1. We are concerned that over 10 months elapsed between the confirmation of the carrier programme and a contract being signed. In January 2008 the Chief Operating Officer of Defence Equipment and Support said that they were "very close to being ready" to sign a contract and yet, five months later, the contract had still not been signed. (Paragraph 28)
2. Although the Government has repeatedly said there will be no delay to the construction phase of the project, continued delays to the contract signing have caused concern. We have been told that the CVF programme is vital to maintaining employment in Scotland and the skills necessary for naval ship building. We are concerned that a delay in the construction of CVF and a gap in workload could lead to job losses and damage the ship-building skills base the UK needs to support if it wishes to retain sovereign capability in key areas. (Paragraph 29)
3. Delays during the construction phase and beyond could cause problems, both operationally and to manufacturers. The MoD must be vigilant to the possibility of delays and take robust action to avoid or limit any further delay in the project. We recommend that the Ministry of Defence review how it communicates the progress of defence programmes to limit confusion and concern about possible delays. Uncertainty about progress has led to scare-mongering, which has been destabilising to the workforce and the wider community. (Paragraph 30)
4. Given the importance of shipbuilding to the Scottish economy, delays to the CVF programme could impact disproportionately on Scotland compared to the rest of the UK. The Scotland Office, therefore, needs to make the case to other Government departments to ensure the potential consequences of any delay are clear, particularly to the MoD. (Paragraph 31)
5. We welcome the confirmation that work on the Joint Sea Based Logistics (JSBL) ships and some of the work on the Solid Support (SS) ships will go to British yards. We believe Solid Support ships should also be built in British yards since ensuring a steady forward load is vital if Scottish, and indeed UK, shipbuilders are to be able to plan their workforce and the skills-mix of their workforce effectively. The only circumstances in which we can envisage accepting that the JSBL or SS ships should be put abroad would be if there were capacity constraints, but we believe that this should be avoidable with prudent planning. (Paragraph 40)
6. We are concerned that there appears to be a significant amount of confusion over the status of the MARS tankers. The decision to classify the tankers as commercial vessels had previously been explained with an emphasis on capacity issues. This led to a widespread belief that the tankers could be pulled back to the UK if the CVF programme was delayed. This now appears not to be the case. (Paragraph 41)
7. Uncertainty about the timing of the CVF has increased concern about the first MARS vessels being built outside the UK. We recommend the Ministry of Defence clarify what, if any, strategy there is to cope with delays in the current ship building programme and ensure critical skills are maintained. (Paragraph 42)
8. We recognise the important role aerospace and non-naval defence companies play in providing economic development and high skilled jobs in Scotland, and the role of MoD as a major employer in Scotland. We support necessary MoD reorganisation but the MoD must ensure there is clear communication and consultation with staff and other stakeholders both before and during any changes. (Paragraph 45)
9. We believe the Modern Apprenticeship programme is a valuable alternative to higher education and provides young people with a chance to develop practical skills. We are persuaded that, although the funding structure in Scotland differs from that of England and Wales, 16-19 year old apprentices in Scotland do not attract significantly less funding than apprentices in England and Wales. (Paragraph 59)
10. We welcome the work that BAE and SEMTA are doing to develop apprenticeships for adults. However, we are concerned that apprentices aged 20 or older do not receive full funding. We believe that it is vital for Scottish industry to look at upskilling throughout the workforce, including mature workers who were not able to access apprenticeships as school leavers. We urge the Scottish Executive and Scottish Enterprise to consider increasing funding for adult apprentices. (Paragraph 60)
11. The Scottish Executive must ensure that industry continues to see Scotland as a good area for investment due to the highly skilled workforce. Scottish Enterprise also has a role to play in promoting Scotland to industry and working to develop existing Scottish industry. We are concerned that Scottish Enterprise has not been sufficiently pro-active to date and hope that the re-launch of Scottish Enterprise on 1 April 2008 will lead to greater success in promoting and supporting Scottish industry. (Paragraph 69)
12. We urge all stakeholders, including the Ministry of Defence, Skills Development Scotland, the Scottish Enterprise and defence companies to work together to promote careers in the defence sector and support the work of education providers in widening access to skilled employment or further training. We urge the Scottish executive and local authorities to examine the apparent biases within the education system in favour of the academic stream and urge them to take appropriate action to boost the standing of vocational options. (Paragraph 70)
13. Many defence companies currently operating in Scotland have invested significantly in their facilities there. That makes relocation south of the border unlikely in the short to medium term. We recognise that the possibility of constitutional change will throw into doubt the long term sustainability of the Scottish defence industry as, under the current business model, MoD orders are the foundation of any additional business. (Paragraph 76)
14. With a limited amount of guaranteed work after the CVF programme it is possible that the majority, or the entirety, of the work for the Joint Venture could be carried out in the VT yard in the south of England rather than Scotland. We urge the Ministry of Defence, BAES and VT to ensure that any decisions are communicated clearly and early to the workforce and consulted on. The Scottish Executive and Skills Development Scotland must ensure that education and training in Scotland continue to produce a highly skilled, highly motivated workforce. The Scotland Office must promote the strengths of Scottish industry and make the case within Government for a continued industrial presence in Scotland. (Paragraph 81)
15. While the Joint Venture is guaranteed a certain amount of work, defence companies need to increase their non-MoD order book. We urge the MoD to work with companies during the design stage of defence programmes to ensure that, if possible, designs can be adapted for the export market. (Paragraph 86)
16. The defence industry is vital for Scotland. As well as contributing to the economy the defence industry also provides skilled employment opportunities. The defence industry, particularly the ship building industry, is in a more stable position than it has been for some time, largely due to the CVF programme. Scottish engineering and manufacturing is supported by a highly skilled workforce. However, once the carriers have been constructed, there are a number of challenges that the industry will have to prepare for. (Paragraph 87)
17. Those challenges include the potential impact of possible constitutional change with consequential loss of automatic access to the UK home market, limited success to date in the export market and the formation of a Joint Venture which could lead to more work being carried out in England. To prepare for these challenges, all stakeholders including the Ministry of Defence, the Scottish Executive, Scottish Enterprise, Skills Development Scotland, the Scotland Office and industry, need to work effectively together to ensure that Scotland's engineering and manufacturing base continues to be world class. (Paragraph 88)
