HC Deb 15 July 1986 vol 101 cc853-9

The following Questions stood upon the Order Paper:

5. Mr. Michael Hirst (Strathkelvin and Bearsden)

asked the Secretary of State for Defence if he will make a statement about the export potential of type 23 frigates.

13. Mr. Dick Douglas (Dunfermline, West)

asked the Secretary of State for Defence if he will make a statement on the policy of his Department relating to the intention of ordering three frigates per year; and how this is going to be fulfilled in 1986.

3.32 pm
The Secretary of State for Defence (Mr. George Younger)

It remains my intention to maintain a force level of about 50 frigates and destroyers, but the number of frigates to be ordered in any one year will continue to depend on the resources available.

I am pleased to announce today that I will be placing orders for three type 23 frigates of the Duke class, two to be built at Yarrow Shipbuilders Limited on the Clyde and one at Swan Hunter Shipbuilders on Tyneside as soon as outstanding contract terms have been settled. The first two ships will start building in the coming months and the second ship at Yarrow next year.

The order with SHS followed negotiations with it, in the light of the statement made by my predecessor on 28 January 1985, which have resulted in a satisfactory agreement on price. The order with YSL followed a competition with three other yards and the winning tender offered the best value for money.

These orders will demonstrate to prospective overseas purchasers the confidence which the Royal Navy has in this highly capable warship.

Mr. Hirst

I am grateful to my right hon. Friend for his exceedingly encouraging reply, which will be warmly welcomed by the management and work force at Yarrow on Clydeside, where a number of my constituents work. Is his statement not a superb present for the yard as workers leave for their annual holidays? Is my right hon. Friend aware that Yarrow will now build a covered module yard in the facility, which will enable it to build more frigates more competitively? Will that not enhance the yard's export potential for those countries that wish to buy this type of frigate?

Mr. Younger

I am most grateful to my hon. Friend for all that he has said. I fully appreciate that these valuable orders will be good news for many families at this time. Like my hon. Friend, I am glad to hear that there may be an extra covered berth, and if that results in even better value for money for future purchases from the yard, it will be very much to the advantage of the taxpayer and of the defence budget.

Mr. Douglas

The Secretary of State will not think it amiss, I hope, if we look at his answer fairly carefully in the light of what seems to be an abandonment of a commitment to order three frigates a year. Am I not correct to say that last year no frigates were ordered? This year we are ordering not three frigates but two. Can the right hon. Gentleman say when all four orders will be firm so that progress can be made with the covered berth? Will he give us some news that will make up for the leeway in frigate ordering? If we do not make up that leeway, we shall have a very old surface fleet of frigates and other surface ships.

Mr. Younger

The hon. Gentleman is not strictly correct on the figures he has outlined. I should have thought that he would have unreservedly welcomed an order for three frigates at one time. I am sure that he will appreciate, as a person with some experience in the industry, that one has to look at this over a long period. One could say that I have now ordered three frigates this year, but, as I said, we must look at it over a longer period and the hon. Gentleman will have to wait to see what orders come in later years.

Sir Antony Buck (Colchester, North)

Would my right hon. Friend agree that what he has announced shows that we are not only able to maintain our own independent nuclear deterrent, but that we are able to maintain an adequate surface fleet?

Mr. Younger

My hon. and learned Friend is absolutely right. He may recall, as I do, the rather sour reaction of the right hon. Member for Llanelli (Mr. Davies) the last time there was a frigate order, when he said that it would be the last such announcement that the Government would be making in this Parliament. He said: From now on it is likely to be cancellations all the way." [Official Report, 28 January 1985; Vol. 72, c. 22.] My hon. and learned Friend is quite right.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

Were frigate type 23 03 and 04 placed on the lowest price, or were the bids of Yarrow's competitors increased by an element for lead yard services from Yarrow?

Mr. Younger

The bids for Yarrow were entirely on a competitive basis. In other words, Yarrow won the competition for those ships. The order for Swan Hunter —the frigate 02—as the hon. Gentleman knows, was a special arrangement announced by my predecessor. I have stuck to his undertakings absolutely. Lead yard services are reflected in the price we expect to get from the ships we ordered from yards other than the lead yard. It is a reflection of the value they get from the lead yard in information.

