Select Committee on Work and Pensions Minutes of Evidence

Letter to the Committee from the Department of Trade and Industry (SHP 7)

  Dear Mr Whatley

  The Minister of Energy and Industry, Brian Wilson, has asked me to write to you to submit the Department's written evidence for your Committee's Enquiry into Employment in Shipbuilding on the Clyde. Mr Wilson is pleased to have this opportunity of doing so as he believes that this Government has a good story to tell relating to support for the shipbuilding industry across the whole of the United Kingdom. Government Ministers have been regularly saying publicly that shipbuilding is important and have taken a number of tangible steps to support the industry's efforts to improve its position. Government also recognises the wide range of high value skills inherent in modern shipbuilding and there are projects in place to improve training capacity.

A great deal of important work has been carried out for the benefit of the UK's shipbuilding industry and there have been many new initiatives to assist the industry to improve its competitiveness and win new orders. Rather than detailing everything in this letter, I am attaching an explanatory Annex prepared by the Department of Trade & Industry's Marine Unit.

At the same time, Mr Wilson appreciates the uncertainty which arose on the Clyde as a result of the redundancy programme announced last year by BAES Marine Ltd, which led to the establishment of the Clyde Task Force and on which Mr Wilson was pleased to sit. Indeed, BAES' previous experience of the Prestwick Task Force, which Mr Wilson established when Scottish Industry Minister, was significant in encouraging BAES to participate. The redundancies on the Clyde arose from short-term gaps as BAES Marine's work tailed off before the start of manufacturing on orders subsequently secured from the MoD, principally the Alternative Landing Ships Logistic.

At this point Mr Wilson wishes to commend the very constructive work undertaken by the Clyde Task Force which, amongst other conclusions, succeeded in reducing the number of jobs lost and identified potential future markets for Clyde-built ships.

It is certainly true that the merchant shipbuilding market is difficult, with low prices and excessive capacity across the whole of Europe and the world generally. But the Ministry of Defence will, in its own evidence, be pointing to the very substantial order book for the future which includes the two Alternative Landing Ships Logistic under construction at Govan and work on six Type 45 Destroyers, with an order for up to a further six Destroyers likely in due course. A substantial part of the work for these Destroyers will be undertaken on the Clyde, with the First of Class being assembled and launched at Scotstoun. A potentially even larger prize is the work to construct and assemble two new aircraft carriers, the largest warships ever to be built in the UK. Although a decision on precisely how and where these vessels will be built is some months away—and will be taken by whichever of BAES and Thales wins the Prime Contract Office competition—the programme is so large as to offer tremendous opportunities for UK shipyards. Mr Wilson therefore believes that, thanks to MoD orders, the Clyde has a certain work-programme for at least the next 10 years, certainly unparalleled in the recent history of the Clyde.

Even though all the initiatives on productivity, marketing and training set out in the Annex are proceeding well, the Government is not sitting back complacently and awaiting results. Ministers are continuing to improve their involvement with and support for the industry. Only recently, there were further improvements to the Shipbuilding Forum and Government's relations with the industry. The Shipbuilding Forum, under the Chairmanship of Brian Wilson, agreed to expand membership of the Forum and to establish a high-level Steering Group which will be responsible for determining and driving forward the industry's agenda for further improvements to competitiveness.

The Steering Group and Forum will in future be chaired by a senior industry representative, to give even greater "buy-in" from the industry, though Ministerial involvement will in no way be diminished. The Steering Group is actively working on a Strategy Implementation paper which it is intended would be adopted by the whole Forum, including the Government Departments sitting on it. And, finally, the Steering Group will be considering whether the appointment of a "Maritime Industry Coordinator" would create an additional asset in bringing together the wide range of manufacturing, employment and academic sectors of this very important industry—both of these were Recommendations in the Clyde Task Force Report.

As I said at the outset, Mr Wilson is pleased to have had this opportunity of setting out the very comprehensive range of measures that Government has introduced to support the shipbuilding industry and the very close cooperation that exists between employers, unions, suppliers, customers and Government to ensure the industry achieves its full potential. The industry works in a challenging global market environment but there remain opportunities the Government trusts the industry and its workers will meet.

Mr Wilson also looks forward to giving oral evidence on 19 June, when I shall be the accompanying official.

Yours sincerely
N R Brice
Marine Unit

1 May 2002

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