Source · Select Committees · Scottish Affairs Committee
Fourth Report - Defence in Scotland: military shipbuilding
Scottish Affairs Committee
HC 1096
Published 27 January 2023
Recommendations
15
Acknowledged
Para 52
The UK Government should provide greater clarity about the work that will fill the whole...
Recommendation
The UK Government should provide greater clarity about the work that will fill the whole of the 30-year shipbuilding pipeline into the 2030s and 2040s. It is of course difficult to calculate precise military needs beyond 2050. However, the UK …
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Government Response Summary
The MOD recognises the importance of maintaining a regular drumbeat of orders and refers to the NSbS and the 30-year Shipbuilding Pipeline. However, the details of shipbuilding programmes in the later decades will come with time.
Scotland Office
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19
Acknowledged
Para 59
Given the ongoing global uncertainties we ask the UK Government to provide annual updates on...
Recommendation
Given the ongoing global uncertainties we ask the UK Government to provide annual updates on the construction of the Type 26 vessels to both Houses of Parliament. We note that the Defence Select Committee has made a similar recommendation, but …
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Government Response Summary
The MOD welcomes the committee’s interest in the construction of Type 26 and will consider its request when providing updates to Parliament on key Defence programmes.
Scotland Office
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21
Acknowledged
In its response, the UK Government should set out how much capacity it expects to...
Recommendation
In its response, the UK Government should set out how much capacity it expects to now be available in the Scottish warship industry in each of the years between 2025– 2032 as a result of the decision to select Team …
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Government Response Summary
The Fleet Solid Support contract will still provide opportunities for Scotland in Harland and Wolff’s Methil and Arnish sites, stating there will be ample opportunity for Scottish naval shipyards to fill their order books over the next decade. The NSO recognises that key to delivering this Government’s vision for UK shipbuilding is to better understand the opportunities and pressures across the sector.
Scotland Office
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34
Acknowledged
Para 96
The UK Shipbuilding Skills Taskforce’s report should identify the skills demands of the warship industry...
Recommendation
The UK Shipbuilding Skills Taskforce’s report should identify the skills demands of the warship industry specifically, as well as steps that can be taken to meet those needs.
Government Response Summary
The UKSST will consider the skills requirements and know-how for the entirety of the shipbuilding enterprise, including the warship, commercial, workboat and leisure market sectors, both in the short and long term. The UKSST will also consider the impact of technological innovation on these sectors.
Scotland Office
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36
Acknowledged
The UK Shipbuilding Skills Taskforce should have a specific objective to encourage coordination between different...
Recommendation
The UK Shipbuilding Skills Taskforce should have a specific objective to encourage coordination between different jurisdictions in the UK, so that a common effort can be made towards supporting shipbuilding in Scotland and other parts of the UK. (Paragraph 98) …
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Government Response Summary
The UKSST, NSO and DfE welcome the signal to work collaboratively to meet skills needs, recognizing skills is a devolved issue. The UKSST is committed to ensuring its recommendations work for all UK nations and has worked with Devolved Administrations.
Scotland Office
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49
Acknowledged
In its December 2021 report “We’re going to need a bigger Navy”, the Defence Select...
Recommendation
In its December 2021 report “We’re going to need a bigger Navy”, the Defence Select Committee recommended that the Ministry of Defence provide Parliament with an annual shipbuilding plan, including the number of ships planned to enter and leave service …
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Government Response Summary
The MOD acknowledges the committee's interest in the construction of Type 26 and will consider the request when providing updates to Parliament on key Defence programs.
Scotland Office
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52
Acknowledged
The UK Government should provide greater clarity about the work that will fill the whole...
Recommendation
The UK Government should provide greater clarity about the work that will fill the whole of the 30-year shipbuilding pipeline into the 2030s and 2040s. It is of course difficult to calculate precise military needs beyond 2050. However, the UK …
Read more
Government Response Summary
The MOD recognizes the importance of maintaining a regular drumbeat of orders across the Shipbuilding industry and aims to provide a more sustainable demand signal from Government as a whole through the 30-year cross-Government Shipbuilding Pipeline of over 150 new vessels.
Scotland Office
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63
Acknowledged
In its response, the UK Government should set out how much capacity it expects to...
