Naval Shipbuilding - UK by Default

I was at the Scottish Parliament’s Cross Party Group on Maritime and Shipbuilding this afternoon to present a report I wrote for Prospect, Design, build and maintain: Effective defence procurement. 

The report describes the current defence procurement regulations and my recommendations for a new approach. This is an explicit UK by default strategy linked to an industrial strategy, with workforce planning and social value at its core. Social Value measures the direct, indirect and induced impact of procurement. Around one-third of defence spending returns to the Treasury, so it makes sense to recognise this in bid evaluation. Procurement should also support public policy considerations, including the real living wage, employment standards, and ending tax dodging. My proposals on this mirrors my work on Scottish procurement legislation, so although defence is reserved, the Scottish Government can lead by example. 

 

Defence spending remains a crucial part of the Scottish economy. The latest data shows jobs have increased by one-third to 33,500 - contributing £3.2bn to the Scottish economy. For Scotland, a big chunk of that investment and employment comes from naval shipbuilding on the Clyde and at Rosyth. Babcock has built a new frigate factory in Rosyth, and BAE Systems is expanding its covered building facility in Govan. 

 

While the frigate programme is a solid work programme, the rest of the National Shipbuilding Strategy is vague regarding timescales and funding. Companies need greater certainty if they are to invest in the necessary facilities, equipment and skills. Potential opportunities are not sufficient. This helpful graphic (from Navy Lookout) takes the plan and highlights the capability gaps towards the end of the decade and into the 2030s. 

Other countries across the world build in greater certainly through local production strategies. The UK has the most open procurement regime in the world. The Royal Navy Fleet Solid Support ships have recently been awarded to a Spanish-led consortium, which benefits from the taxation treatment I recommend in my report. Countries like India, USA, Canada and Türkiye have explicit local procurement strategies. An Australian minister put it even more bluntly, 'We make no apologies for deciding to invest in Australian-built ships, creating Australian jobs and using Australian steel.' They point to research that shows that building ships locally has huge flow-on effects and can help underpin other advanced manufacturing. This graphic explains the security and economic benefits of investing in a domestic defence industry.

Having a shipbuilding strategy is a positive start. However, to make the plan a reality, companies must manage technological developments, the ever-changing political climate, economic uncertainties and a war on the continent of Europe. There are opportunities but plenty of pitfalls. What they need is a more stable procurement framework of the sort that is common worldwide. 

Programme for Government - Fair Work

 The Scottish Government has determined that Scotland will become a Fair Work Nation by 2025. Yesterday, the Scottish Government published its Programme for Government, so it's a good time to assess the likely progress in the coming year.

The Reid Foundation has published a report I drafted on Assessing Fair Work in Scotland. Trade unions in Scotland called for the creation of Fair Work, welcomed its aspirations and now serve on the Fair Work Convention. However, they also recognise the limitations of Fair Work and have been critical of its implementation.

In the report, I conclude, ‘The largely voluntary approach taken to Scotland’s Fair Work initiative has made a limited but positive contribution to improving working lives, particularly in the broader public services. However, it has not yet delivered major results, as evidenced by the continued prevalence of poor-quality work across Scotland’s labour market. If Scotland is to claim to be a Fair Work Nation in 2025, much more needs to be done to turn the worthy ambition into reality.’

The report makes 19 recommendations to improve Fair Work. The key points are summarised in this graphic, which focuses on using all the levers of government to deliver all aspects of Fair Work.

In the Programme for Government, it is welcome to see such a clear statement that Fair Work is crucial to achieving social justice, ‘Creating good jobs and increasing wages is one of the best ways to support our anti-poverty agenda.' It is disappointing that in 'business reset' mode, the introduction did not repeat its importance to the broader economy. On the substance of Fair Work, there was nothing new. 

Delivering Fair Work for all

■ Boost wages by increasing the number of employers who pay at least the Real Living Wage including through Fair Work conditionality for grants, introducing sectoral Fair Work agreements, and improving outcomes by delivering the Fair Work Action Plan.

This is all fine, but extending Fair Work conditionality to grants took many years. We are still waiting for the critical policy of sectoral Fair Work agreements, which is also not necessarily the same as sectoral collective bargaining. Delivering the previously announced Fair Work Action Plan ought to be a given, but maybe not! Increasing the minimum pay of social care and childcare workers to £12 per hour is a welcome step in the right direction, even if better employers are already there and beyond. However, it is another sticking plaster which needs sectoral collective bargaining to address the wide range of employment issues that underpin recruitment and retention in these sectors.

There is no mention of the aim for Scotland to be a Fair Work Nation by 2025. Another task group has been established for this, which will need to focus less on ambition and more on delivery. If, as the Programme for Government claims, ‘Delivering Fair Work for all is critical to our missions and a top priority for the Scottish Government,’ and to ‘Embed fairness in how workplaces are managed’ is to become a reality, more needs to be done as set out in the Reid Foundation report.

P.S. My thanks to the union representatives and others who gave their time to be interviewed by me. And to the Alex Ferry Foundation, which funded the project.