The Future of Shipbuilding Debate

I secured an  Adjournment Debate on the Future of Shipbuilding, following recent announcement by the Coalition Government and fears of the local trade unions. It took place just before 10pm and expect not many people were tuned in to watch it, however, I’ve published the transcript of the debate below and for those who could not watch at the time here it is below:


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Shipbuilding

Motion made, and Question proposed, That this House do now adjourn.—(Mr Dunne.)

9.59 pm

John Robertson (Glasgow North West) (Lab): My speech tonight might be about shipbuilding, but it is fundamentally about commitment—to a tradition, to an industry and to the people who rely on it. I am glad to have secured this debate and hope to catch the Chancellor’s ear when he makes his future plans. I hope it is not too late, but I doubt it.

I must begin by mentioning how disappointed I was at last month’s decision to award a £452 million contract for support tankers to the South Korean ship company, Daewoo, at the expense of the UK sector. Not only was this sneaked out in a written statement, but a Westminster journalist reported that the Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff) said, “It’s okay, we’ve got away with it. It’s only on the BBC website”. I hope that the Minister will put the record straight today about these reported comments and about why the decision was made.

The four military afloat reach and sustainability—MARS—tankers, from which military helicopters will be able operate, are due to enter service from 2016. Owing to the timing and nature of the contract, it is especially tough on the UK sector. For example, there will be gaps in order books after the carriers and Type 45 destroyers are finished. Placing orders for those four ships in UK yards was essential to retaining those skills and capabilities in the UK. I remind the Minister that retaining that capability is also a strategic issue, so the Ministry of Defence is risking UK defence capability by placing this order in South Korea, as well as undermining the UK shipbuilding industry.

There have been suggestions in the past that South Korea has won orders at prices below production cost, and the EU has reported South Korea to the World Trade Organisation for its behaviour.

Speaking as a local MP, I would say that given that there are at least three years before the steel work on the carriers being built in the shipyards in my constituency and that of my hon. Friend the Member for Glasgow South West (Mr Davidson)is finished, these contracts mean that there would have been enough time to find work to keep other highly skilled workers busy until the Type 26 frigates came along at these shipyards. Instead, however, as a result of losing out on this contract, the shortfall will lead to the loss of 1,000 jobs. Given that unemployment in my constituency is up 66% since February 2008 and in Glasgow city by 80% since summer 2007, we can see that this is of major concern not only to me but to the people of the city of Glasgow. That will be mirrored in other areas of the country.

What really annoys me, however, is that these four MARS tankers for the Royal Navy were deemed to be “warlike” ships. As a result, under the previous Government’s procurement rules, they would have been built in the UK. I secured that commitment from the previous Government in 2003 at a meeting of the Scottish Affairs Select Committee, when they guaranteed that all “grey ships” or “warlike ships” would be built in the UK.

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My local GMB shipbuilders’ trade union certainly considers these tankers for the Royal Navy to be “warlike”, so like the Type 45 destroyers, the aircraft carriers and the future surface combatant ships, the Type 26 frigates, they should be built in the UK too. The reason is that they could be put into a war zone to refuel warships and to provide support for amphibious and land forces close to the shore. They need to be equipped with proper defences to protect the Royal Navy personnel on board, the helicopters that operate from them and, of course, the ships themselves—let us not forget them and the men in them. For that reason alone they should be built in the UK.

I fear, however, that the commitment that I secured from the previous Government is being broken and that the current Government are sending out signals that they will continue to break it. In fact, I believe that it is the Government’s policy to break it. This fear is supported by the equipment, support and technology Green Paper published on December 2010. It stated that the Government intended to buy more defence equipment off the shelf. As defence companies in the UK cannot afford the costs or accept the risks of developing major pieces of defence equipment without Government support, the clear implication of the Green Paper is that the Government mean to buy more equipment from foreign suppliers. Moreover, there is no mention of arrangements for licensed production, suggesting that the Ministry of Defence envisages buying more from the company’s own production line—another potential blow for UK manufacturing.

At the end of August 2011, the Government announced an order of 14 Chinook helicopters from Boeing, at a cost of £1 billion, which was fully in line with the approach I have outlined. At the beginning of October, AgustaWestland announced that it would make 375 staff redundant, owing to a shortage of work. That means that the Government are setting a dangerous precedent, which may have changed the commitment that I received from the previous Government on “grey ships”. With fewer than 10,000 highly skilled workers in the shipbuilding industry, any further loss of commitment to support the yards will result in the total collapse of UK shipbuilding and the loss of a highly skilled and motivated work force. Investment over the last few years has created a fantastic opportunity for UK shipbuilding to be recognised as it was a number of years ago—highly respected for quality, efficiency and cost-effectiveness. Many navies in the world are looking at our Type 45 destroyers with envy. They are without doubt the best ships of their class and type anywhere in the world.