Recommendation
In its response, the UK Government should set out how much capacity it expects to now be available in the Scottish warship industry in each of the years between 2025– 2032 as a result of the decision to select Team …
Read more
Government Response Summary
The government states that the Fleet Solid Support contract will still provide opportunities for Scotland, and Scottish shipyards will have ample opportunity to fill their order books over the next decade, the NSO recognises that key to delivering this Government’s vision for UK shipbuilding is to better understand the opportunities and pressures across the sector.
Scotland Office
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98
Acknowledged
The UK Shipbuilding Skills Taskforce should have a specific objective to encourage coordination between different...
Recommendation
The UK Shipbuilding Skills Taskforce should have a specific objective to encourage coordination between different jurisdictions in the UK, so that a common effort can be made towards supporting shipbuilding in Scotland and other parts of the UK. Defence in …
Read more
Government Response Summary
The UKSST, NSO and DfE welcome the signal to work collaboratively and are committed to ensuring its recommendations work for all UK nations, with the NSO providing transparency on future orders and a stable baseline of work through the 30 Year Cross-Government Shipbuilding Pipeline.
Scotland Office
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Conclusions (40)
7
Conclusion
Acknowledged
In its response to this report, the UK Government should confirm on what date it determined that Team UK’s bid for the Fleet Solid Support ships contract was non- compliant with the terms of the competition, what work was done to resolve the compliance issues identified, and on what date …
Government Response Summary
The government stated that bidders were fully aware of the evaluation criteria and that Team Resolute was informed of the decision on 10 November 2022, formally appointed on 15 November 2022.
8
Conclusion
Acknowledged
Para 31
The export of the Type 26 and Type 31 design licences is a great success story for the Scottish shipbuilding industry, and we are confident that further exports will follow. At the same time, export opportunities cannot be depended upon to provide consistent work for the Scottish military shipbuilding industry …
Government Response Summary
The MOD notes the success of exporting the Global Combat Ship, estimating it will create/sustain 5,000 export-led jobs and enable £6bn in potential export contracts. They state the NSbS Refresh recognizes the role of exports in growing the shipbuilding enterprise.
9
Conclusion
Acknowledged
Para 32
The role of exports of military ships/design licences in the National Shipbuilding Strategy should be to supplement, and not to replace, domestic demand. The UK Government should be prepared to use shipbuilding contracts strategically to sustain shipbuilding capacity in Scotland in circumstances where the export environment is more challenging than …
Government Response Summary
The MOD noted the success of exports, estimating they will create or sustain 5,000 export-led jobs in the UK and will enable c.£6 billion of potential export contracts to flow to UK suppliers. The NSbS Refresh recognizes the role that exports have in growing the overall shipbuilding enterprise and bolstering domestic demand.
10
Conclusion
Acknowledged
Para 37
The creation of the National Shipbuilding Office is a welcome development that can bring greater coherence to shipbuilding planning. At the same time, we note that the NSO does not have formal powers and will therefore rely on its ability to manage and influence stakeholders.
Government Response Summary
The NSO is a strategic organization that oversees all of the Government’s shipbuilding interests. The NSO reports to the Secretary of State for Defence, who in his role as Shipbuilding Tsar has the ability to hold other Ministers to account in support of the delivery of the NSbS.
12
Conclusion
Acknowledged
Para 39
The establishment of a National Shipbuilding Office hub in Edinburgh provides a welcome link to Scottish shipbuilders.
Government Response Summary
The Department is pleased that the committee recognizes the importance of the NSO’s physical presence in Scotland and has signed a lease for a base in Queen Elizabeth House in Edinburgh.
14
Conclusion
Acknowledged
Para 51
We wish to underline the importance to Scottish shipyards of maintaining a dependable ‘drumbeat’ of orders to allow them to invest and grow. The days of ‘feast and famine’ must not return. The creation of the National Shipbuilding Strategy suggests that the UK Government appreciates the importance of this point. …
Government Response Summary
The MOD recognizes the importance of maintaining a regular drumbeat of orders and the NSbS aims to provide a sustainable demand signal through a 30-year cross-Government Shipbuilding Pipeline.
