pay tribute to them. The Clyde yards, for example, have recently finished work on two new auxiliary oilers and two new landing platform dock replacement ships, all for the Royal Navy.
Looking to the future, the Clyde yards are also playing a crucial role in the design and production of the new Type 45 class of anti-air warfare destroyers. The award of a contract to BAE Systems as the prime contractor for the manufacture of the first six ships was announced in February of last year, and is worth £2 billion. The procurement cost for these vessels, once they have been completed and fully equipped, will be more than £4 billion. Although many companies are involved in the programme, the role of Scotstoun and Govan is absolutely central to its success. It has secured about 1,250 jobs at those two yards.
At about 7,350 tonnes and with a class size of up to 12 ships, the Type 45 will be the biggest and most powerful air defence destroyer ever ordered for the Royal Navy. They are fitted with the world-beating principal anti-air missile system, and will provide a quantum leap in capability from the outset. With the first of class due to enter into service in 2007, these ships will provide the Royal Navy with highly effective air defence capability against multiple threats from incoming missiles, and will form part of the layered defence required to protect the new carriers.
Rising as it did from the ashes of the tri-national Horizon programme, the Type 45 has always faced challenging targets. However, as a result of the extra work being done at the design centre at Scotstoun, the manufacture of the first ship, HMS Daring, is due to begin on time this spring. Perhaps more crucially,
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manufacture will begin against greater design maturity than has often been the case in past warship programmes. That is a great achievement and is greatly to the credit of the Scotstoun team.
The benefits of the programme are also being felt well away from the shipyards. Building a modern warship is a complicated and highly demanding process, and many small and medium Scottish enterprises are involved at every level. For example, Rolls-Royce Dunfermline is producing stabiliser and steering kit as well as the propeller shaft line system and several hydroelectric systems worth about £21 million. The Glasgow firm Weir Pumps has a £1.3 million contract to provide pumps for the Type 45.
The Clyde shipyards have also significantly benefited from the contract that was awarded to BAE Systems Marine for the construction of two landing ship dock auxiliaries in November 2001. The contract, worth £120 million, is to build two ships to a Swan Hunter design. That will sustain up to 600 hundred jobs at the Govan shipyard at the peak of the building programme. Steelwork on the first ship, RFA Mounts Bay, began in January of last year, while work on the second, RFA Cardigan Bay, began last month. Work on the vessels is progressing well, and the company expects to have three large blocks of Mounts Bay on its slipway by the end of February 2003.
Those Bay class vessels will significantly improve the ability of our armed forces to deploy rapidly and effectively worldwide. They are larger, more versatile ships than the vessels that they replace, and they offer a much greater capability. All four vessels are planned to be in service by the end of 2005.
I wish to make a further point about the decision that I announced last summer to base the Astute class of submarines at Faslane. That decision, which offered the most cost-effective and operationally acceptable long-term solution, will support the highly skilled and dedicated work force of the Faslane base for many years to come.
All in all, the carrier work, the landing ships and the Type 45 programme represent a solid base of work for the Scottish shipbuilding industry well into the next decade. I thank those hon. Members who worked extremely hard to ensure that Scotland's economy continues to benefit from this work. However, we must be clear that the industry can never survive, far less thrive, if it relies entirely on defence contracts, and certainly not if it refuses to face the future. We would expect the industry to use such contracts as a foundation on which to invest and build, and to become more efficient, competitive and innovative in its approach. The projects represent a major opportunity for Scottish industry, for shipbuilding, engineering and manufacturing generally. The Government have invested in Scotland because we know that Scotland can deliver.
John Thurso (Caithness, Sutherland and Easter Ross): I thank the Minister for having had the courtesy to send the statement. It was waiting for me when I returned to my office after my previous engagement. I welcome the 10,000 jobs that are
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being brought to Scotland. Wherever they end up in Scotland, they are clearly welcome. It is good news that two of Scotland's main yards are to benefit.
Will the Minister confirm that the cost is £3 billion, and that £900 million is the cost of building the two ships, and the remaining £2.1 billion is the cost of the systems fit-out? Will he explain how much of the systems fit-out is communications and how much is weapons? Does that include the aircraft? Given that the main design to be used is that of Thales UK—I believe that the phrase is whole-ship design—will he confirm that the five superblocks design will be carried out as a dry build and assembled at one of the yards? If that is the design, and bearing in mind the fact that risk is to be allocated to the party best suited to manage and mitigate the risk, will the Minister confirm that the only yard in the UK—in fact in Europe—that is currently long enough, wide enough and has a sufficiently wide dock gate size to manage a 60,000 tonnes ship is Nigg?
If, for example, Rosyth were to be chosen, it would require £60 million of work for a £100 million assembly cost. Will the Minister say whether proper risks will be considered in apportioning the work between the block construction and the assembly on a dry basis?
The Minister mentioned investment for the future. He will be aware that the only dockyard that currently uses the dry build technique, which is an offshoot of the offshore oil industry, is Nigg. Its only possible future will be to use a dry build technique for regular shipbuilding, so such a contract would take it into the future. Contracts should be distributed throughout Scotland. Does the Minister agree that, were one of the portions of the contract not to come to Nigg, it would probably close, and that technology would be lost forever for Scotland?
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