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Defence Spending in Scotland

Volume 654: debated on Wednesday 6 February 2019

[Joan Ryan in the Chair]

I beg to move,

That this House has considered defence spending in Scotland.

It is a pleasure to see you in the Chair, Ms Ryan. As the Minister reminded us before we started, I think that the last time I secured a Westminster Hall debate, the House had adjourned early, and it has done so again now that I have secured another.

The title of the debate is “Defence spending in Scotland”, but it could be “Defence spending in Glasgow South West”, and I will make no apologies for that.

I will give way to the hon. Gentleman in a second. As I am sure the Minister with responsibility for defence procurement knows, I remain a strong advocate for the Clyde shipyards—the greatest shipbuilders in the world. It has been a pleasure to see that they have started building the HMS Glasgow—the first of three Type 26 frigates—and to see the fantastic design work being carried out on the Clyde. I hope that the Minister will be able to confirm that, although there are three ships currently in the contract, the eight that were promised by the UK Government will be built on the Clyde. As the hon. Member for Moray (Douglas Ross) is so anxious to intervene, I will give way.

I am very grateful to the hon. Gentleman for giving way. Although the title of the debate is “Defence spending in Scotland”, I think it is going to become “Defence spending in Glasgow South West” within 30 seconds. Could I therefore take this opportunity to ask him whether he agrees that there is considerable defence spending in Scotland, particularly in my constituency, with the imminent arrival of the P-8s and £400 million of investment from the UK Government and Boeing into RAF Lossiemouth? That is important to my area and to the whole of Scotland.

I support that investment in RAF Lossiemouth. It was argued for by the hon. Gentleman’s predecessor, as I am sure he would agree, and I think we both agree that we want defence spending in Scotland. Later on in the debate, we may come to the actual figures, which I look forward to discussing and debating with him.

I cannot allow the debate to go by without referring to the letter that the procurement Minister received yesterday from the Chair of the House of Commons Defence Committee, regarding the fleet solid support ships. Many Members across the House are concerned about the Government having advised them that those are not warships. In the light of the parliamentary answers that many of us—myself included—have received about the combatants and the weaponry on those ships, I really do not understand the argument that they are not warships. I take the view that if it looks like a warship and acts like a warship, it is fair to call it a warship.

I commend to Members a blog from the Save the Royal Navy website, which makes clear its support for the letter from Chair of the Defence Committee to the Minister, who may wish to remark on that. My view, which is well known, as I am sure he will agree, is that the fleet solid support ships should be built in the UK. There are enough shipyards across the UK, including in Scotland, that could block-build those ships. If the Aircraft Carrier Alliance can block-build, the fleet solid support ships should be block-built using the same model.

I have many family ties to the defence industry. One of the employers that I will mention today is Thales, which used to trade as Barr and Stroud. Today is the anniversary of my grandfather’s death; he was employed by Barr and Stroud, where he met my grandmother, and they were married for 61 and a half years, so there are clear family ties to that employer. It was based in Anniesland in the city, but has moved to Govan, the former site of the Stephen shipyard—that is a different spelling and no relation—which is famous because Billy Connolly is a former employee. I have family ties and a real connection to the defence industry in Glasgow.

It is important, as the hon. Member for Moray outlined, that Government spending helps to support and promote prosperity across these islands. Ministry of Defence spending has the potential both to have a positive impact on Scotland’s economy and employment, and to help to balance the export deficit. I want to see the Government give a vote of confidence to manufacturing and engineering skills in Scotland by investing the defence pound in Scotland, and by encouraging foreign companies that are looking to maximise UK content to do the same.

At present, the lion’s share of MOD industry spending on Scottish industry goes, quite rightly, to shipbuilding and repairs. As one of the vice-chairs of the all-party parliamentary group on shipbuilding and ship repair, I have no particular problem with that, although I hope that in future, the Ministry of Defence will look at how it can help the shipyards become more efficient. When BBC journalists looked for a frigate factory that a former Secretary of State for Defence insisted was on the Clyde, they found only rubble and ash.

While the shipbuilding industry must be supported—far be it from me to argue against that—I want to look at defence spending elsewhere. As the Minister knows, the Ministry of Defence is currently procuring key new land platforms, including the multi-role vehicle protected—MRVP—and the mechanised infantry vehicle, the MIV. That will be a significant spend, and the platforms will be vital to delivering the Army’s strike brigades, which are part of the backbone of its new structure.