16
Conclusion
Acknowledged
Para 53
Recent developments have introduced uncertainty about some orders in the pipeline and whether it sets out a clear ‘drumbeat’ of orders needed to sustain Scottish shipyards. The Fleet Solid Support Ships and the National Flagship are two examples. There has been some media speculation about the Type 32s, although the …
Government Response Summary
The MOD recognizes the importance of a regular drumbeat of orders. The 30-year cross-Government Shipbuilding Pipeline of over 150 new vessels aims to provide a sustainable demand signal, encouraging industry investment. The NSO will update the pipeline at each multi-year Spending Review.
17
Conclusion
Acknowledged
Para 54
In its response to this report, and in its annual shipbuilding update to the Defence Select Committee, the UK Government should provide an update on the current status of the military shipbuilding pipeline for Scottish naval yards. In particular, it should confirm whether the MOD still intends to order the …
Government Response Summary
The government stated its intention to have more frigates and destroyers. The T32 programme is in concept phase, the National Flagship was suspended to bring forward the Multi Role Ocean Surveillance (MROS) ships.
18
Conclusion
Acknowledged
Para 58
The award of the contract to build five additional Type 26 frigates to BAE Systems is welcome news for Scottish shipbuilding, and importantly continues the shipbuilding ‘drumbeat’ into the medium-term. We note that, partly as a consequence of global challenges, the first batch of Type 26 vessels has faced delays …
Government Response Summary
The government acknowledged the delays and increased costs of the first batch of Type 26 vessels due to global challenges.
27
Conclusion
Acknowledged
Para 78
We heard that historically the Ministry of Defence’s understanding of shipbuilding supply chains had been a vulnerability. The Secretary of State told us this had subsequently improved. The new Defence Supply Chain Strategy’s emphasis on building resilience in supply chains is welcome, and improving understanding of supply chains further will …
Government Response Summary
The MOD is operating a Supply Chain Resilience Programme and introducing a new Defence Condition (DEFCON) to improve understanding of supply chains and address vulnerabilities.
29
Conclusion
Acknowledged
Para 87
We heard evidence that the MOD and the Scottish Government could both have a better understanding of the skills profile of the shipbuilding workforce. This makes workforce planning for a highly advanced sector like military shipbuilding more challenging.
Government Response Summary
The UK Shipbuilding Skills Taskforce (UKSST) seeks to address this challenge by collaborating across Government, the Devolved Administrations, industry and training providers to develop and implement a future-focussed skills strategy. The UKSST includes representatives from both Skills Development Scotland and Scottish industry.
31
Conclusion
Acknowledged
Para 93
The creation of the UK Shipbuilding Skills Taskforce shows a welcome recognition of the importance of long-term workforce planning in shipbuilding. This kind of planning is essential if Scottish yards are to have the highly-skilled workers they need to thrive in the future. We look forward to the publication of …
Government Response Summary
The NSO agrees that workforce planning by the UKSST is essential. The 30-Year Cross-Government shipbuilding pipeline provides transparency and encourages investment in skills. The NSO also recognizes shared ambitions between the work of the UKSST and Scotland’s National Strategy for Economic Transformation (NSET).
33
Conclusion
Acknowledged
Para 95
We wish to underline that the additional complexity of building warships demands highly specialised skills and knowledge, and that these will need to be updated and refreshed as warship design and manufacture evolves.
Government Response Summary
The UKSST will consider the skills requirements and know-how for the entirety of the shipbuilding enterprise, including the warship, commercial, workboat and leisure market sectors, both in the short and long term. The UKSST will also consider the impact of technological innovation on these sectors.
35
Conclusion
Acknowledged
Para 97
Skills policies will best support the shipbuilding industry if the UK and Scottish Governments’ approaches complement each other. For this to happen, education policymakers in Scotland will need to be able to receive clear signals about the skills needs of the defence sector, and will need routes for working together …
Government Response Summary
The UKSST, NSO and DfE welcome the signal from the Committee to work collaboratively to meet the skills needs of the sector through the existing education system. The NSO has committed to providing transparency on future orders and a stable baseline of work through the 30 Year Cross-Government Shipbuilding Pipeline.
37
Conclusion
Acknowledged
The creation of the National Shipbuilding Office is a welcome development that can bring greater coherence to shipbuilding planning. At the same time, we note that the NSO does not have formal powers and will therefore rely on its ability to manage and influence stakeholders.