Mr. Keith Speed (Ashford)

Would my right hon. Friend confirm what his predecessor told the Defence Committee, that to maintain an up-to-date and capable 50-strong force of frigates we will need to order three frigates a year for the next few years?

Mr. Younger

As my hon. Friend knows better than most of us, it is not as simple as that. The maintaining of about 50 frigates at any one time is a mixture between the new building of frigates and the length of time for which it is sensible to retain older frigates in service. However, I am sure that my hon. Friend will be encouraged to see the large series of three orders today. I hope that he will feel that that it is a good sign of the confidence we have in keeping a strong component in the Navy.

Mr. Ted Garrett (Wallsend)

The Secretary of State has to be congratulated, somewhat belatedly, on finally making the decision. It is of immense importance to the Tyne, especially the Wallsend constituency. I am pleased that he has mentioned a significant factor, which is to impress upon the navies of the world that Britain can build ships which would be to their advantage if purchased. That point must be emphasised repeatedly by the people who will be marketing the ships. Will the Secretary of State do his utmost to help in the marketing?

Mr. Younger

I am extremely grateful to the hon. Gentleman for everything that he has said. It is a reflection of the hard work that I know he has done for a long time to help to get these orders. I agree entirely about export orders. It should now be possible for us present a strong bid throughout the world for this excellent frigate. Certainly, my Department will do all it can to help.

Mr. Barry Henderson (Fife, North-East)

Does the announcement of my right hon. Friend not underline the vital contribution that Scotland makes to the defence of the West and the extent to which defence considerations make an important contribution to the jobs and economy of Scotland?

Mr. Younger

My hon. Friend is absolutely right. Scotland, especially in relation to the Navy, makes an outstanding contribution to the defence of the country and a large number of jobs in Scotland result from it. My hon. Friend is right to draw that to the attention of the House.

Mr. Robert Maclennan (Caithness and Sutherland)

I recognise the satisfaction that the announcement will give to Yarrow in particular. However, can the Secretary of State say what action he proposes to take following the resignation of Professor Main from the proposed committee of inquiry into hull design. Are the Government going to take the considerations of the committee into account when considering future policy towards frigates?

Mr. Younger

I am sorry to point out to the hon. Gentleman that he has got the wrong person. I believe that Sir Peter Main is in charge of the teachers' inquiry. I regret that Professor Caldwell found it necessary to resign from the investigation into hull shapes for ships. He did it on his own authority, feeling that his credibility had been undermined. We will now be looking for a suitable and, I hope, independent replacement.

Mr. Peter Griffiths (Portsmouth, North)

I congratulate my right hon. Friend on his announcement, but would he recognise that the outstanding export record of Vosper Thornycroft, on the south coast, makes it a prime contender for the next order that he offers?

Mr. Younger

I appreciate my hon. Friend's point. Vosper Thornycroft has a fine record and, as my hon. Friend is aware, it is our lead yard for mint countermeasures vessels. As for other export orders with which Vosper Thornycroft is concerned, we shall do everything possible to assist the company.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

Is the Secretary of State aware that a proper age structure for the 50-surface-ship fleet to which he referred can only be assured if an ordering pattern of three ships a year—referred to by my hon. Friend the Member for Dunfermline, West (Mr. Douglas)—is resumed? Can he say whether the newly ordered type 23s will be fitted with the latest towed array sonar, which is to be denied to the type 22s?

Mr. Younger

I can confirm the hon. Gentleman's last point. I am glad to say that the three ships that we are ordering today will be fitted with new towed array sonar. There has been a gap in the ordering which is quite usual when the first of a new line of frigates is ordered. The type 23 01 has taken longer than usual to produce because it is the first. This year, we have produced an order for three follow-on frigates. The hon. Gentleman must await future announcements for other frigates in due course.

Mr. Jonathan Sayeed (Bristol, East)

My right hon. Friend's announcement will be welcomed by everyone who believes in the defence of Britain. The types 23 and 22 are both expensive and too sophisticated for a number of foreign purchasers. How will my right hon. Friend encourage foreign navies to buy British? What plans has he to ensure that yards develop a system for building frigates for naval use which have lower manning levels and cost less?