The latest available figures on Ministry of Defence spending in Scotland show that in 2017-18, MOD expenditure in Scotland was £300 per capita. Scotland has had an increase in expenditure within UK industry, but of all the nations and regions of the UK, Scotland finds itself with the fourth-highest spend. As someone who watches Scottish football—the hon. Member for Moray will appreciate these comments—I know that a team who finish fourth are not currently guaranteed a UEFA place. I hope that the Minister will reflect on that figure.

In fact, spending in Scotland was less than half of the spending in the south-east and south-west of England—two regions that account for over half of MOD expenditure within UK industry. Approximately 10,000 jobs in Scotland were supported through MOD expenditure in 2017-18. A recent parliamentary question revealed that of the £1.59 billion that the MOD spent within Scottish industry, over £900 million was spent on shipbuilding and repair. It is important that no area becomes too reliant on a single industry.

I thank the hon. Gentleman for giving way. He is talking about spending in Scotland. As he will be well aware, the MOD recently confirmed its commitment to RM Condor in my constituency. Can he confirm to my constituents and to me that in an independent Scotland, the Royal Marines at RM Condor would be 100% safe, and that the Scottish National party would spend exactly the same amount that the UK Government have committed to the base’s long-term future?

I am more than happy to support the hon. Lady’s constituents and the Royal Marines in Angus and elsewhere. As she knows, her predecessor in Angus, Mike Weir, was supportive, too.

Thales has more than 700 employees in Scotland, the vast majority of whom are at our site in Govan, in Glasgow. Thales’s Glasgow links date back to 1888, which makes the Glasgow part of the company the oldest part in the United Kingdom. As the procurement Minister knows, an early-day motion recently celebrated the centenary of Thales providing optronic systems to submarines—indeed, optronic systems for land, sea and air—and I went to an event to celebrate that centenary. The work carried out by that employer in Glasgow is important. Thales is a major contributor to the Scottish economy, investing more than £850 million since 2000, and supporting a strong and diverse supply chain. Preliminary findings from a report by Oxford Economics found that Thales UK activity supports an additional 2,000 jobs in Scotland, and its total gross domestic product contribution in Scotland is more than £100 million.

On land platforms, the team at Thales in Glasgow established an armoured vehicle centre of excellence, with a view to nurturing the company’s rich engineering heritage and commitment to developing its capabilities well into the future. The centre builds on highly skilled engineers’ and manufacturing employees’ decades of experience in complex military vehicle integration. Thales Glasgow has the capacity and capabilities to support Scotland’s growth in the defence sector outside its traditional maritime contribution.

Combined, the two vehicles that have been contracted for so far could create and sustain 100 jobs in Thales UK, 180 jobs through the supply chain and up to 200 jobs indirectly throughout the UK. Thales’ offering to the MOD’s MRVP programme is the Bushmaster MR6—a military off-the-shelf product with reduced development costs that offers value for money and lower through-life costs. The fact that there are production lines in Australia for vehicle assembly, and in Glasgow for equipment and system integration, reinforce Thales’s ability to achieve cost and risk reduction. The Bushmaster would support 50 highly skilled engineering, design and manufacturing jobs in Glasgow, and there is the potential to create an additional 30 jobs over the lifetime of the programme. It could also support up to 100 jobs in the supply chain across the UK, as I say.

In the context of Brexit, the Government, we hope, are looking to strengthen trade ties with countries outside the EU. I would argue that Thales does that, particularly through its work in Australia. The MRVP programme offers the chance to help combat the trade imbalance with Australia, and supports the development of closer trade and defence equipment ties with that important ally.

On the MIV programme, Thales has supported the prime contractor over the past two years. It has all the expertise and resources to support the Boxer. Thales brings with it its recognised UK mission system integration, survivability and electronic architecture pedigree, developed over many years as a trusted partner of the Ministry of Defence.

I hope that the Minister is sympathetic to my representations on behalf of my local employer, Thales. I look forward to hearing what he has to say.

It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing the debate. I do not know whether something about him means that the whole Chamber leaves when he has his debates—perhaps they should all have stayed to listen to his contribution—but I am glad that he is rightly standing up for his constituents and his constituency. I will come on to some of the specific points he made in more detail in a moment, but I will first provide some context for defence spending in Scotland.

