Select committee: Scottish Affairs Committee
Conclusion 66
Fourth Report - Defence in Scotland: military shipbuilding
Published 27 Jan 2023
Addressed to Scotland Office
Scottish Affairs Committee Defence in Scotland All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
Only a small proportion of MOD spending with SMEs goes to Scottish SMEs, however. During our previous defence inquiry into Scotland’s military landscape, the MOD told us that Scottish SMEs accounted for just over £25 million of the MOD’s total spend. This is around 2.5 per cent of the approximate £1 billion total spent with SMEs in 2020/21. Scottish SMEs account for 6.2 per cent of all UK SMEs.105 When we put this to the Defence Secretary he accepted that the 2.5 per cent figure sounded “rather low.”106 Our previous report on the military landscape in Scotland noted that 2.5 per cent is far below the UK average for a region, and below Scotland’s population share of the UK. Witnesses we spoke to during that inquiry suggested this was because the MOD was culturally disposed towards working with contractors in the south of England with whom it had existing relationships and was slow to change. This led us to conclude that there was an “engrained hesitancy within the defence sector towards working with Scottish SMEs.”107 The UK Government in its response said it “reject[ed] the Committee’s view.”108
From: Scottish Affairs Committee, Fourth Report - Defence in Scotland: military shipbuilding (HC 1096), 27 January 2023
Government response
The government responded to the whole report on 6 April 2023 (deadline 27 March 2023).
Summary written by Accountability Index from the government's response. It is not the government's own words.The MOD disagrees with the Committee's first conclusion and its conclusion on a potential Scottish workstream gap, while welcoming recognition of export success and the National Shipbuilding Office's Edinburgh presence and setting out its position on the pipeline, skills and SMEs.
- On the Fleet Solid Support contract, the MOD says the decision to award it to Team Resolute "did not prioritise short-term savings" and followed "a fair and open competition". It says it does not disclose details of losing bids, so it cannot say why the Team UK bid was non-compliant.
- The MOD "does not agree" that the award creates a potential gap in the workstream for the Scottish warship industry. It cites Type 31 construction continuing until 2028 and Type 26 construction "expected to continue into the mid-2030s".
- On the pipeline, the MOD says it is "subject to change" as it spans 30 years, but the National Shipbuilding Office "has committed to updating the shipbuilding pipeline at each multi-year Spending Review". For Type 32 frigates, the procurement route is "yet to be determined".
- On annual Type 26 updates to Parliament, the MOD "will consider its request". On skills, the UK Shipbuilding Skills Taskforce "intends to publish a report of recommended actions in autumn 2023", and its Chair "would be pleased to meet with the Committee" afterwards.