The saving of Arnish and Methil yards is Labour government in action

I dropped into Arnish fabrication yard near Stornoway yesterday for a chat with the general manager, Albert Allan, the islands’ MP, Torcuil Crichton, and union representatives for the 170-strong workforce. It was a happy place and the sun even emerged from the clouds.

Arnish is one of four yards which form the Harland & Wolff group that is to be acquired by the Spanish state shipbuilder, Navantia. This offers massive potential for Arnish and also, I hope, Methil – the two former BiFab yards – but the story would have unfolded very differently, without a change in government.

It’s an interesting parable about how politicians who care enough can make the difference. In this case, great credit is due to Jonathan Reynolds, Secretary of State for Business and Trade, who has been at the centre of UK Government negotiations with Navantia. By happenstance, he knew enough about Arnish to influence his approach.

During the general election campaign, Mr Reynolds wanted to campaign in the four corners of the country. So he offered a visit to the Western Isles and, of course, Torcuil took him to Arnish where Harland & Wolff’s problems were becoming apparent but had not yet come to a head.

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‘Unsustainable’ debts

Harland & Wolff in its recent manifestation was a seat-of-the-pants job. An entrepreneur, John Wood, bought the Belfast yard from administration in 2019 and thus acquired its famous name. He then attached it to three other distressed assets – Appledore in Devon and the two former BiFab yards.

This created, opportunistically, a network of strategically placed yards round the UK coast. It might have worked. They won contracts, including a Ministry of Defence order to build Fleet Solid Support Vessels, in partnership with Navantia. However, Harland & Wolff finally ran out of money just in time for the general election.

The first-day brief on Reynold’s desk told him the company’s debts were “unsustainable” and an injection of further public funds would be “deeply irresponsible”. I’m pretty sure it would also have advised him to focus negotiations with Navantia on the Belfast and Devon yards where the MoD work was to be carried out.

But by then he knew first-hand about the potential of Arnish, the quality of its management and workforce. So, from day one, the government’s position was that a deal must cover all four yards. Whatever Navantia might have thought of that initially, they became willing converts after the same experience of visiting a yard they had never heard of, on the edge of Europe.

A strategic asset

Thus it became possible for Mr Reynolds to tell the House of Commons on Thursday: “Thanks to the deal that has been announced, workers in Belfast, Arnish, Methil, Appledore and right across the country can be confident that the government are squarely behind them.” It is the best possible outcome, certainly for Arnish.

Apart from the value of personal ministerial experience being applied to political outcomes, there are lessons to be learned from the Arnish experience. First, it is a reminder of how important it is for public bodies to take investments risks, not just for the short term but also the legacies they create. It is 50 years since the Highlands and Islands Development Board first invested in Arnish as a strategic asset, at the time of the early oil boom.

Over the decades, the yard has had plenty ups and downs but something that does not exist cannot be brought back to life. It’s the same story at Nigg, Kishorn, Methil and other locations where infrastructure created in the 1970s continues to be crucial for our industrial prospects in the renewables age. To maximise these opportunities, we now need the same bold approach to investment – public and private – to ensure that capacity exists.

Once-in-a-lifetime opportunity

This test was failed in the onshore wind phase of our energy transition. Instead of it becoming the “second industrial revolution”, as Alex Salmond once promised, it turned into a massive anti-climax because the ground had not been laid for a supply chain and infrastructure which matched developers’ demands. Before they could be created, the vast majority of the work had gone overseas.

If the same is not to happen again, on a much larger scale, then there has to be far more attention paid to the sequence of events. Already, a lot of the high value work is being awarded to foreign companies because our own supply chain is not ready to meet the demands. Huge cable contracts, for example, have been awarded to Italian companies.

For developers who probably want to send the work abroad anyway, the perfect rationale is that the 2030 carbon emission targets must be met. It is another reason for being sceptical about the priority placed on targets rather than maximising the benefits to the UK, and particularly Scottish, economy from what really is a once-in-a-lifetime opportunity for industry and jobs, even if that takes a little longer.

Politicians who care

Again, Arnish illustrates the need for this more balanced approach. Half a century on, there are plans for a second phase of the site’s development to create an offshore renewables hub that can handle much larger contracts than is possible at present. Assurance now that this infrastructure will be available before contracts are placed towards the end of the decade is far more important than that 2030 hostage to fortune.

The same story can be told around the country. There is a huge challenge to get all of this right and a rush to meet targets must not frustrate the greater good of ensuring as much of this work as possible stays in the UK.

So let’s celebrate the good news for Arnish and Methil – and look forward to more of the same from politicians who care enough to make a difference.