Government Response Summary
The NSO is a strategic organization overseeing the Government’s shipbuilding interests, working with Departments to optimize shipbuilding requirements and reporting to the Secretary of State for Defence.
39
Conclusion
Acknowledged
The establishment of a National Shipbuilding Office hub in Edinburgh provides a welcome link to Scottish shipbuilders.
Government Response Summary
The Department are pleased that the committee recognises the importance of the NSO’s physical presence in Scotland. The NSO is using the Edinburgh base to host staff, support visits and engagement and has made the space available for other Departments involved in delivery of the NSbS.
42
Conclusion
Acknowledged
Stakeholders also emphasised that a steady ‘drumbeat’ could underpin future investment that would make the industry more productive in the future. Mr Waddell told us: It is a very simple equation. If businesses are faced with uncertainty, they do not invest. If they are faced with certainty and can guarantee …
Government Response Summary
The MOD recognises the importance of a regular drumbeat of orders and states the NSbS and 30-year pipeline aim to provide a sustainable demand signal. They also highlight workforce and programme details.
43
Conclusion
Acknowledged
In written evidence, the UK Defence Journal set out their understanding of the shipbuilding pipeline for BAE Systems and Babcock as of April 2022 (Table 1). 64 BAE Systems (DIS0030) 65 UK Defence Journal (DIS0022) 66 Q2 67 Q3 68 Q12 69 UK Defence Journal (DIS0022); BAE Systems (DIS0030); Q144 …
Government Response Summary
The MOD fully recognises the importance of maintaining a regular drumbeat of orders across the Shipbuilding industry. The NSbS is clear that we do not want a return to the “boom and bust” cycles of historic Naval demand, but to provide a more sustainable demand signal from Government as a whole, providing the certainty required by industry. The NSO has committed to updating the shipbuilding pipeline at each multi-year Spending Review.
44
Conclusion
Acknowledged
In his foreword to the National Shipbuilding Strategy Refresh, the Defence Secretary says the UK Government “will give industry a much clearer demand signal about what we are trying to achieve with our procurement programmes” and that for the first time the 70 Professor Trevor Taylor, RUSI (DIS0033) Defence in …
Government Response Summary
The MOD recognises the importance of a regular drumbeat of orders and states the NSbS and 30-year pipeline aim to provide a sustainable demand signal. They also highlight workforce and programme details.
45
Conclusion
Acknowledged
Some parts of this pipeline have since been confirmed, such as the confirmation that the second batch of Type 26 frigates would be built by BAE at Govan (considered in more detail later in this chapter).73 However, the pipeline is also subject to change. The Refresh explains that The NSO …
Government Response Summary
The MOD recognizes the importance of maintaining a regular drumbeat of orders across the Shipbuilding industry and highlights the 30-year cross-Government Shipbuilding Pipeline.
47
Conclusion
Acknowledged
In addition to uncertainty around the Type 32 frigate, the selection of Team Resolute as the preferred bidder for the Fleet Solid Support ships contract (as discussed in paragraphs 20–27 above) also means that the FSS vessels (considered later in this chapter) will not be forming part of the drumbeat …
Government Response Summary
The MOD recognizes the importance of maintaining a regular drumbeat of orders across the Shipbuilding industry and highlights the 30-year cross-Government Shipbuilding Pipeline.
48
Conclusion
Acknowledged
Representatives from the shipbuilding industry told us that having sight of upcoming shipbuilding projects over the coming decades was helpful, but that it was less clear how this translated into a drumbeat of work for shipyards. Ian Waddell of the Confederation of Shipbuilding and Engineering Unions told us: My frustration …
Government Response Summary
The MOD recognises the importance of a regular drumbeat of orders and states the NSbS and 30-year pipeline aim to provide a sustainable demand signal. They also highlight workforce and programme details.
50
Conclusion
Acknowledged
We heard differing views over how decisions about how Scotland’s constitutional future might affect the shipbuilding pipeline. Professor Keith Hartley told us that “at the moment, the industry’s future depends on the Royal Navy. Without the Royal Navy, you would not have an industry.”86 He concluded that “I do not …
Government Response Summary
The MOD recognizes the importance of maintaining a regular drumbeat of orders across the Shipbuilding industry and highlights the 30-year cross-Government Shipbuilding Pipeline.