Last year’s report on the contribution of defence to UK prosperity, which was produced by my right hon. Friend the Member for Ludlow (Mr Dunne), showed that defence benefits every single part of the United Kingdom. The sector has annual turnover of £22 billion and supports some 260,000 jobs. Scotland very much shares in that national success, benefiting directly from every pound that is spent on defence. To illustrate the point, it is worth looking at two of the key areas where defence spending in Scotland is concentrated. The first element relates to our spending with industry in Scotland. Last year, as the hon. Member for Glasgow South West said, that spending amounted to £1.65 billion, supporting 10,000 jobs. That is equivalent to £300 per capita, which is above the UK average. I know that he was complaining about some other regions, but I represent Yorkshire, and Scotland is doing a heck of a lot better than Yorkshire on defence spending.

We cannot talk about the defence industry in Scotland without recognising, as the hon. Gentleman did, the incredible expertise of the Scottish shipbuilding sector. With a history dating back more than 150 years, it has long been the envy of the world, and it remains a global leader. In the past few years, Scotland has played a major part in the building, assembly and successful delivery of HMS Queen Elizabeth, the most powerful surface vessel in British history, as we all know.

The MOD has already placed a £3.7 billion contract to build the first three state-of-the-art Type 26 global combat ships on the Clyde, in the place—I can now confirm—where all eight will eventually be built. The first of those City-class frigates has been named HMS Glasgow, which I am sure the hon. Gentleman is delighted about, and the last will be HMS Edinburgh, again recognising Scotland’s contribution. Coupled with our order for five offshore patrol vessels, that work will sustain some 4,000 jobs in the Scottish shipyards and throughout the supply chain until the 2030s.

I am grateful to the Minister for confirming that all eight of the Type 26 ships will be built in Glasgow. He might get representations from his colleagues in Scotland to name the other ships after different areas of Scotland, but I will leave that to them. Will the Minister kindly update us on the Type 31 frigates? He knows that there is interest in those being built in Glasgow and other places in Scotland.

I was going to come to that, but I will touch on it now. The Type 31e is subject to an open competition at the moment, as the hon. Gentleman knows, so I cannot go into too many details, other than to say that we have three bidders in the competition, which is an exciting and challenging one as we try to change how we procure our frigates. I look forward to seeing the competition progress.

As I was saying, the fact that we have been able to secure those jobs in the Scottish shipyards, with work into the 2030s, is something that no other industry in the United Kingdom can boast or be assured of, so it is not surprising that many MOD prime contractors have sites in Scotland, including Babcock, BAE Systems, Rolls-Royce, Leonardo, Thales, Raytheon and QinetiQ. That goes to prove that the defence industry in Scotland is about more than just shipbuilding, as the hon. Gentleman rightly pointed out.

In the land sector, beneath the prime contract level, many companies across Scotland have provided high-technology sub-systems to the Army’s critical warfighting platforms, which include Challenger 2 main battle tanks, Warrior infantry fighting vehicles, Foxhound patrol vehicles and the new Ajax reconnaissance fleet. Such on-board technology ranges from world-beating, 24-hour, all-weather sensors and sighting systems to the integrational design of complex battlefield communication equipment.

Looking forward, the land sector also holds much near-term potential for the Army’s exciting fighting vehicle modernisation programmes. Scottish companies are already bidding competitively in the Challenger 2 life extension programme, the mechanised infantry vehicle programme and the multi-role vehicle protected programme package 2—that’s a bit of a mouthful! For example, as the hon. Member for Glasgow South West said, Thales—a company that I have visited on many occasions, even in the short time that I have been in my role—has a site in his constituency and is one of two finalists, bidding with its Bushmaster vehicle. Thales is also tendering for a range of smaller electro-optical sub-system upgrades for the existing armoured fleet to contribute to the British Army’s warfighting edge. I repeat, however, that the competition is open, so I cannot comment other than to say that I have heard him.

We should also not forget that small and medium-sized enterprises throughout the supply chain in Scotland benefit from our investment. I have really enjoyed seeing the innovation there is among SMEs not just in Scotland but right across the country. Innovative smaller companies such as Denchi Power in the town of Thurso in Caithness provide much of the essential very high capacity advanced battery and charging technology for the British Army’s combat radio systems. In the past financial year, our Defence Science and Technology Laboratory alone invested £4.84 million in research and development contracts with Scottish suppliers.

The second main element of our defence spending consists of investments in critical defence assets, stretching far beyond our submarine and RAF bases. Few are aware that Scotland has some 50 defence sites, including Benbecula in the Outer Hebrides, Buchan in Aberdeenshire and Saxa Vord in Shetland. Those are the locations of our military radars, which provide critical long-range coverage of the northern approaches to the UK and neighbouring NATO nations. As the threats from the likes of Russia rise, so too does the significance of those sites.

