Asked by
To ask Her Majesty’s Government what assessment they have made of
the value for money to the taxpayer of building the new Fleet
Solid Support Ships in (1) the United Kingdom or (2) overseas;
and whether any such assessment includes (a) the level of tax
paid onshore, (b) any requirement to maintain skilled jobs, and
(c) any strategic requirement for a minimal shipbuilding
capability in the United Kingdom.
The Minister of State, Ministry of Defence () (Con)
My Lords, it is too early in the procurement process to assess
the value for money of building fleet solid support ships in the
UK compared to overseas, and it would be inappropriate to comment
in advance of a new competition. The Secretary of State has
already said that he will make an announcement about the progress
of the programme during the autumn, and the criteria for
assessing the FSS bids will be produced in accordance with Her
Majesty’s Treasury guidelines on seeking best value for money.
(Lab)
I thank the noble Baroness for her Answer. I am delighted that
the Secretary of State has classed Royal Fleet Auxiliary vessels
as military. These three ships should have been ordered more than
three years ago. I hope that the integrated review is concluding
that our outward-facing island nation needs a maritime strategy
as a basis for its national security. Will the Minister confirm
that a maritime strategy needs ships, that the UK’s shipbuilding
strategy needs ship orders and that building of military ships
will be onshore?
(Con)
I reassure the noble Lord that it would be a very curious defence
capability that did not have a maritime capacity. As we look to
the challenges of the global world in the years to come, it seems
that a maritime capacity will be an essential part of our
capability. The Government are aware of the importance of the
UK’s maritime industries. As the noble Lord will be aware, the
Prime Minister appointed the Secretary of State for Defence to be
the shipbuilding tsar for this very reason. The challenges which
the noble Lord articulated are recognised.
(Lab) [V]
My Lords, on the possibility of awarding this contract within the
UK, hopes have been raised and dashed countless times over the
past few years. Does the Minister agree that the UK’s post-Covid
industrial recovery strategy must weigh up the benefits of
enabling some 6,500 skilled jobs in the shipbuilding industry
against the long-term damage to people, local industries and the
wider economy of losing those jobs? Will the Government support
retention of shipbuilding by awarding these contracts within the
UK?
(Con)
Like the noble Baroness, coming from Scotland, I am well aware of
the significance of shipbuilding to Scotland, not least to our
communities on the Clyde. The process has been put in place to
proceed with the three new fleet solid support ships. Making them
exempt from the EU procurement regulations will put us in a
position to make informed decisions as to the approach that
represents the best chance of success while realising our
ambition to bring shipbuilding home.
(Non-Afl)
As we leave the European Union, will the Minister agree that,
when it comes to building military assets, British workers and
British companies are perfectly capable of delivering what is
needed and they should be given all orders?
(Con)
I think the noble Lord is being slightly mischievous in his
question and understands that I cannot make a specific response
in the way in which he would desire. What I can say is that the
Government are well aware of the significance of our indigenous
UK shipbuilding capacity. We are engaged in a process in respect
of the three new ships. As I said to the noble Lord, Lord West,
the criteria for assessing the bids will be produced in
accordance with Her Majesty’s Treasury guidelines, seeking best
value for money.
(Con)
My Lords, while we are talking about value for money to the
taxpayer in defence spending, I am sure that my noble friend
noted the immensely valuable and highly effective work done by
the Armed Forces in this coronavirus crisis, particularly with
the Nightingale hospitals and in testing. When she goes to
various discussions about the security review, can she note that
we need a large defence budget and a large pool of manpower to be
effective in cases such as this?
(Con)
My noble friend will be aware that the integrated review, which I
think is the review to which he refers, is concerned with the
broad and difficult question of what threats we face and whether
we have the capability to meet them. That is the question which
has to be resolved by the review process. The Government are
acutely aware of the significance of defence to the United
Kingdom. He is absolutely right: the MoD has played a proud and
effective role in supporting our public agencies and other
entities during the pandemic.
(LD) [V]
My Lords, the Minister has twice referred to the Treasury
guidelines on procurement, but the other area where the Treasury
is hugely important is in agreeing the size of the defence
budget. We have had a Budget postponed this year. Is she
confident that the resources will be there for three support
ships?
I reassure the noble Baroness by reminding her that this
Government have a proud record in relation to our commitments for
budget to the MoD. We had a clear manifesto commitment to
continue to exceed the NATO target of spending 2% of GDP on
defence as well as to increase the budget by at least 0.5% above
inflation every year of this Parliament. As she is aware, we are
the largest defence spenders in Europe and the second-largest in
NATO.
(Con)
[V]
When a ship is built, we immediately look at the hull and
structure. Steel is vital to the UK’s manufacturing industry.
Does my noble friend the Minister agree that this is also about
retaining capability of repairing sophisticated, highly technical
ships? What support is being given to recruitment in technical
apprenticeships, which are critical to our continued sovereign
capability?
(Con)
I am pleased to say that, broadly speaking across the UK, defence
supports more than 300,000 jobs in the private and public
sectors. I know at first hand that a number of them include
modern apprenticeships. I have met some of those apprentices, and
they are not just a tremendous advertisement for the talent,
particularly among youth, within the country but a tremendous
reassurance about the continued provision of skills to our
essential industrial partners.
(Lab) [V]
On 5 November, it will be one year since the Government suspended
competition for building the fleet solid support ships. Sir John
Parker, who wrote the review of the implementation of the
National Shipbuilding Strategy, recommended at the time that
“UK-only competition should be considered for future
defence-funded vessels.”
Have the Government accepted Sir John’s advice? Will they get on
with the job, or will the words “dither and delay” as well as
“incompetent” come to mind whenever people speak about this
Government?
(Con)
I feel slightly wounded by the noble Lord’s charge; I shall try
not to take it personally. Of course, there was disappointment at
the paucity of interest when the contract was originally put out.
I think that it is now recognised that there were perhaps reasons
for that. An internal review then carried out by the Royal Navy
was helpful in ascertaining exactly what the role of the fleet
support ships was to be and what they were meant to do,
particularly in relation to the carrier strike group. Based on
that review, we were able to make informed decisions as to the
approach that best represents what we need to make a success of
that support role. As he may be aware, the prior information
notice, which set out the details being sought, indicated that
there is a revised design for the ships. I am pleased to say
that, in response to that notice, there has been a very healthy
level of interest.
(Con)
My Lords, will the Minister confirm that in the new support ships
programme the overriding priority will be best value for the UK
defence budget? Might this involve giving orders to consortia,
including British and foreign companies working together? Has the
impact of any delay in delivery of new ships beyond the end of
the service life of Royal Fleet Auxiliary “Fort Victoria” been
costed?
(Con)
We are aware of the scheduled end of service for “Fort Victoria”,
which is in 2028. We are satisfied that we can make the necessary
arrangements to continue the support which will be required. On
delay, as my noble friend will be aware, the National Audit
Office has made it clear that it is too early to say what impact
stopping the original competition process might have on the entry
into service of the fleet solid support ships. We will seek to
mitigate any delay, and we shall certainly assess—as we are
currently doing—the interest of those parties which have
responded to the prior information notice process. We hope to
proceed to make further information available to Parliament on
the procurement strategy.