The Government say that no UK yard made a bid for the MARS ships. However, I am the chair of the all-party shipbuilding and ship repair group, and a meeting was held last week. I have approached companies that should have bid, but did not do so, for which there were two good reasons. First, they were discouraged from doing so; and secondly, the decision had already been made on cost. Will the Minister comment on that, verify whether those are the facts, and if so, say what he will do to rectify the situation?

Mr Russell Brown (Dumfries and Galloway) (Lab): In view of my hon. Friend’s discussions with the all-party group, will he tell the House why those companies appear to have been discouraged?

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John Robertson: My hon. Friend will appreciate that the companies do not want to be named, for obvious reasons—their orders might be looked at in future—but the fact of the matter is that they seem to have been pretty well warned off, being told that it would be a waste of time, energy and money for them to tender for the ships. I find that despicable to say the least, and it is also a slight on our great work force, who work in the shipyards in my constituency and many others.

The previous Labour Government deserve to be congratulated on saving shipbuilding on the Clyde, as the Conservative Government from whom they took over did their best to ensure that those yards closed. The present carrier project, initiated by the last Government, is not only boosting the shipbuilding sector’s profile, but having a knock-on effect in the manufacturing sector as a whole. At a time of high unemployment, we should remember that the industry cannot afford to lose skilled workers, because as we have seen, once gone, they do not return to the industry. The industry needs skilled workers over the next 10 years. The young people entering the industry need to be trained, but it is not easy with people leaving the industry owing to lack of work or retirement. The shipbuilding work force are ageing and need new blood now. With youth unemployment at an all-time high—I might add that it is above the national average in my constituency—what better time than this to employ more young people? I congratulate BAE Systems in my constituency on its apprenticeship policy and on doing a great job to keep apprenticeships going in the last 10 years, but let us face it: the industry on the Clyde can ill afford any redundancies.

All this raises the question of where the ships should be built. We could, of course, build them abroad, as the Government appear to want to do. After all, it might work out cheaper to do so. However, we are not talking about a simple commercial ship that can be built more cheaply in a low-wage economy; in this case, we are talking about complex, highly integrated systems that happen to be housed in ships. We have the necessary skills here in the UK, and we cannot run the risk of losing crucial shipbuilding skills to other countries, let alone the cost of unemployment. Ultimately, the Government could find that they have nowhere at home to turn to for their systems requirements, if they continue to act as they currently are: penny wise but pound foolish.

The Minister will be aware of a recent report by the Royal United Services Institute which looked into defence procurement. The report found that the tax revenue implications of a given choice are frequently overlooked. Given that the Government, including the Ministry of Defence, are committed to reducing the budget deficit—a function of spending and revenue—this issue is highly pertinent. Using an actual contract and an explicit accounting method, the RUSI report found that the tax revenues are significant; they can yield to the Exchequer over a third of the value of the contract.

The same study found that the Government could get back more than 28% in income tax and national insurance payments alone by buying British in defence procurement. That figure is of obvious procurement policy significance at a time when there is such concern over the Government’s budget deficit, and this is something that the Chancellor should consider this week. The thousands of people in the shipbuilding industry could not care less about the

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50p tax rate; they just want a job that allows them to be able to pay tax. The report also suggested that if the UK were to spend a third of its defence budget on off-the-shelf foreign systems, as outlined in the Green Paper on equipment, support and technology, the Treasury would lose about £1 billion in revenue. That could have a negative effect on Government revenues and thus on the public sector deficit. Will the Minister tell us whether the Government have considered the RUSI report?

There is also a human aspect to all this that we miss in the faceless statistics and figures that are quoted. How can families in my constituency, and constituencies like it, plan for their own future when they could see their jobs go? How can we expect them to cope with such insecurity, especially when they are working in an industry of national importance? We are talking about generations of families who have worked in the industry, and about the traditions that go along with that. If the Government cut first and think later, it is those people and many others like them who will ultimately pick up the tab. So I call on the Minister and the Government to honour the commitment of the previous Government to the proud people in the shipbuilding industry of this country, and to ensure that all “grey ships” continue to be made in Britain.

Whiteinch Scotstoun Housing Association New Housing

Recently, I attended the official opening of Whiteinch Scotstoun Housing Association New Housing Fore Street by Anita Manning, Auctioneer & BBC Antiques Expert, and who is based in the area.

This development provides eight new homes on the site of a former bakery in Fore Street. This is the sort of investment in new homes we need and I strongly welcome it.

I will be working with my colleagues in other administrations to make sure that this is not just a one off but the start of more to come to Glasgow North West.

Early this month, I attended the re-opening of the Phoenix Centre in Drumchapel.

The Centre was closed for a time after the previous committee running it collapsed.

