10.12 pm

The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): I congratulate the hon. Member for Glasgow North West (John Robertson) on securing the debate, and on his heartfelt remarks. He knows the shipbuilding industry in its entirety well. I am sure that he will not be surprised to learn that I do not agree with all his conclusions, but I nevertheless respect the fact that he takes a considerable interest in the industry.

I should like to set out the UK’s current market position on defence and, indeed, on the broader issue of marine engineering, because that is crucial to underpinning many of the engineering businesses to which he referred. I shall respond to his specific concerns on defence, and explain the Government’s strategy for helping marine engineering in the round to grow over the next few years.

I want to put this in context. The foundation of UK marine manufacturing and shipbuilding derives from our historical position in relation to merchant shipping and to the defence of our nation. Today, the equipment that we develop in this country is still highly favoured by ship and boat owners around the world. The marine industries manufacture and provide important support services in not only the naval market but the leisure, commercial and offshore renewable markets, and generate some £10 billion for the UK. Furthermore, the UK is still the fourth largest shipbuilder in Europe in terms of gross value added. However, the global market is not static, as the hon. Gentleman acknowledged. Today, our expertise and facilities are being adapted for new clients and new markets. Of course, that also means that they face new challenges from new competitors who were not there 10 or 15 years ago.

Our worldwide reputation for naval ships, marine equipment and systems, marine science, ports and infrastructure, ship repair and recycling is now migrating into a broader sphere, which includes offshore renewables manufacture, super-yachts and high-value sailing yachts.

19 Mar 2012 : Column 619

Let us take, for example, South Boats, which designs and builds aluminium catamarans on the Isle of Wight. It sells to a market for the operators of offshore wind farms in the whole field of support and crew transfer vessels. Four years ago—in 2008—its turnover was in the region of £8 million, but it exported merely 5% of its output. By 2011, the turnover had increased to £23 million, with 21% exports. That is an example of positive signs in shipbuilding and ship repair, but it is not the only one.

Let us take the revival of the Cammell Laird Birkenhead shipyard. The firm that went into administration in 2001 was bought back by former employees and now once again, I am pleased to say, is a thriving shipbuilding and ship repair business. It specialises in commercial repair and upgrading heavy fabrication engineering, but also operates in military refit markets. It is located, as we know, in an area where there is a major cluster of marine service expertise. It is currently responsible for the maintenance of vessels from the Royal Fleet Auxiliary, which recently saw service in Libya, and is working on a number of commercial conversion projects.

What is encouraging about this—it is something to which the hon. Gentleman specifically referred—is the important commitment to training. The current chief executive at Cammell Laird, John Syvret, started as an apprentice shipwright. Today the company employs 70 apprentices alongside a core work force who average almost 700 direct staff. These are good signs for the prospects, and, indeed, the ambition of shipbuilding in the UK, but we recognise that this company, among others, has to compete in a tough and challenging global market.

We have, of course, seen this country and others facing a substantial financial crisis in past years, and many of the markets that shipbuilders sell into have either just come out of recession or, in some cases, are still in it. That is why when we started as a Government we wanted to put manufacturing back at the heart of our economic strategy. It is why we believe our job is to make sure that we maximise industries’ competitive advantages. That is why we are ensuring that we have one of the most competitive tax regimes—not just in the G7 but in the G20. It is crucial to get that long-term investment that is important to industry generally and to shipbuilding specifically. This also explains why we are investing in skills, as with the substantial expansion of apprenticeships. It is why we are investing in key infrastructure, with our £200 billion package of civil engineering projects incorporated into our national infrastructure plan.

John Robertson: The Minister, with his limited time, is generous in giving way. Does he agree that the reason why we have these apprentices and why we are investing in skills is that we have lost those skills over the decades, so it is more by necessity than design that this is happening?