51
Conclusion
Acknowledged
We wish to underline the importance to Scottish shipyards of maintaining a dependable ‘drumbeat’ of orders to allow them to invest and grow. The days of ‘feast and famine’ must not return. The creation of the National Shipbuilding Strategy suggests that the UK Government appreciates the importance of this point. …
Government Response Summary
The MOD fully recognises the importance of maintaining a regular drumbeat of orders across the Shipbuilding industry. The NSbS is clear that we do not want a return to the “boom and bust” cycles of historic Naval demand, but to provide a more sustainable demand signal from Government as a whole, providing the certainty required by industry. The NSO has committed to updating the shipbuilding pipeline at each multi-year Spending Review.
53
Conclusion
Acknowledged
Recent developments have introduced uncertainty about some orders in the pipeline and whether it sets out a clear ‘drumbeat’ of orders needed to sustain Scottish shipyards. The Fleet Solid Support Ships and the National Flagship are two examples. There has been some media speculation about the Type 32s, although the …
Government Response Summary
The MOD recognizes the importance of a regular drumbeat of orders and highlights the 30-year cross-Government Shipbuilding Pipeline. Scotland plays a vital role in defence shipbuilding, and the Type 26 Batch 2 contract reaffirms the UK Government's commitment to shipbuilding in Scotland.
55
Conclusion
Acknowledged
During our inquiry the Prime Minister announced the decision that the second batch of Type 26 anti-submarine warfare frigates would be built by BAE in Glasgow.90 This means that, in addition to the three Type 26 ships already being built, five more vessels will be built on the Clyde. The …
Government Response Summary
The government acknowledges the importance of the Type 26 frigates, but reports that the Initial Operating Capability date of the first ship will be a year later than anticipated with additional costs, but work is underway to increase productivity and improve efficiency.
57
Conclusion
Acknowledged
As noted in the section above, the Defence Select Committee has recommended that the Ministry of Defence provides an annual shipbuilding update to Parliament, and annual updates on particular programmes including the Type 26 frigate. No such update has yet been provided.97
Government Response Summary
The MOD acknowledges the committee's interest in the construction of Type 26 and will consider the request when providing updates to Parliament on key Defence programs.
58
Conclusion
Acknowledged
The award of the contract to build five additional Type 26 frigates to BAE Systems is welcome news for Scottish shipbuilding, and importantly continues the shipbuilding ‘drumbeat’ into the medium-term. We note that, partly as a consequence of global challenges, the first batch of Type 26 vessels has faced delays …
Government Response Summary
The MOD welcomes the committee’s interest in the construction of Type 26 and will consider its request when providing updates to Parliament on key Defence programmes.
64
Conclusion
Acknowledged
In addition to its large shipyards, Scotland is home to a large number of Small and Medium-sized Enterprises (SMEs) which contribute to Scottish shipbuilding and to the wider defence sector. An SME is defined as a company with annual turnover of less than €50 million and fewer than 250 employees.101
Government Response Summary
The MOD published the SME Action Plan in 2022, which outlines the commitments being made to increasing and supporting opportunities for Small and Medium Enterprises (SMEs) and supports the Defence Suppliers Portal which offers SMEs access to view contracting opportunities.
67
Conclusion
Acknowledged
The MOD’s SME Action Plan acknowledges some of the challenges SMEs face. The Plan notes that “improving access to opportunities for SMEs also requires support from MOD as the end customer”109 and proposes a number of actions aimed at improving 101 Ministry of Defence, MOD trade, industry and contracts 2022, …
Government Response Summary
The MOD refers to its existing SME Action Plan and digital outreach to support SMEs, and mentions the Department for Transport's lead role in the Regional Maritime Cluster Development Programme.
73
Conclusion
Acknowledged
We heard there was some uncertainty over how MOD assessed social value, and how delivery of social value would be measured. Industry representatives told the Defence Committee that social value was “probably the biggest factor in deciding who will win these contracts, and we don’t understand what the criteria are.”117 …
Government Response Summary
Both the NSO and the MOD are committed to ensuring that social value commitments through Government shipbuilding procurements and investments are delivered, with the contracting authority mandated to assess the supplier’s performance.
