Shipbuilding (Orders) (Hansard, 23 July 1973)

§ Mr. Ian Gilmour

My assessment, which Messrs. Booz-Allen have confirmed, is that the regular programme of warship building for the Royal Navy, together with the foreseeable market for naval exports, is unlikely in the longer term to afford sufficient production to sustain the highly specialised design, planning and quality control capacity required for this work in all of the six firms at present engaged in warship build-306W ing. To continue to invite competition from all six for every warship order for the Royal Navy would almost certainly affect all of them adversely, and particularly those with the high overheads associated with the design, planning and marketing of warships for export as well as of new classes for the Royal Navy.

I have, therefore, decided that in order to preserve this special capacity in the three firms which have built it up in recent years, Messrs. Vickers, Yarrow, and Vosper Thornycroft, we must concentrate future warship orders for the Royal Navy increasingly on these firms. This will mean that the scope for placing competitive contracts for warships will be considerably reduced; however, the three firms have promised their full co-operation in ensuring that we continue to receive full value for money.

I naturally regret that this decision will mean fewer naval orders for the remaining firms, which have served the Royal Navy very well in the past. However, there may still be a requirement to place some warship orders with these firms, depending on the future level of the Royal Navy and export programmes; and in any case the new policy will not apply to Royal Fleet Auxiliaries or to other vessels smaller than destroyers and frigates. For this class of work we intend to continue the present policy of wide competition wherever this is practicable, since this would still be compatible with the maintenance of the capacity likely to be needed in future.