Restoring the Fleet: Naval Procurement and the National Shipbuilding Strategy Contents

2National Shipbuilding Strategy


12.The development of a National Shipbuilding Strategy (NSS) was announced in January 2015. The MoD stated that the Strategy would:

Help deliver world class ships for the Royal Navy while ensuring the best value-for-money for the taxpayer. It will also ensure that the Navy continues to have the capability it needs to protect our nation’s interests and ensure continued investment in UK warship production. It will help maintain jobs, provide new apprenticeships, and develop advanced engineering skills.15

The MoD also said that the National Shipbuilding Strategy would consider the potential to build a new complex warship16 every two years.17

13.On 16 March 2016, Sir John Parker was appointed as the Independent Chair of the National Shipbuilding Strategy, with a timetable to Report by the 2016 Autumn Statement.18 In written evidence the MoD told us that Sir John’s work would consider the following:

It went on to say that the Strategy would place UK warship building on a “sustainable long-term footing” and that the Type 26 programme would form a “central part of the Strategy”.20 As we set out later in this Report, the Type 26 programme has been extended on several occasions, resulting in delays to the construction phase. The impact of those delays on the surface fleet is of deep concern to us and if the Strategy does not address this, the Royal Navy’s capability to maintain its current meagre total of 19 frigates and destroyers, and to deliver on its tasks, may be significantly undermined.

14.In oral evidence, Harriett Baldwin MP, Parliamentary Under-Secretary of State for Defence Procurement, told us that the commitment to build eight Type 26 Global Combat Ships formed “part of the foundation [of the NSS] and informs the whole strategy”.21 However, she explained that while the Type 26 programme and the Strategy were interrelated, they were independent exercises. Furthermore, the actual decision on the main gate for the Type 26 would be a “separate part of the overall process”.22

15.Although the National Shipbuilding Strategy has yet to be published, it is clear that it will play a key role in the production of the Type 26 and in future years, the GPFF. The Type 23 frigates are coming towards the end of their service life and, with fewer surface ships in the Royal Navy than ever before, there is little, if any, room for manoeuvre. Therefore, the ability of the National Shipbuilding Strategy to deliver Royal Navy capabilities on time and within budget is of vital importance.

16.Alongside the delivery of the Type 26 frigates, the MoD has also to manage a major refit of the Type 45 destroyers—which we discuss later in this Report—following the well-publicised problems with their propulsion system. Taken together, this represents the replacement or refit the Royal Navy’s entire fleet of destroyers and frigates.

17.We look forward to the announcement of the National Shipbuilding Strategy, which has the potential to deliver a more coherent and timely production line of ships for the Royal Navy. However, if that potential is to be realised, the Strategy must include strict timelines for the delivery of the new Type 26 class of frigates and an indicative timeframe for the General Purpose Frigate. Without this information, the National Shipbuilding Strategy will offer little more than aspirations for the future of the Royal Navy.

18.We recommend that the National Shipbuilding Strategy sets out a detailed timeline for the delivery of the Type 26 frigates and the General Purpose Frigates alongside a clear description of how success will be measured in the coming years. We will expect the Strategy also to include a comprehensive assessment of the potential to build a new complex warship every two years, as well as a detailed schedule showing how each new frigate will arrive as each Type 23 frigate is withdrawn from service with the Fleet, so that no further reduction occurs in its already insufficient warship numbers.

19.Furthermore, we expect the Strategy to set out the criteria against which the expansion of the UK’s share of the export market in warships will be judged.