86
Conclusion
Acknowledged
Some contributors to our inquiry argued that addressing skills challenges was made more difficult by a lack of data on the skills composition of the UK workforce. Professor Keith Hartley told us that while the UK has “decent data on both direct and indirect employment in the UK’s defence industries…when …
Government Response Summary
The government states that the UK Shipbuilding Skills Taskforce (UKSST) is collaborating to develop and implement a skills strategy and will publish a report of recommended actions in autumn 2023.
89
Conclusion
Acknowledged
The National Shipbuilding Strategy Refresh recognised the importance of skills as an issue, and in response announced the establishment of a UK Shipbuilding Skills Taskforce (UKSST). The Taskforce is run by the Department for Education, working with the National Shipbuilding Office.146 The Taskforce’s role is to “build a picture of …
Government Response Summary
The government states that the scope of the UKSST aligns with the NSbS Refresh and will consider the skills requirements for the entirety of the shipbuilding enterprise, as well as the impact of technological innovation.
90
Conclusion
Acknowledged
The National Shipbuilding Strategy Refresh implicitly recognises that the design and building of warships is significantly more complex than for many other vessels, and includes warships as a discrete category when listing types of shipbuilding undertaken in the UK.149 It does not acknowledge as explicitly that the warship industry demands …
Government Response Summary
The government states the UKSST will consider the skills requirements for the entirety of the shipbuilding enterprise, including the warship sector.
91
Conclusion
Acknowledged
The creation of the UKSST was widely welcomed by contributors to our inquiry.152 John Howie of Babcock described it as “a key example of…the longer term planning that is needed to ensure that we generate the next generation of the workforce, and that we 144 Professor John Louth (DIS0028) 145 …
Government Response Summary
The NSO agrees that workforce planning by the UKSST is essential, and that the 30 Year Cross-Government shipbuilding pipeline provides transparency to plan and manage its workforce, and encourages investment in skills; the Chair of the UKSST would be pleased to meet with the Committee following publication of its report.
92
Conclusion
Acknowledged
A complicating factor in the work of the Taskforce is the devolved nature of skills policy in parts of the UK, including in Scotland. Kevin Craven of ADS Group said “the devolved nature of the work involved means that co-ordination and collaboration, working together on these things, is desperately important.”155 …
Government Response Summary
The UKSST, NSO and DfE welcome this signal from the Committee to work collaboratively to meet the skills needs of the sector through the existing education system. The UKSST recognises skills is a devolved issue and is committed to ensuring its recommendations work for England, Northern Ireland, Scotland and Wales.
93
Conclusion
Acknowledged
The creation of the UK Shipbuilding Skills Taskforce shows a welcome recognition of the importance of long-term workforce planning in shipbuilding. This kind of planning is essential if Scottish yards are to have the highly-skilled workers they need to thrive in the future. We look forward to the publication of …
Government Response Summary
The government agrees that workforce planning by the UKSST is essential and that the 30-year shipbuilding pipeline will provide industry with transparency to plan and manage its workforce and encourage investment in skills. The Chair of the UKSST would be pleased to meet with the Committee following publication of its report.
94
Conclusion
Acknowledged
We invite the UK Shipbuilding Taskforce, together with UK Government Ministers, to give oral evidence to the Committee when the UKSST’s report is published in autumn 2023, so that its findings can be discussed further and priorities identified to ensure Scottish shipyards have the skills they need.
Government Response Summary
The government agrees the workforce planning is essential and the Chair of the UKSST would be pleased to meet with the Committee following publication of its report.
95
Conclusion
Acknowledged
We wish to underline that the additional complexity of building warships demands highly specialised skills and knowledge, and that these will need to be updated and refreshed as warship design and manufacture evolves.
Government Response Summary
The government states the UKSST will consider the skills requirements for the entirety of the shipbuilding enterprise, including the warship sector.
97
Conclusion
Acknowledged
Skills policies will best support the shipbuilding industry if the UK and Scottish Governments’ approaches complement each other. For this to happen, education policymakers in Scotland will need to be able to receive clear signals about the skills needs of the defence sector, and will need routes for working together …
Government Response Summary
The UKSST, NSO and DfE welcome the signal to work collaboratively and state the UKSST is committed to ensuring its recommendations work for all UK nations, and the NSO will provide transparency on future orders via the 30 Year Cross-Government Shipbuilding Pipeline.