Paris Gourtsoyannis: Future of shipbuilding remains unclear

It's hard not to have your imagination fired by the awesome image of a floodlit HMS Queen Elizabeth squeezing under the Forth Bridge. At a cost of £3.1 billion and without a full complement of jets to fly off its deck until 2023, the Royal Navy's next flagship may be a white elephant '“ but as a feat of engineering, it can't fail to impress.

The UK new carrier set off for sea trials in what was on the surface a good week for Scottish shipbuilding. On Sunday, the Ministry of Defence confirmed the signing of a £3.7bn contract to build three new Type 26 frigates on the Clyde, safeguarding 1,700 high-skilled jobs in Scotland.

It is worth remembering that both milestones were until recently in doubt. It was an open question until after the 2010 defence review whether both carriers would be completed, let alone see active service, and unions had sounded the alarm over the future of jobs on the Clyde as the Type 26 programme was cut from 13 vessels to eight.

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Despite the good news, however, it would be a mistake to greet the events of last week in the same way as the sight of a 70,000 tonne aircraft carrier manoeuvring itself out of the Forth – and be overawed.

Confirmation of the Type 26 contract brings a measure of relief to shipbuilding unions on the Clyde who had warned that engineering skills could be lost to the UK forever if there wasn’t a steady flow of work to sustain jobs at Govan and Scotstoun.

It also means the UK government can finally say it is delivering on the promise made in the run-up to the 2014 independence referendum, that the Clyde shipyards would see new investment and workers would have their jobs secured. There will be a generation of boys and girls finishing school on the west coast for whom the announcement means a highly-skilled, well-paid job on their doorstep. For some, it will open the door to the world.

But shipbuilding in Scotland isn’t out of the shoals yet. There remain serious question marks over future investment in new naval surface vessels, the quality of kit that investment produces, and whether it is being directed in the right way.

Thanks to the interruption of the election, the UK government has yet to produce a National Shipbuilding Strategy in response to a review by Sir John Parker in November. Military procurement tends to attract attention only when it is tragically costing lives rather than merely wasting treasure, so Sir John’s report got little public attention, but some of its conclusions were damning, and its recommendations could have a big impact on the industry in Scotland.

Capacity for new combat vessels, both in terms of the money to pay for them and the shipbuilding infrastructure to build them, is sorely lacking, Sir John said.

The result is that the Royal Navy is forced to extend the lives of existing ships “well beyond their sell-by date”, and is trapped in a “vicious cycle” of falling further behind in ordering more expensive vessels to update the fleet.

Perhaps unsurprisingly for a former chairman of engineering contractor Babcock, Sir John says part of the solution is to reverse the recent trend in concentrating military shipbuilding in the hands of one company, BAE Systems, and in one area, the Clyde.

Unions in Scotland have spoken of a “betrayal” if the outcome of the Parker review is to reverse that trend and spread contracts across the country, with greater use made of the modular construction that has seen the Queen Elizabeth-class carriers assembled at Rosyth.

Holding on to orders and keeping business flowing means holding costs down – which is why workers on the Clyde should be worried about what’s going on with the frigates they’ve just been contracted to build.

Why has the cost of Type 26 programme risen from £250-350 million per unit to the £1.2bn confirmed this week? That is more than the £1.05bn for each Type 45 destroyer, a larger vessel fitted out predominantly with new, cutting edge systems – whereas the Type 26 will borrow technology, including its propulsion, air defence and sonar systems, from other vessels, including in some cases the 30 year-old Type 23 frigate class it is intended to replace.

The MoD says it has only signed for the first three new frigates to ensure costs and delays are kept to a minimum – but as Brexit takes hold, further penny-pinching could bite, as it did in the development stages of the Queen Elizabeth carriers.

Even if the MoD delivers on every planned vessel currently in the pipeline, experts have warned it is questionable whether UK can sustain what’s left of its shipbuilding industry with domestic demand. The Parker review highlights the need to find more overseas buyers for UK-made warships, but Canada, which is shopping for new frigates, has reportedly balked at the Type 26 because of rising costs and the fact none have made it off the drawing board.

Naval power is coming into its own again, whether in fighting piracy in the Indian Ocean, catching people smugglers in the Mediterranean, or confronting assertive powers in China and Russia. The UK needs to be equipped for the task. Yet when the Russian aircraft carrier Admiral Kuznetsov steamed through the English Channel last year on its way to support the Assad regime, US and Canadian maritime patrol aircraft were called on to provide air surveillance, thanks to the scrapping of the Nimrod fleet.

The latest defence review in 2015 acknowledges the growing threat from Russia, but makes no mention of the High North, the critical wedge of sea between Scotland, Iceland and Norway that was the Cold War window through which Soviet naval power was projected.

The Royal Navy needs the right kit, at the right price – and the shipyards to build it. The next few years will determine if the UK can maintain all three.