Shipbuilding scares challenged as it emerges MoD awarded half billion pound contract to ‘foreign country’


By Bob Duncan
Claims that an independent Scotland would automatically be denied shipbuilding contracts from the remainder of the UK have been called into question after it emerged that MoD contracts worth up to £500 million have already been awarded to foreign bidders.
A half billion pound contract to build four British navy tankers was awarded in February this year to a South Korean company, despite a bid from BAE System’s Govan based yard (pictured).

The latest claims from anti-independence parties have been described as “scaremongering” by the SNP’s Westminster Leader Angus Robertson who insisted that the skills base in Scotland would ensure that contracts continued to be won.

The story was initiated by a Downing Steet spokesman who said: “The reality is that in 50 years, Britain hasn’t built a warship outside the UK.  That is a fact.

“Distinction has to be made between contracts already in the pipeline and those further down the line.  Separation is not just for a five-year term.”

The story was given a high profile throughout the Scottish media.  The Scotsman newspaper claimed yesterday that an independent Scotland “will lose all its Royal Navy contracts, putting 16,000 jobs at risk along with the country’s entire shipbuilding industry.”

According to the author of the article, David Maddox, the assertion is backed up by a Downing Street spokesman who stated: “No British warship has been built in a foreign country for the last 50 years and we do not intend to start doing that now.”

However, in February this year the MoD announced that it was awarding a contract worth almost half a billion pounds to a South Korean company, Daewoo Shipbuilding and Marine Engineering, to build four of the next generation of British Navy tankers.

At the time, SNP Westminster leader and Defence spokesperson Angus Robertson MP said the decision was a blow for the domestic ship-building industry and “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.”

At the same time, Jim Murphy, MP for East Renfrewshire and Labour’s Shadow Defence Secretary 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, Newsnet Scotland has learned that it was actually the last Labour government which drew up the contracts for the four ships.  Critically, this was done without designating them as “protected” defence contracts which could have been tendered within the UK, as they would not then have been subject to EU competition laws.

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

Angus Robertson in summing up the situation, stated: “This tendering process began under the last Labour government, who must now explain why these massive contracts are being sent to South Korea.  With contracts for the fast jets going to France and the Royal Navy tankers going to South Korea people will be asking where is the Union dividend?

“And with UK decisions like this we must now have an end to the constant scaremongering by Westminster politicians who continually talk-down Scotland’s defence-industrial prospects.”

The awarding of the half billion contract to the South Korean company was widely reported by the Scottish media when it first emerged and undermines yesterday’s suggestion that UK shipbuilding contracts will not go to foreign countries.

Commenting on the these latest claims, Mr Robertson said: “The scaremongering of Tory ministers has been sunk again.  In reality, shipbuilders across Europe regularly get orders from other countries.

“France makes ships for Russia, and the UK has made frigates for Malaysia.  The Type 26 destroyer, now called the Global Combat ship, has attracted interest from countries including Australia and Canada.

“With independence, Scotland would have a healthy order book.  It is not the London government that makes the yards successful – it is the second-to-none Scottish skills base and technical expertise that brings orders to the yards, and that will continue under independence.”

The UK Government and the MoD has claimed that if the contracts were opened up to tender then Scotland would have to compete with countries like Turkey and Brazil – which, they claim would effectively price out Scottish shipyards.

The uncertainty claims by Unionist politicians was echoed last night by BBC Scotland’s Julie Peacock who, on Reporting Scotland, claimed that “uncertainty over the future of Scottish shipbuilding is bound to raise questions as we approach the independence referendum.”.