The hon. Member for Glasgow South West mentioned fleet solid support ships, an issue I have had to deal with on many occasions in this role. Those ships’ primary role is to replenish naval vessels with bulk stores. They are non-combative naval auxiliary support ships, which are manned by civilian Royal Fleet Auxiliary crews and fitted with weapons systems purely for self-defence, so they cannot be designated as warships. I will probably continue to have long correspondence about that with the members of the Defence Committee, and I look forward to replying to their letter.

The relationship between defence and Scotland is mutually beneficial. Scotland is as integral to the United Kingdom’s security as the rest of the United Kingdom is to Scotland’s. Yes, the UK depends on the deep commitment of our Scottish personnel and benefits enormously from the unparalleled expertise of the industries based there, but Scotland also benefits from being part of the United Kingdom as a whole. It benefits from the UK’s broad spectrum of capabilities, it benefits from the sheer scale of defence spending by the UK, which can call on the fifth biggest defence budget in the world, and it benefits from the influence the UK is able to wield on the world stage to make a genuine difference.

Will the Minister confirm that another benefit of Scotland being part of the United Kingdom is that, when the SNP made Scotland the highest taxed part of the United Kingdom, the UK Government and his Department were able to mitigate that Nat tax for our armed forces personnel?

My hon. Friend makes a very important point, which my hon. Friend the Member for Angus (Kirstene Hair), who is sitting next to him, raised at Scottish questions just a few weeks ago. Of course, we will have to analyse the latest situation. If we need to make that mitigation, we will do so. The fact is that armed forces are sent where they are needed—they do not choose where they live—so we will step in where necessary to ensure that they are not disadvantaged.

As the dangers to the United Kingdom increase, it is even more vital that Scotland remains a pivotal part of UK defence. That is why we are upping our defence spending there. When it comes to the military footprint in Scotland, force levels will continue to grow. A further 550 military personnel and their families will be based in Moray by 2024. Significantly, numbers on Her Majesty’s Naval Base Clyde will also increase, to 8,200, while the base benefits from further investment of £1.2 billion over the next decade. HMNB Clyde will also become the base port for all the Royal Navy’s submarines, including its fleet of attack submarines, and the UK’s submarine centre of excellence. That is only fitting, since by the 2030s it will welcome four next-generation Dreadnought-class nuclear deterrent submarines too.

Meanwhile, this year, RAF Lossiemouth, which is in the constituency of my hon. Friend the Member for Moray (Douglas Ross), will welcome its fourth Typhoon squadron, making Scotland home to half of the RAF’s Typhoon force. Thanks to its close proximity to the north Atlantic, where enemy submarines are most likely to operate, Lossiemouth will also be a base for our nine P-8A maritime patrol aircraft, with a £132 million operational support and training facility being built to support them. That will create a further 200 jobs and, once fully operational, bring some 550 additional RAF personnel on site. I know my hon. Friend has been a good advocate of that.

Since becoming Minister for Defence Procurement, I have been pleased to observe the truly unique relationship with Scotland at first hand, and I am determined to do everything in my power to ensure that it continues to go from strength to strength.

I am coming to my last paragraph, but I can see that the hon. Gentleman wants to intervene, so I will give way.

I thank the Minister for a lot of what he has said, but I thought he would expand a bit more on the fleet solid support ships. Given the comments he rightly made about Scotland’s contribution to the Ministry of Defence, can he justify the fact that those ships might be built somewhere else in the world, rather than in Scotland or, indeed, anywhere else in the UK?

I will happily answer that question. The whole point of the national shipbuilding strategy is to make our shipyards as competitive as possible. For far too long, our shipyards have depended too often on defence for their work. The whole point of the strategy is to try to make them as competitive as possible and to challenge them. The Type 31e frigate competition that the hon. Gentleman mentioned is one such challenge to industry to consider how it can become more competitive, so it can go out to the wider world and start winning competitions. That is why I am really pleased that there is a bid from the UK as part of the fleet solid support competition. We will see whether it is successful, but the point is that we want our shipyards to be competitive. That is the way to secure their future now and in the long term.

Next year, Scotland will be home to all the Royal Navy’s submarines at HMNB Clyde, to one of the British Army’s seven adaptable force brigades and to one of three RAF fast jet main operating bases. That is a mighty testament to a relationship that works—a relationship that makes Britain a global force for good. That is why I believe passionately that Scotland should remain an integral part of this United Kingdom, so we can all work for the good defence of our country and around the globe.

Question put and agreed to.