Buy British and head for the rocks


By George Kerevan

Time and again in political arguments about Scottish independence and the prospects for naval shipbuilding on the Clyde, we hear the following refrain: “For security reasons, Britain only buys ships for the Royal Navy from yards inside the UK. If Scotland votes to leave the UK, it therefore cannot expect naval orders from the rest of the UK. And that spells doom for shipbuilding on the Clyde.”

Variations on this proposition have been fired off like broadsides from Nelson’s Victory during this week’s row over the restructuring of BAE System’s shipyards. In response, the SNP has argued the legitimate case that BAE’s Govan and Scotstoun yards, where the latest Type 45 destroyers were built, is the only logical place to construct the Royal Navy’s Type 26 frigates. BAE thinks the same, which is why it preferred to end shipbuilding at Portsmouth rather than lose the Clyde facility.

Sadly, in the heat of the referendum debate, logic is unlikely to win the day. Already we have had Ian Davidson, the irascible Labour MP whose constituency includes BAE’s Govan yard, demand a “break clause” in any contract for the Type 26 under which construction would automatically revert back to the UK if Scotland votes Yes next September. Why Mr Davidson wants to play Russian roulette with his constituents’ jobs is for him to defend.

Nevertheless, there is a risk that independence might lead to the rest of the UK ceasing to order Royal Navy ships from the Clyde – even if it cuts off England from its traditional, competent suppliers.

However – and here is my point – the UK’s go-it-alone naval building strategy is not fit for purpose in the modern world. Regardless of next year’s referendum, the Ministry of Defence’s failure to promote a multilateral approach to naval ship procurement is the very strategy that has isolated BAE Systems from gaining significant export orders.

Such an approach has long been abandoned in the aerospace industry, where everyone knows that building hugely expensive combat aircraft demands an international joint effort. Going it alone in developing aircraft ratchets up the costs to a degree that it makes the final aircraft insanely expensive. Result: you don’t export many planes. Worse, they are too costly even to buy for your own air force except in tiny numbers. That is why aircraft for the RAF – Jaguars, Tornados, Typhoons and now the F-35 Lightning for Britain’s new carriers – are joint European and American projects.

Alas, this sensible policy has not been followed in the UK naval procurement. Result: the mega cost of new warships – which are floating computers stuffed with rockets – has expanded beyond what the UK can afford on its own. That is why the modern Royal Navy resembles a flotilla rather than an armada. Besides starving our naval shipyards of orders, it leaves Britain’s sea lanes poorly defended.

The Admiralty’s insistence on buying two expensive aircraft carriers we don’t need has reduced the Royal Navy to a rump. Aside from assault ships and coastal patrol vessels, the navy has a mere 19 combat destroyers and frigates in its surface fleet. With two out of three ships in dock or training, that leaves a handful to meet operational emergencies. Scotland’s coastal waters – with their oil platforms and fishing vessels – are thus vulnerable.

Take another example: the Type 45 destroyer that is supposed to provide anti-aircraft defence for the fleet. Originally the MoD planned to build 12 Type 45s but cost over-runs have reduced this to six. With a price tag of £1 billion each, we won’t have enough Type 45s to protect the carriers. Had they been cheaper, BAE’s Scotstoun facility would still be churning them out today.

There’s more. In October 1999, the UK unilaterally pulled out of the tri-national Project Horizon to build a fleet air defence vessel. Our spurned partners, France and Italy, were left to go it alone while the UK designed the Type 45. Since then, Franco-Italian warship co-operation has blossomed. To date, 17 of the Franco-Italian FREMM class multi-purpose frigates have been launched or ordered, including exports.

FREMM is the main competitor for Britain’s as yet unbuilt Type 26 in the global marketplace. But the Type 26 is probably too late to catch the French and Italians. Design of the Type 26 has still not been finalised. This signals another problem with Britain’s dysfunctional approach to naval procurement. UK warship design is tied too closely to the restricted demands of the Navy’s admirals, who still think they rule the waves. As a result, Britain’s naval shipbuilders are disadvantaged in export sales because they lack a flexible product at the right price.

Each Type 26 is supposed to cost between £250m and £350m, a quarter to a third of the Type 45. However, the experience with recent UK warship design – especially the new carriers, which have doubled in price – suggests the final bill for the Type 26 will escalate because of MoD interference. That will kill exports.

Also, foreign governments now insist that some of the warships they order from abroad must be built locally, or have local equipment installed. Damen, the Dutch builder, constructs its frigates in modules, so bits can be fabricated by the importing country. Unlike BAE, Damen is exporting hand-over-fist to Asian navies. The MoD’s exclusive “buy British” policy tells the world we don’t believe in commercial reciprocity.

Paradoxically, Clyde yards in an independent Scotland can escape this policy debacle. As well as building for unmet Scottish needs, there is a huge potential for developing European joint ventures, given the Scotstoun yard’s world-class technical expertise.

Reality is catching up with the Admiralty – though too slowly to help BAE’s workforce. The new carriers have Finnish diesel generators and Dutch-designed radar, suggesting that any post-independence veto on buying Scottish would be political spite rather than military or commercial sense. Ian Davidson please note.

Courtesy of george Kerevan and the Scotsman