Workforce and Training

20.The National Shipbuilding Strategy is intended to provide the industry with the long-term certainty necessary to generate a secure and skilled workforce. However, we were told that that will depend upon the commencement of the construction phase of the Type 26. Duncan McPhee, Manual Convenor (Scotstoun) of Unite the Union, told us that without the Type 26 programme, there was insufficient work in Scotland for the existing workforce. This has already resulted in BAES retaining staff at Rosyth on the carrier programme for “longer than anticipated” and will also result in other members of the workforce being re-tasked at the Barrow shipyard.23

21.Mr McPhee highlighted the fact that the absence of work on the Type 26 was undermining the ability to provide apprenticeships. Following the start of the construction phase of the Carrier programme, BAES was recruiting 100 apprentices a year. This was important to the industry as it both brought in new entrants and lowered the age profile of the workforce.24 Furthermore, that throughput of apprentices played a key role in sustaining the appropriate level of skills for the longer-term.25 By contrast, only 20 apprentices would be recruited in 2016 and Mr McPhee asserted that this was “solely because of the decision to move the Type 26 to a later date”.26 Alongside this, existing apprentices were experiencing significant disruption to their training:

We are going to recruit 20 this year, and there are steelworkers who started last August who we have now had to switch to other trades. Fortunately, we are keeping them within the business, but in all my time in shipbuilding, I have never known apprentices to start with one trade and then, six months later, have to switch to another one. They were brought in because we thought we would be working on the steelwork for the Type 26. That is the impact on training and young people.27

Of still greater concern to us was the fact that Mr McPhee warned that any further delay would be “catastrophic” to the industry.28

22.Despite this assessment, Tony Douglas, Chief Executive of Defence Equipment and Support, Ministry of Defence, was far more optimistic about the shipbuilding industry and declared that the opportunities had “probably not been so good for an awfully long time”.29 He restated the MoD’s commitment to work not only to sustain skills in the industry but also to build on them.30 Clearly, the MoD’s recent announcement that “the steel cut for new Type 26 frigates will be in summer 2017” is a welcome development. However, this remains subject to the conclusion of negotiations on both the design and the overall contract.31 Until these matters have been concluded, a level of uncertainty remains over the programme.

23.The MoD also asserted that the announcement of a date for cutting steel for the Type 26 would secure “hundreds of skilled jobs through until 2035.” However, the construction of the General Purpose Frigate was not included in that announcement. Without a commitment to that work being undertaken on the Clyde, there will not be sufficient work to sustain the workforce over two decades. Furthermore, the MoD did not address infrastructure investment required to build an indoor assembly hall (or “Frigate Factory”) on the Clyde, which would facilitate a much faster drumbeat not only for the Type 26, but also for future orders.

24.It is clear to us that the delays in the construction of the Type 26 have had a negative impact on the development of the workforce on the Clyde. Apprenticeships are not being offered at the necessary rate, and those currently undertaking apprenticeships are having their skills training disrupted. Furthermore, workers are being required to move from Scotland to Barrow in order for them to undertake meaningful work. We welcome the efforts made by the trades unions and BAES to retain the workforce during this period of uncertainty, but remain deeply concerned by warnings that further delay could be “catastrophic” for the skills base.

25.The Government must, as a matter of priority, ensure that the UK retains the specialist skills necessary to deliver the National Shipbuilding Strategy. It can do this only if the National Shipbuilding Strategy provides a programme of work on which industry and the workforce can rely. This must include a timetable for both the Type 26 and the GPFF. If the UK is not building sufficient ships, the skills base will be depleted with long-term impacts on both our national security and the UK’s defence industrial infrastructure. To ensure the future skills required for ship building it is essential that the Government does more to protect and secure the apprenticeship programme. The Government must set out in the National Shipbuilding Strategy, the numbers of apprenticeships required in each of the key trades and how it will monitor them to ensure there are no longer-term skills gaps.

15 Ministry of Defence, press release, 30 January 2015.

16 For the MoD’s definition of a complex warship, see paragraph 66.

17 Ministry of Defence, press release, 30 January 2015

18 HC Deb, 29 June 2016, (35480)

19 Ministry of Defence (RNT0003)

20 Ministry of Defence (RNT0003)

21 Q137 [Harriett Baldwin]

22 Q139 [Harriett Baldwin]

23 Q117 [Mr McPhee]

24 Q118 [Mr McPhee]

25 Qq118–120 [Mr McPhee]

26 Q118 [Mr McPhee]

27 Q120 [Mr McPhee]

28 Q121 [Mr McPhee]

29 Q205 [Mr Douglas]

30 Q205 [Mr Douglas]

17 November 2016