Critique of the proposed HMG/MOD National Shipbuilding Strategy (NSbS)

Following on from a recent House of Commons Briefing Paper on UK National Shipbuilding Strategy (focussing upon Complex Warships for the RN), DS delved more deeply into the Terms of Reference (TOR’s) that MOD produced. What we found was that the TOR’s for Sir John Parker are too narrowly focused on ‘complex warships’ to be meaningful. Although the task is headed ‘National Shipbuilding Strategy’ it is likely only to produce a parochial MOD solution to one element of a much more complex puzzle. We have no doubt that Sir John will do his absolute best but what he is unable to control is the underlying flaw in the task he has been given – no overarching national strategic direction. National Strategy must inform Industrial Strategy which itself can then inform National Shipbuilding, Defence Industrial and Complex Warship strategies and this level of complexity requires cross government cooperation between FCO, BEIS, MOD, International Trade, Home Office and the Treasury. This DS short critique highlights some of the more fundamental flaws in a National Shipbuilding Strategy, that by definition only focusses in on Royal Navy ‘complex warships’, excluding the wider national and international aspects that are essential to inform a comprehensive strategy review.

The recent publication of the House of Commons Briefing Paper (HoCBP) on the Royal Navy’s (RN) new frigates (FF) and a United Kingdom National Shipbuilding Strategy (UK NSbS) was a timely reminder of the need for coherence and ambition in UK national shipbuilding thinking and future direction. However, if Sir John Parker’s study and output mirror the thrust of the HoCBP, and the narrow study Terms of Reference (TORs), the UK will likely not benefit from this approach which will threaten the UK’s naval, and wider, ship building capacity and allow capability to continue to wither on the vine, eventually becoming unsustainable.

For a UK NSbS to effectively develop it must be able to transcend legacy policy and thinking. To do otherwise will merely constrain Sir John Parker to work within current constraints, practices and orthodoxy. It will ‘situate the appreciation’. For that reason DefenceSynergia believes that any review of UK NSbS must take into account the full spectrum of UK shipbuilding (not just complex warships) and the panoply of UK commercial businesses that support such an enterprise – components, steel manufacture, software, energy costs and maritime architecture. In addition it must be recognised that no UK NSbS can possibly work, however heartfelt the aspiration, if hull numbers over time (the drumbeat of work) is not taken into account alongside the number of competing contractors (indigenous or otherwise) in the shipbuilding business.

The HoCBP referred to analysis of the shipbuilding industry by the Daily Telegraph which identified competition from Asia, low productivity and a strong pound as causing the commercial shipbuilding industry to decline to “a shadow of what it once was”. However, it noted that the leisure and luxury and the maintenance and repair sectors remain buoyant. As the Ministry of Defence (MOD) appears to rely upon a single primary shipbuilder (BAE Systems) DS assumes the same scenario for the UK naval shipbuilding industry where UK options have reduced over the same period leaving a monopoly/cartel approach that has significant leverage over the MOD’s ability to innovate and drive cost effectiveness.

The number of shipbuilders in the UK has declined to a point where any effective UK NSbS will be a hostage to fortune unless this disadvantageous situation is remedied as part of the review process. But in making his recommendations, Sir John, must not be hamstrung by such a paucity of hull numbers that competition, even if permitted, is not commercially viable. To that end the RN fleet size is a critical enabler for a viable UK NSbS. With only 13 FF hulls to be delivered at a rate no greater than one per year from 2023 one could be forgiven for being sceptical that this is sufficient to formulate a UK shipbuilding strategy that is too much different from what we have now. The knock on effect – now that T26 FF main gate decision has been pushed to the right – is that the ‘drumbeat’ offered will create gaps in an already depleted FF force.

The restrictive mantra that ‘complex warships can only be built in UK’ must be challenged and/or qualified. If the intent is for UK to retain indigenous capability to build RN warships then it is incumbent upon government to acknowledge that this can only be achieved if the numbers of hulls ordered annually meets commercial viability criteria. Such a policy should not be so restrictive that friendly foreign involvement and competition is dismissed out of hand. Having a single monopoly UK supplier of warships has not always offered best value for money when considered against foreign warship design and build – the T26 having a price tag more than twice that of similar frigates being built and sold from European yards.

A UK NSbS must embrace all UK shipbuilding across the many disciplines, should cross pollinate experience and expertise, embrace new thinking from requirement setting, concepts, design and through-life governance and embrace, not exclude, the global market. The professional advice of the UK commercial ship construction, leasing and purchasing sector must be included in Sir John’s TOR mix or valuable current experience will be missed.

However, the Terms of Reference for Sir John Parker are too narrowly focused on ‘complex warships’ to be meaningful. Certainly the task is headed ‘National Shipbuilding Strategy’ but because the government works in silos, through too many disparate departments, the danger is that what will be produced will be a parochial MOD attempt to solve one element of a more complex puzzle. For example: An NSbS should include other government department ship orders (Patrol Vessels for Border Force, Police, etc) to push more orders through UK shipyards and create opportunities for exports with coastal nations having to deal with similar maritime security issues. It must constrain ‘specification creep’ in MOD to ensure UK ship specifications are orientated to be attractive to overseas customers and internationally price competitive to bring export orders to UK shipyards that add volume and keep UK shipyard’s sustainable and shipbuilding skills honed, revitalised and enhanced.

Sir John will do his absolute best but what he is unable to control is the underlying flaw in the task he has been given – no overarching strategic direction. National Strategy must inform Industrial Strategy which itself can then inform National Shipbuilding, Defence Industrial and Complex Warship strategies and this level of complexity requires cross government cooperation between FCO, BEIS, MOD, International Trade, Home Office and the Treasury.

If Sir John can draw together a team from all these departments and is empowered to go beyond his MOD brief then a National Shipbuilding Strategy might emerge, if not, rearranging the deck chairs on Titanic is more likely to be the effect.