The future prosperity of Scottish military shipbuilding is at risk through the lack of a clear drumbeat of orders, exacerbated by opening procurement up for international competition, the Scottish Affairs Committee has warned.
The publication of its report into the sector states that currently it is a success story, with the expertise and skills present at Scottish shipyards helping to secure contracts to build Type 26 anti-submarine warfare frigates and Type 31 frigates.
However, the committee raised concerns that there is no longer a clear commitment to warships being designed and built in the UK, following recent indications the Ministry of Defence will allow ‘offshoring’ of military shipbuilding.
While there has been positive policy moves in recent years, such as the National Shipbuilding Strategy offering a long-term look for Scottish shipbuilders - and the establishment of a National Shipbuilding Office in Edinburgh - more recent developments present uncertainty for the sector.
The report stated that Defence and Security Industrial Strategy and National Shipbuilding Strategy Refresh appear to represent a marked shift from Royal Navy warships being designed and built in the UK, leaving the door open to international competition.
A consistent theme heard by the committee during evidence sessions was that to continue to thrive, the sector must have regular orders coming in. This could be at risk if cancellations and offshoring of production lead to ‘gaps’ in the work stream for naval shipyards.
The procurement of fleet solid support ships was opened to international bidders, with the successful team being a consortium of companies, including Spanish state-owned Navantia. It is expected that the successful consortium, Team Resolute, would offer fewer jobs in the UK, and less investment in infrastructure, apprenticeships and training at Scottish yards than if Team UK, comprising BAE Systems and Babcock, had been successful.
Opening up procurement to international competition is against the backdrop of uncertainty over the domestic pipeline of procurement extending to the 2030s and 2040s, such as the basis on which the Type 45 destroyers will be replaced.
The report stated that the UK Government must therefore offer greater clarity about the work expected in the coming decades to allow Scottish shipbuilders to strategically invest.
It is not just the large shipyards that are affected by uncertainty in the pipeline. Small and medium-sized enterprises (SMEs) offer a crucial role in many supply chains for the sector.
The committee has previously reported to the UK Government that Ministry of Defence spend for Scottish SMEs is well below the national average, with calls repeated for ministers to update MSPs on what proportion of its spend is with Scottish SMEs - and to level the playing field with defence SMEs throughout the UK.
The report also suggested a more holistic view to address future skills gaps in the sector, with the creation of the UK Shipbuilding Skills Taskforce welcomed, although given Scotland’s importance to UK shipbuilding and the devolved nature of skills policy in Scotland, it argued that this taskforce must look at how it can encourage cooperation between governments.
Committee chair Pete Wishart said that UK Government policy on military shipbuilding ebbs and flows.
“On the one hand, ministers are championing the skill and expertise the military shipbuilding sector thrives on in Scotland, but on the other, its policies have opened up the ‘offshoring’ of warship production to other countries.
“They cannot have this both ways: a thriving shipbuilding sector is dependent on the drumbeat of orders.
“We have the skills and expertise here, in Scotland, to support our future military shipbuilding needs so it is unclear what benefit is to be had by opening up procurement to international competition.“
He added: “We hope the UK Government carefully considers our findings and recommendations, and in turn offer some certainty to the military shipbuilding sector in Scotland that its prominence in designing and building warships is here to stay.”
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