Clydeside loses out to South Korea to build £½bn Royal Navy tankers

A model of one of the tankers ordered by the MoD
A model of one of the tankers ordered by the MoD
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A CLYDE shipyard has been snubbed over a £452 million contract to build four tankers for the Royal Navy, raising question marks over claims of the UK defence dividend for Scotland.

Tory Defence Secretary Philip Hammond has rejected the bid led by an Italian company which would have seen the ships built in BAE System’s Govan yard and instead agreed a contract for them to be built in Korea.

The work would have filled an important gap in the UK shipyards’ work programme between the new aircraft carriers and Type-26 frigates.

The GMB union attacked Mr Hammond, claiming he “had form in letting down British workers”, after he chose a German firm instead of Bombardier in Derby to build the Thameslink train when he was Transport Secretary.

However, in the case of the tankers, defence contracts are not governed by international competition law, which means Mr Hammond could have favoured domestic over foreign bidders.

The controversy has significant implications in the independence debate, as critics of the SNP have claimed independence would result in a loss of work, since the MoD would not award contracts to a foreign country.

Last night, the SNP said the problem with the tankers contract was not only the fault of the Tory/Liberal Democrat coalition but also of the last Labour government, which decided not to make it a protected contract for domestic shipyards.

SNP defence spokesman Angus Robertson said: “After months of scaremongering over the prospects for Scottish shipyard jobs post-independence, it is now clear that it is the UK, right now, that is creating uncertainty for the future of the sector.”

However, Labour said that the tankers were not warships which are built in domestic shipyards and would not be awarded to Scottish yards if it was a foreign country.

Labour’s shadow defence secretary Jim Murphy demanded the tankers contract was revisited.

He said: “The one thing keeping shipbuilding on the Clyde afloat is work on Royal Navy warships. It is a real let-down for the Clyde that these tankers are going to be built in South Korea. This is a real snub.”

However, ministers insisted that BAE was not listed on the losing bid led by Trieste-based company Fincantieri.

Defence Equipment Minister Peter Luff said: “The fact is that no British company entered a final bid. The Fincantieri bid did not contain any mention of BAE Systems involvement and BAE have themselves said they don’t know the costs of building one of the ships in the UK.”

But sources at BAE and the GMB have confirmed they were approached by the Italian company and “it is likely” the tankers would have been built in the Govan yard. BAE privately also confirmed it had the capacity to do the work there.

A leaked letter from Fincantieri’s chief executive Giuseppe Bono to Mr Hammond has also suggested that at least one of the £125 million tankers would have been built in a British yard.