Mr Prisk: The hon. Gentleman is absolutely right to say that we have seen a wind down so that over the next 10 to 15 years there will be a substantial loss through retirement of a whole generation of engineers. We do not see this is a necessity, however, but as an important

19 Mar 2012 : Column 620

part of shifting the balance of the economy. We want to see a strengthening in apprenticeships, so I would go further than the hon. Gentleman suggested. We believe that supporting supply chains and technological innovation is the way in which shipbuilding in the UK and elsewhere can keep ahead, so we need to make those investments.

Let me deal specifically with defence, on which the hon. Gentleman focused—not surprisingly in view of his constituency. It is, of course, a significant market for the UK’s shipbuilding sector. Supporting this, the Royal Navy is in the middle of a major building programme of both warships and submarines. Looking at the broader industrial issue here, partnering and industrial collaboration are key elements of the programme.

The warship programme is a significant investment, including six Type 45 destroyers, five Astute class submarines and two Queen Elizabeth class carriers, and they are all being delivered by UK shipyards. Subject to Ministry of Defence approval, new contracts are anticipated for two further Astute class submarines, the future strategic deterrent submarine and a new generation of frigate—the Type 26 global combat ship. The Type 26 frigates will form the backbone of the Royal Navy until the middle of this century and, I suspect, beyond. It is clearly too soon to speculate on precisely where the ships will be built, but I will say that the programme provides a real opportunity for strong ties to be formed between the United Kingdom Government, the Royal Navy and British industry as it progresses.

The work on the Queen Elizabeth class carriers, which it is important to consider in this context, has brought about a reinvigoration of the apprenticeships programme on the Clyde. Some 270 apprentices will be employed by BAE Systems, and 154 by Babcock in Rosyth.

Thomas Docherty (Dunfermline and West Fife) (Lab): As the Minister will know, refitting the two carriers in Rosyth would give my constituency 50 years of work. In the light of the sensitive nature of carrier work, will he confirm that if Scotland were to leave the United Kingdom, my constituency would not be able to compete with English yards on a level playing field?

Mr Prisk: All the Royal Navy’s current warships are built in the United Kingdom. Scotland has a strong and skilled defence sector, and it would make strong bids, but if Scotland were not part of the United Kingdom, the sector would clearly be pitching for business in what is a very competitive international market. I am sure that Members on both sides of the House understand that.

Let me say something about the points raised by the hon. Member for Glasgow North West about BAE Systems’ shipyard work. Like the future implications for the yards, those issues are a matter for the company. The Ministry of Defence has made it clear that it expects the BAE Systems maritime naval ships terms of business agreement to provide a strong foundation for it to compete for non-MOD work, both here and abroad, but it is for the company to retain the capacity that it deems necessary to meet the demands made of it, and to transform the sector as it feels appropriate.

What the Government will do is ensure that the United Kingdom provides an economic and business environment within which businesses, shipbuilding or

19 Mar 2012 : Column 621

otherwise, can flourish. The defence White Paper, which was published on 1 February, explains how we will promote exports related to defence and security—for example, by ensuring, when we work with industry, that export potential is considered at an earlier stage. All too often in the past Governments have not done that properly, regardless of their political persuasions.

Let me say something about the MARS programme. In the context of the fleet tankers, the hon. Gentleman referred to speculation in reports about remarks attributed to the Under-Secretary of State for Defence, my hon. Friend the Member for Mid Worcestershire (Peter Luff). I can confirm that those remarks were wrongly attributed, and that my hon. Friend did not make them.

I share the hon. Gentleman’s frustration about the fact that no UK contractor bid for the final contract, but the Government cannot force contractors to bid. We are not in that position, nor should we be.

The hon. Gentleman mentioned previous commitments involving warlike vessels, but these are not warlike vessels. The commitment to which he alluded—that complex Royal Navy warships will continue to be built in UK shipyards—remains. I hope that that gives him some comfort.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP) rose—

Mr Prisk: I must tell the hon. Gentleman, with respect, that the debate was initiated by the hon. Member for Glasgow North West. I do not know whether he asked permission to intervene, but it appears that he did not, so I will now turn to the broader strategy.

