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Analysis: UK naval shipbuilding

30th November 2016 - 10:30 by Tim Fish in London

Analysis: UK naval shipbuilding

Too little too late

There are some great recommendations from Sir John Parker in his independent report about the UK naval shipbuilding industry, all of which make a lot of sense. However most of it is likely to fall by the wayside.

His UK National Shipbuilding Strategy basically says that there should be proper advanced planning and governance by the British Government and the Royal Navy with more involvement of commercial shipbuilders so that this will allow costs to be controlled. Great idea, unfortunately the government, navy nor industry is really capable of doing this.

First of all, the concept of a long-term plan for anything is pretty alien to the UK, just look how long the decision to opt for a new runway at Heathrow took and there is still no plan to meet Britain’s long-term energy security needs.

The only example I can think of is the London 2012 Olympics, which was seven years in the making and with massive cost increases. Parker is suggesting a 30-year shipbuilding plan with an associated fixed budget. 

Secondly the Royal Navy needs to have a set idea of what it wants from its ships. It has consistently gone for the most expensive, high-end warships it possibly can and they keep changing the requirements as they go. Going for a cheaper warship designed for export is anathema to them. In some ways they can’t help it, they have to secure the navy’s budget vis-à-vis the Army and RAF, so to change this culture in a military service would be a big ask.

Thirdly, you are asking BAE Systems, the sole large complex warship builder left in the UK to give up prime contractor work on the new Type 31 light frigate to commercial rivals. Parker has called for the Royal Navy to maintain existing frigate and destroyer number via an ‘urgent and early build’ of Type 31 before Type 26 has been completed? I am sure BAE will agree with Parker’s recommendations in public, but will then go about trying to secure the programme for themselves in all but name, that is business. 

Besides, who else is able to take this role on? Babcock, where Parker was Chairman from 1994-2000, is the only potential contender after integrating the Queen Elizabeth carriers but they have their limitations and that programme was hardly to cost and schedule. The other choice is to make a design authority the prime – like BMT. Parker seems keen on their Venator model.

Messy landscape

So really it is all too late. But what undermines any naval shipbuilding plan is the lack of ships on order. Just eight Type 26 and five Type 31 frigates barely enough to sustain a single national shipbuilder, never mind a wider naval industry. The UK MoD has had to order three new Offshore Patrol Vessels that the Royal Navy does not need and cannot crew at an inflated price just so that BAE can hold on to its engineers until the Type 26 programme comes on stream. Meanwhile it outsources construction of new Royal Fleet Auxiliary ships to South Korea.

The real opportunity was 20 years ago in the late-1990s when there was a large enough number of ships planned under the Strategic Defence Review of 1998 and there were still a range of naval shipbuilders that could have executed the kind of competition that Parker envisages. But Labour government policy in the early 2000s sought a single national champion and BAE emerged from the ashes. 

Indeed Sir John Parker was involved in this process as a non-executive Chairman of BVT Surface Fleet, which was a short-lived joint venture in 2008-09 between BAE Systems Surface Fleet Solutions in Glasgow and VT Shipbuilding in Portsmouth, before the latter was sold to BAE by parent VT Group. The shipyard in Portsmouth was later closed.

It meant that when the UK MoD and BAE Systems disagree there was nowhere else for the government to go and with cost increases the number of ships to be built under SDR was scythed down. 

Since then the Strategic Defence and Security Review in 2015 merely attempted to reverse the SDSR’s 2010 review’s awful decisions and paper over the holes in the service. There has been no real change in defence policy and as the Defence Committee has made clear, the claims of spending 2% of GDP on defence are basically fiction and it is a poor marker anyway.

So the National Shipbuilding Strategy will fail simply because the government will not spend any more money on defence and the navy. But the crux of it all comes to his statement: ‘If necessary, wider government financial support should be provided to allow early build of the vessel.’ Well it will be necessary, but the government won’t be convinced to cough up more cash in advance.

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