Source · Select Committees · Scottish Affairs Committee
Recommendation 2
2
Accepted
Paragraph: 18
If bids from Scottish yards are to be fairly compared with those of their international...
Conclusion
If bids from Scottish yards are to be fairly compared with those of their international competitors, this process should be based on a full analysis of their respective benefits, including the benefits to the local economy and in additional tax revenue collected in the UK. However, it is not clear how the UK Government assesses the benefits that procuring military ships domestically delivers for the wider economy. It is important these benefits are properly understood so they can inform future decisions about where naval ships are to be built.
Government Response Summary
The Government seeks to account for the wider benefits from shipbuilding procurement programmes through the application of the Social Value model and regional assessments. The NSO also works with MOD procurement teams to ensure economic benefits are considered.
Paragraph Reference:
18
Government Response
Accepted
HM Government
Accepted
2 & 3: The Government seeks to account for the wider benefits from shipbuilding procurement programmes through the application of the Social Value model. Specific criteria will vary for each programme, but alongside delivering the capability to time, cost and specification, we value themes such as incentivising investment, tackling economic inequality and supporting local communities. Additionally, the National Shipbuilding Office (NSO) and the MOD have undertaken a series of regional assessments to better understand the economic footprint of the UK shipbuilding industry, which in turn has helped inform the Government’s knowledge of the economic impacts of building military vessels domestically. Since its establishment, the NSO has also worked with MOD procurement teams to ensure economic benefits are considered whilst determining the procurement approach for each class of naval ship. Lastly, His Majesty’s Treasury is responsible for determining how much revenue it wishes to raise through taxation and borrowing. This is done separately from, and in advance of, individual departmental spending decisions. Departments are then funded to maximise social welfare for the Government. Nonetheless, the MOD recognises that BAE Systems and Babcock are major employers in Scotland and therefore contribute significant value at both regional and national levels.