Davidson’s Choice: State or People

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By Derek Bateman

The shock that greeted Ian Davidson’s infamous remark about naval shipbuilding contracts containing a break clause in the event of independence shouldn’t have come as a surprise.  He was already considering this nearly a year ago, on December 19 during evidence to the Scottish Affairs Committee.

In questioning the minister for defence equipment, support and technology Philip Dunne and Vice Admiral Andrew Mathews, Davidson expressed surprise when the witnesses failed to answer emphatically his question about naval contracts being withheld from Clyde yards (and Rosyth) after “separation.”

The MP became a little irascible when the minister declined to be specific about the date for making the Main Gate decision on the new Type 26 frigate.  Davidson tried to tie the decision into September 2014 but Dunne told him: “You not going to be able to persuade me to be more specific…”

Davidson: “I mean 11 and 12 are at the beginning of the decade and 18 and 19 are at the end of the decade.  Is 13 at the begining or in the middle of the decade?”

The minister goes on to say that it is likely that the placing of a contract (for Type 26) will already have taken place by the time Scotland theoretically achieves independence in 2016.

Davidson: “So the placing of the contract for the 26 might have taken place after the referendum but before separation took place in that timetable.  Would it be your intention to have a for-convenience clause in some way, so that if an order is placed and the company puts it on the Clyde, in the event of separation that the order is switched elsewhere?”

Dunne: “I’m not going to speculate on what the terms of the contract will be at this stage….” He adds; “The date of the referendum is not influencing the date of the placing of the contract for the type 26.  That is being determined by the maturity of the design and that is being driven by the defence operational requirements, not the political requirements of the Scottish Government.”

If he’d added: “…and you can pull that down tight over your baldy heid, ya wee bag o’ wind”, it would have encapsulated the moment neatly.

However hard Davidson tried, he couldn’t shake the gentlemen from the MoD into giving him his headline – that defence contracts for warships on the Clyde would definitely end if Scotland voted Yes.

Indeed a closer read of the oral evidence suggests that today’s announcement ending shipbuilding on the south coast confirms Royal navy plans to use the Clyde as its main construction centre – irrespective of independence.  Vice Admiral Mathews points out that the business agreement (TOBA) between the MoD and BAE was designed to create “a sustainable shipbuilding capacity in the UK to build type 26 frigates…the purpose was to rationalise the business. 

We wanted BAE Systems to be a high performance yard when we got to Type 26.  We wanted them to have reduced their overhead.  The deal is predicated on them coming down to the equivalent overhead of one complex warship-building yard.  It is for them to decide how they achieve that, whether it is with two yards building in Portsmouth and on the Clyde, or one yard.  That is their decision.” And now we know – it is one yard – on the Clyde.

Then the Vice Admiral rather gives the game away when he says it is for the company – BAE – to say where frigates will be built.  The government has to approve it but since BAE will have reformed its entire defence business model around the Clyde – at the government’s behest – there would be uproar if the UK said No Thanks.  Where else could they be built with Portsmouth facing construction closure?

And of course, never far away is the commercial reality.

Mathews: “We have to decide how we get the best place in terms of best value for enterprise between the carrier (the current orders) and the Type 26 programme.”

Davidson: “Yes, but the best deal could then result in the ships actually being built on the Clyde and potentially outside the United Kingdom.”

Mathews: “I think that is absolutely the case.  It depends on the outcome of the referendum and the timing of the Type 26 order.”

Davidson: “Let me be clear.  Are you saying – and this is new – that it might very well be the case that if the order is placed and Scotland becomes separate, the order would continue in the Clyde for the entire run of 13 Type 26s?”

Mathews: “What I am saying is that that is one of the options open to us…”

Without making any commitment either way the men from the ministry totally failed to provide the committee and its dogged chairman with the headline they wanted, although that didn’t stop them.  They simply got others to deliver the No Contracts quotes.

But I think this evidence is revealing, first because it shows there is a complex web of interests and billion-pound contracts here which have to take account of the privatisation of defence procurement so the MoD – and therefore the politicians – don’t actually have total control at all.   If BAE say the work must be done on the Clyde, it will be done on the Clyde.  It will be for the political class to sort out any security issues, which I think will evaporate under the heat of financial necessity.

After all, how would the new Scottish Government deal with it? Offer the MoD and BAE a cordon sanitaire around the physical base and relinquish all rights to the intellectual property in the design and technology.  It’s not as if we’re South Korea or Singapore. 

Even after a Yes, we will still be Scots, family and neighbours, sharing so much with the rUK and the Clyde workers are already doing the job any way.  (They will of course still be foreigners to Davidson and Margaret Curran.  Maybe they’ll go to the yard and tell them that.)

Here’s the other thing.  We will have our own defence needs and it could be that the Clyde yards will be busy building Scotland’s own new fleet by the time the MoD gets round to placing that frigate order.  My advice is to get in quick, lads before it’s too late.

Courtesy of Derek Bateman