Mr. Younger

My hon. Friend makes a valid point. The type 23 is much more economical in terms of manpower than its predecessor. It needs a considerably smaller crew and will be fitted with a great deal more sophisticated equipment. It is true that such a sophisticated vessel is of interest only to certain navies which have similar needs, but nevertheless it is more cost-effective than its predecessor. Therefore, it ought to be a better bet for many more navies than the previous type of frigate. We should do all we can to encourage its purchase.

Dr. David Clark (South Shields)

Although the whole of Tyneside will be pleased that the Government have confirmed this order, does the Minister appreciate that there is still a considerable shortfall of work in the area? What plans has the right hon. Gentleman to ensure that there is an on-going naval shipbuilding presence on Tyneside?

Mr. Younger

I appreciate the hon. Gentleman's point. That there should be a shipbuilding presence on the Tyne is a matter of great concern to many of us. This order was an undertaking given to Swan Hunter and I hope that the hon. Gentleman will feel that it has been properly and completely carried out. It is worth reminding the House that we are in the middle of a large warship building programme. In real terms, it is probably the largest that we have had for many years. It is a demonstration of the importance that the Government attach to defence.

Sir David Price (Eastleigh)

Does my right hon. Friend recognise that his statement will cause great disappointment in Vosper Thornycroft in my constituency? Will he at least confirm the proposed single-role minehunter orders which will make a considerable difference to employment prospects at Vosper Thornycroft, given its disappointment at not getting one of these type 23 frigate orders?

Mr. Younger

I appreciate what my hon. Friend says about Vosper Thornycroft and I am sorry on its account that it did not win the competition for the type 23 frigate. I can confirm that we regard it as a most important yard, especially with regard to the mine counter-measures vessels and the minehunter vessels. I confirm that it is our lead yard for those vessels.

Mr. Harry Ewing (Falkirk, East)

Is the Secretary of State aware that this will be good news for the workers in Yarrow before they go on their annual holidays, but will he be a bit more precise about the starting date for the building of the frigates? He did say that, in the case of the two placed at Yarrow, construction would begin in the coming months.

Is the Secretary of State further aware that it is entirely appropriate that he should answer the question put down by the hon. Member for Strathkelvin and Bearsden (Mr. Hirst), who, when he worked for the Marathon yard, had his job saved by my right hon. Friend the Member for Chesterfield (Mr. Benn) when he placed an order for an oil rig? Does he think that at long last this will persuade his hon. Friends that public expenditure can not only save but create jobs?

Mr. Younger

The principal consideration that I have to have in mind when I place orders is whether they are the best value for the defence budget and the best equipment for the Royal Navy, and I am sure that the hon. Gentleman will understand that. It will be good news for those who are likely to have their jobs safeguarded.

Let me reaffirm the position on construction times. The precise starting dates for construction are for negotiation between the Department and the contractors concerned, but I understand that the one at Swan Hunter and the first of the two at Yarrow are likely to start in a few months time, and the second one at Yarrow is likely to start next year but it is not yet clear in precisely which month.

Several Hon. Members


Mr. Hirst

On a point of order, Mr. Speaker.

Mr. Speaker

I know about it. I will take it at the end of the statement.

Mr. Churchill (Davyhulme)

I congratulate my right hon. Friend most warmly on his decision to order three type 23 frigates. What estimate can he give the House of the number of jobs that will be safeguarded or created in the key areas of unemployment on Tyneside and Clydebank?

Mr. Younger

My hon. Friend hits an important note. Approximately 1,200 men per year per ship will be employed in direct labour at the yard with about twice as many again employed on sub-contracts and in the weapons and marine equipment industries. Therefore, about 10,000 jobs overall will be sustained in these important areas over several years and I am sure that my hon. Friend will want to welcome that, as indeed will the whole House.

Mr. Robert C. Brown (Newcastle upon Tyne, North)

I congratulate the Secretary of State on at least keeping faith with Swan Hunter with regard to the frigate order. He refers to the jobs that are being saved, but is he aware that, had it not been for the robbery with violence of the auxiliary oiler replenishment vessel from Swan Hunter a lot of men who are now walking the stones would still be in full-time employment? When can we expect an encouraging statement from him on the second AOR for Swan Hunter?

