DEFENCE – NATIONAL SHIPBUILDING STRATEGY – 11 July 2019
Chris Stephens: ... After four years in this place I am starting to believe that it is the Treasury that makes the Defence decisions, not the Ministry of Defence.
Dr Lewis: Definitely.
Mr Stephens: Apparently the Chair of the Defence Committee agrees.
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The Parliamentary Under-Secretary of State for Defence (Stuart Andrew): ... I have heard a number of people say that the FSS are warships, and that no other country in Europe buys its support ships or other ships from international orders. That is not quite true: for example, Germany had an international competition for its multi-purpose frigate, Norway has procured a support ship from South Korea and five frigates from Spain, Australia has had two support ships from Spain, and New Zealand has an auxiliary ship from South Korea. It is not true to say that all those countries always have their ships built in their home countries.
Dr Lewis: What the Minister says is completely correct. The question is not so much whether countries choose to do this but whether they have to. In the case of Germany, its expenditure on Defence is notoriously a much smaller proportion of its GDP than ours is of ours, so it is probably doing it for the same sort of reasons. That does not make it the right policy.
Stuart Andrew: I will come on to my right hon. Friend’s comments. He talks about funding, which is absolutely the heart of the issue. With a very challenging budget, we must ensure that we get the maximum capability possible for our Armed Forces at the best value. I must say that in the past, international competition has proved very successful; on the MARS tankers, it saved a considerable amount of money. We want to go for two of the ships on the FSS with the option of a third.
Dr Lewis rose –
Mr Jones rose –
Stuart Andrew: I will give way to my right hon. Friend, but there will be a fixed budget, and we must get the best we can out of that money.
Dr Lewis: I fully understand the logic of the Minister’s position, but it just goes to what I was trying to convey in my speech: it is a question of short-term savings that will show up in an annual budget, compared with medium to long-term costs when the time comes that we want to build other ships and we find that we have lost our industrial footprint to some extent and have to reconstruct it. I acknowledge that that is the dilemma that he faces.
Stuart Andrew: I am grateful for the point that my right hon. Friend makes. That is the balance we are struggling with at the moment; I will be completely up front about that. It will probably be helpful if I go on to talk about what my right hon. Friend the Secretary of State has said. In the speech that she gave to the Royal United Services Institute, she was quite right to say that we needed to look at where we could explore changing policy so that the UK could at least have the choice, if it so wished, to just build in the United Kingdom.
A tremendous amount of work is going in to reviewing the national shipbuilding strategy. We have Sir John Parker’s comments and of course we are taking stock of those. My right hon. Friend asked for a review to learn the lessons from the MARS tankers, so that we can feed them into potentially changing the policy, but I assure hon. Members that all that, and all the debates, meetings and questions I have had, is followed through.
Dr Lewis: Will the Minister give way?
Stuart Andrew: I had better give way to the right hon. Member for North Durham first, and then I will come back to my right hon. Friend.
Mr Jones: On the MARS tankers, when the Minister is asking for the costings, could he ensure that the costs of the assessment phase, which I think were nearly £100 million, are included? I am also led to believe by industry that some of the costs were incurred because of the poor workmanship and other issues that surrounded it, so what was seen, on ticket price, to be very competitive was overall quite expensive.
Stuart Andrew: I assure the right hon. Gentleman that the report we commissioned will look at every single aspect of that, including the benefit to the supply chain in the United Kingdom. There is some evidence that a number of UK supply chain companies have seen their international work increase as a result of being part of that. We are formulating our response to the review of the strategy.
Dr Lewis: The Minister is being amazingly kind. I really appreciate it. Let me put this sunny scenario before him. Let us imagine that the wishes of the Defence Committee come true and the Defence budget is restored to 3% of GDP, as it was right up until the middle of the 1990s, quite a few years after the end of the Cold War. Will he at least acknowledge that if there were an uplift in the Defence budget, spending some of that extra money on securing the shipyards and the Defence-industrial footprint, even if that sometimes meant that we spent more than we might spend in the short term if we contracted with an overseas builder, would be a sensible strategic decision?
Stuart Andrew: Again, that is part of the work that the Secretary of State is looking at, so that the United Kingdom can make a choice on those options. Of course, that will require more money. We have to accept that. I look forward to right hon. and hon. Members securing similar debates, so that Treasury Ministers can answer those questions.
Dr Lewis: They never do. They always try to put it back to you.
Stuart Andrew: The next time it comes to me, I will push it back, so that hon. Members can challenge that. We can make strategic decisions, but we are governed by the rules of the Treasury Green Book, which we obviously have to follow. The debate on that is a wider debate that we need to have.
[For Julian's speech in this debate click here.]