If we are to achieve sustained improvements for the sector as a whole, we shall need a joint industry and Government strategy, whether it is in defence or on the civilian side. That is why, last year, we created the Marine Industries Leadership Council as a forum for the industry. We have launched the first ever strategy for the growth of the marine industries, which seeks to draw on the strengths of the whole sector. Having been a member of the Government for two years, I was surprised to learn that this was the first ever integrated UK strategy for the growth of the marine industries. Our goal is that by 2020, the UK marine industries will be renowned for the quality and value for money that they provide in their products, services and systems. A specific part of the goal is that we ensure that by 2020 the marine industries and maritime services sector sees the value of its contribution to our economy rise to £25 billion, up from £17 billion. That is a clear and important tangible goal, and I hope it will give some comfort to the excellent work force in the constituency of the hon. Member for Glasgow North West.

John Robertson: Does the Minister not accept, however, that the rules we in this country play by are not the same as those that other countries play by when bidding for orders to build our ships? There is not a level playing field. We allow companies from other countries to make bids when we know—particularly in respect of South Korea in the past—that money that has been given for development has been ploughed into the shipbuilding industry, to enable other countries’ companies to make ships cheaply.

19 Mar 2012 : Column 622

Mr Prisk: I understand that point. The point has been made that the complexity of warships can make it quite difficult for other countries’ companies to make successful pitches. There might also, however, be a point to be made about the cheap end of the market—if we can use that expression in this context. We might look back at past procurement practices, for instance—and there has been a similar debate about trains in this context. The UK must ensure that, while working within the law, we enable UK businesses to compete, which is exactly what we are trying to do.

In the strategy for the marine industry, we have set out specific goals, including making sure we maximise export opportunities to places such as Brazil, Russia and India, expanding the domestic offshore renewable energy industry—that has a very good tie-in to the sector —and building on partnerships with the universities, because we should not forget that cutting-edge research and development is just as important as the excellent fabrication and construction work within the yards. We also want to improve co-operation within the marine industries sector.

Mr MacNeil rose—

Mr Prisk: I will make progress, if I may.

The Technology Strategy Board is helping to co-ordinate a future technology road map, and UK Trade and Investment has now, as I understand it, made marine a priority sector in our trade and inward investment programmes, which I find extraordinary. It is putting marine right where it needs to be, shipbuilding included.

Next month, my Department will be hosting an exhibition at Victoria street for the UK marine industries, where we can at last showcase some of the brightest and best products and services in the industry. I extend an invitation to the hon. Member for Glasgow North West and all other Members of the House.

Mr Speaker: Order. I apologise for interrupting the Minister, but may I gently say to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil)—

Mr MacNeil rose—

Mr Speaker: Order. The hon. Gentleman sought to intervene on a number of occasions. He was perfectly entitled to seek to intervene, just as the Minister was entitled to decline to take the interventions. The use of electronic devices in the Chamber is supposed to be undertaken without impairing decorum. To seek to intervene one minute, and then very ostentatiously and blatantly—

Mr MacNeil rose—

Mr Speaker: Order. To seek to intervene one minute, and then very ostentatiously and blatantly to be fiddling with such a device is a discourtesy, and I simply ask the hon. Gentleman not to do it. There is nothing more to say on the subject.

Mr Prisk: I cannot promise the hon. Member for Glasgow North West that we will return to large-scale shipbuilding on the Clyde. I do not think he expected me to say otherwise. He and I both know that we now

19 Mar 2012 : Column 623

live in a different era, but a resurgent industrial sector, including shipbuilding, lies at the heart of our plans to try to rebalance the economy and ensure that we have a more resilient model for long-term growth, and to show respect for the quality of the work done both now and in the past by the men and women who work in the shipyards. Despite what some people think, this country remains one of the world’s leading manufacturing nations

19 Mar 2012 : Column 624

and, as far as I am concerned, marine engineering remains a vital element of that.

We are a maritime nation, and I believe that, with a clear strategy, with investment in technology and with our commitment to skills, we can ensure that the future for this industry can once again be positive.

Question put and agreed to.

10.29 pm

House adjourned.