Mr. Younger

I appreciate part of what the hon. Gentleman said, but his remarks about the AORs may be looked at a little askance elsewhere. If I had decided that the firm which clearly won the competition on design and price was not to get the first AOR, I would have been justifiably and severely criticised. In case the hon. Gentleman has forgotten, I remind him that in the course of that announcement I made it clear that I would make sure that Swan Hunter had a particular opportunity to bid for the second AOR order on certain terms. I should have thought that that was a fairly good gesture towards Swan Hunter which I hope is appreciated in the north-east.

Mr. James Wallace (Orkney and Shetland)

The Secretary of State's long-awaited announcement is welcome on these Benches, as I am sure it is very much welcomed by the work force at Yarrow and Swan Hunter. As he has rightly and properly taken into account the undertaking given by his predecessor to the Swan Hunter yard and no doubt awarded the order on a basis other than sheer competitive price, will what might be called the difference in price fall on an overstretched defence budget or can it be allocated to some other budget such as, for example, that of the Department of Employment?

The right hon. Gentleman has mentioned that this must be looked at on a long-term basis. Can he assure the House that, over that long term, bearing in mind the pattern of new ships coming into service and older vessels going out of service, there always will be a surface fleet of about 50 vessels, or will there be a shortfall at some stage during that period?

Mr. Younger

I see the point that the hon. Gentleman is getting at about the small amount of extra cost which we shall have paid by placing the order somewhat uncompetitively at Swan Hunter. That is something that we had already undertaken to do, and, therefore, it falls on the defence budget. I make no complaint about that because it was a decision taken openly by the Department some time ago.

The hon. Gentleman mentioned the ordering position generally. He is right in his suspicion that the way in which the orders are placed must be balanced out between how long the existing ships can be kept going economically and sensibly and how much new build is needed to keep the fleet in balance. I have maintained the policy, which has been the policy of the Department for a long time, that about 50 frigates will be kept in commission. I think that the House would like to know that.

Mr. Denzil Davies (Llanelli)

The right hon. Gentleman will be aware that his statement will come as a great relief both to the Royal Navy and the warship building yards involved. He will also recognise that it does not solve the fundamental problems of arriving at a modern 50-warship Navy by the 1990s. The right hon. Gentleman said that there would be two orders this year and one next year. What will the cost be in terms of the Ministry of Defence budget in this financial year? In other words, how much money will come out of the Ministry of Defence budget in this financial year as a result of today's announcement?

Mr. Younger

The right hon. Gentleman was somewhat less than generous in his opening remarks. I should have thought that it was a major step towards having a modern force of about 50 frigates in the 1990s. I leave that aside. The position of the frigates in the programme must be balanced out with all the other factors. I hope that the right hon. Gentleman will take that as a clear indication. Costs are commercial and confidential. However, I have aready made it clear that the cost of the frigates is about £1 15 million each. While I cannot give the precise prices for the group of three frigates, I can say that we have made a saving of about 5 per cent. on what we expected to spend.

Mr. Davies


Mr. Speaker

No. The right hon. Member cannot ask a second question. I am sorry.

Mr. Hirst

On a point of order, Mr. Speaker. For the avoidance of doubt and in view of the incorrect statements made by the hon. Member for Falkirk, East (Mr. Ewing), I make it absolutely clear that I have never worked in a shipyard. I am a chartered accountant by profession. I have spent all my working life in private practice. My interest in tabling a question today and on previous occasions about defence matters and shipbuilding relates to the fact that I have constantly championed the excellence of shipbuilding on Clydeside and at Yarrow.

Mr. Ewing

Further to the point of order, Mr. Speaker. For the avoidance of doubt, I have never said that the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) worked in a shipyard. I was talking about the oil rig construction yard that the hon. Gentleman worked for on Clydeside.

Mr. Jim Spicer (Dorset, West)

On a point of order, Mr. Speaker.

Mr. Speaker

Does it arise directly from this matter?

Mr. Spicer

It arises directly from Prime Minister's Question Time.

Mr. Speaker

I shall take it after the private notice question.