It is now run by Drumchapel Life, and has been fully refurbished. It is a lovely community centre open to use by the public and if you would be interested in using it call: 0141 944 0110.

Recently, I attended the official opening of Whiteinch Scotstoun Housing Association New Housing Fore Street by Anita Manning, Auctioneer & BBC Antiques Expert, and who is based in the area.

This development provides eight new homes on the site of a former bakery in Fore Street. This is the sort of investment in new homes we need and I strongly welcome it.

I will be working with my colleagues in other administrations to make sure that this is not just a one off but the start of more to come to Glasgow North West.

Phoenix Neighbourhood Centre Drumchapel

Early this month, I attended the re-opening of the Phoenix Centre in Drumchapel. The Centre was closed for a time after the previous committee running it collapsed.

It is now run by Drumchapel Life, and has been fully refurbished. It is a lovely community centre open to use by the public and if you would be interested in using it call: 0141 944 0110.

Tennis in Glasgow North West

Last month, the Lawn Tennis Association (LTA), working in partnership with the Tennis Foundation and Glasgow Life, visited Scotstoun Tennis Centre in Scotstoun Leisure, Drumchapel Park.

I showed representatives of the LTA around Drumchapel Tennis Club, to highlight what investment has been made within Glasgow North West; and also to highlight the recently announced investment in both Drumchapel and Knightswood Park.

I am a big tennis fan and I welcome such investment by the LTA into our local area.

Public Sector Bonuses to senior Civil Servants

Last month you may have seen me in the papers calling on the new Secretary of State for the Department of Energy and Climate Change (DECC) to stop this year’s bonuses being paid to Senior Civil Servants (SCS) at DECC. And for there not to be a repeat of last year’s scenes when large sums of public money were paid to already highly paid senior civil servants.
Last year 86 SCSs at DECC had an annual wage bill of over £8.5M and the bonus pot last year for 22 of them alone was worth almost £180K.
This is just not on, especially when you consider the highest bonus paid to a senior civil servant is probably more than what a cleaner at DECC gets paid in a whole year. In addition, these are already highly paid senior civil servants, the management not your rank and fi le civil servant worker, whose pay ranges from £70,000 – £200,000.
Sadly, this is not the only Department I discovered from Parliamenary Questions that I tabled who are doing this. I have also called on the Home Secretary Theresa May MP, to stop this year’s bonuses being paid to Senior Civil Servants at the Home Office too.
Last year, 204 SCSs at the Home Offi ce had an annual wage bill of over £22.6M and the bonus pot last year for just 54 of them alone was worth almost £300K. When you consider the highest bonus to a senior civil servant last year was £42,000, around the same as the starting salary for two new constables or that of an Inspector, these payments would seem out of touch at a time when 4,000 police officers have lost their jobs in England and Wales since May 2010.
This is just obscene at a time when we are all suppose all be “in it together”, yet with these bonuses the Whitehall mandarin seems to be above not only lower paid staff at DECC and the Home Offi ce, but also pensioners, and low income households in Glasgow North West. A case for senior bonus restraint is needed.
And this is something the government can act on now and there is no excuse not to do so, and I will continue to call on them to act. Last month you may have seen me in the papers calling on the new Secretaryof State for the Department of Energy and Climate Change (DECC) tostop this year’s bonuses being paid to Senior Civil Servants (SCS) at DECC.
And for there not to be a repeat of last year’s scenes when large sums ofpublic money were paid to already highly paid senior civil servants.Last year 86 SCSs at DECC had an annual wage bill of over £8.5M andthe bonus potlast year for 22 of them alone was worth almost £180K.
This is just not on, especially when you consider the highest bonus paid to a senior civil servant is probably more thanwhat a cleaner at DECC gets paid in a whole year.
In addition, these are already highly paid senior civilservants, the management not your rank and fi le civil servant worker, whose pay ranges from £70,000 -£200,000. Sadly, this is not the only Department I discovered from Parliamenary Questions that I tabled who aredoing this.
I have also called on the Home Secretary Theresa May MP, to stop this year’s bonuses beingpaid to Senior Civil Servants at the Home Offi ce too.Last year, 204 SCSs at the Home Offi ce had an annual wage bill of over £22.6M and the bonus pot lastyear for just 54 of them alone was worth almost £300K.
When you consider the highest bonus to a seniorcivil servant last year was £42,000, around the same as the starting salary for two new constablesor that of an Inspector, these payments would seem out of touch at a time when 4,000 police offi cershave lost their jobs in England and Wales since May 2010.
This is just obscene at a time when we are all suppose all be “in it together”, yet with these bonusesthe Whitehall mandarin seems to be above not only lower paid staff at DECC and the Home Offi ce, butalso pensioners, and low income households in Glasgow North West. A case for senior bonus restraint isneeded.
This is something the government can act on now and there is no excuse not to do so, and I will continueto call on them to act.