UK-Norway Defence Agreement: Impact in Scotland

Question

Asked by

To ask His Majesty’s Government what assessment they have made of the economic and industrial impact in Scotland of the United Kingdom’s recent defence agreement with Norway, and what discussions they have had with the Scottish Government to ensure Scotland maximises the benefits of this partnership.

My Lords, I am sure the whole House will welcome the Type 26 frigate Norway deal announced at the end of September. This is the UK’s largest warship export agreement by value. BAE Systems’ Govan and Scotstoun shipyards will construct the vessels, supporting thousands of jobs, hundreds of supporters and tens of small and medium-sized enterprises across the union. The deal reinforces Scotland’s proud history of military shipbuilding and demonstrates its value right at the heart of UK defence.

I thank my noble friend for that reply. Does he recognise that this £10 billion deal secures the future of shipbuilding on the Clyde for years to come and is surely a vote of confidence in the UK Labour Government? However, is he aware that this is in stark contrast to the SNP Government? Trade bodies warn that Scotland could lose a generation of skilled workers, and apprenticeship funding has fallen by more than 30% in real terms. Can he urge the Scottish Government to follow the lead of the UK Labour Government and prioritise the actual delivery of investment, jobs and skills?

I agree with my noble friend that this deal provides long-term security for shipbuilding in Scotland, and I am proud of the role that our Government have played in helping to secure that. The Type 26 programme is vital to the national security of the UK as well as to the UK and Scottish economy, and to our allies. As such, it draws on a wider supply chain from across Scotland, including the excellent work carried out in the Ferguson shipyard. I agree with my noble friend that investment in apprenticeships and skills development is crucial. As for the SNP, they do not know what they are missing by not being in your Lordships’ House.

My Lords, the order by the Norwegians shows that they value Scotland’s skills in the defence sector rather more, as the noble Baroness has said, than the Scottish Government do. However, at a time when we face Russian aggression, does this not prove that Scotland’s interests lie best in being part of the United Kingdom defence and security pact? Will the Scottish and UK Governments work together to secure and build the skills base that will secure our future, and recognise that these submarines are there to help to defend Scotland’s interests as well as the UK’s?

I entirely agree with the noble Lord’s point. This deal is really important, not just economically but for enhancing our strategic and security priorities in the northern flank of NATO—and noble Lords do not need the most junior member of the Front Bench in the House of Lords to tell them how important that is.

Skills are an important area. Investment is important in defence procurement too, but we have to get the skills right, and the running down of skills in this area has been a real problem. This Government have a £182 million skills package, which was announced in the defence industrial strategy, to develop the necessary skills for the defence sector, including the defence universities alliance, an apprenticeship and graduate clearing programme—I have already made the point about apprenticeships—and Destination Defence, and establishing five defence technical excellence colleges. I hope that shows this Government’s commitment. I should add that we are investing directly alongside the Scottish Government.

My Lords, this contract was won in the face of stiff international competition, including from France, Germany and the United States. It is emblematic of Britain’s tremendous strength in defence tech, the strength of the Clyde skill set and, importantly, the tremendous friendship between the United Kingdom and Norway. I think the House would agree that it would be hard to find a nation that is more pro-UK than the Norwegians.

I entirely agree. This is a vote of confidence in the British defence sector, particularly in the world-leading technologies that we have in anti-submarine procurement, as represented in this contract. As for the alliance with Norway, Norway is one of our strongest allies and has been since the Second World War. As I said a moment ago, the relationship in the North Atlantic is obviously crucial, given what my noble friend Lord Robertson said in the strategic defence review.

My Lords, the previous Government found, as the current Government are finding, that the successful operation of our defence industry partners in Scotland is in spite of the Scottish Government, not because of them. I proffer a suggestion to the Minister: would he care, in conjunction with his colleagues in the MoD, to consider a defence industry forum in Scotland, to which all industry partners and relevant government agencies would be invited, to showcase the excellence of what Scotland is producing for our defence capability, broadening that awareness throughout Scotland and requiring the Scottish Government to explain more clearly exactly what they think their role is?

I thank the noble Baroness for that question. That sounds like an excellent suggestion and I will certainly pass it on to the Secretary to State. I should be delighted to attend myself; I am looking forward to visiting some of these facilities with my noble friend Lady Curran. I should say that, in Scotland, defence directly employs 4,000 civil servants and 10,000 serving personnel. MoD spending with UK industry and commerce in Scotland in 2024-25 was £2.1 billion, £1.3 billion of which was on shipbuilding and repair, including submarines, and—this is an important point—£23 million of which went directly to SMEs. We are very committed and, as the noble Baroness says, we hope to make sure that the Scottish Government are too.

My Lords, many, including many noble Lords, rightly believe that the renaissance of shipbuilding in the UK is a direct consequence of Sir John Parker’s review of the 2017 shipbuilding strategy, which reported in 2019, and his recommendations that the industry could be transformed by simplifying governance, securing long-term funding, and improving competitiveness to boost skills and engineering. May I suggest to my noble friend that the Secretary of State for Defence and the Minister for Procurement meet with Sir John, if they have not already done so, to discuss whether the Parker approach would be to the benefit of all military manufacturing in the UK, in particular the manufacturing of drones and drone-hunting technology?

I thank my noble friend. He draws our attention to a very important development in the defence world of drones and their procurement. I am sure that my right honourable friend the Secretary of State will be happy to meet Sir John Parker, as he suggests. As was in that review, though, the key to this is not just investment. It is about skills, as we have already highlighted, but also innovation, research and development, supply chain innovation, and the speed to market. All those points would come out in the meeting that my noble friend suggests.

My Lords, does the Minister agree that the example of Barrow-in-Furness, where central government, local authorities and their agencies and BAE Systems are combining and taking forward the shipyards, provides a very good template for what might happen in Scotland?

I absolutely agree with that point. The story of Barrow-in-Furness is quite inspiring. Since 1901, Barrow-in-Furness has built 312 submarines, and its current renaissance reflects the importance of skills, innovation, R&D and the supply chain. But I would emphasise that things had got to a very low ebb in Barrow-in-Furness before the turnaround we are now discussing.

My Lords, having worked previously in a plant in the Midlands which supplied parts to frigates, I echo the comments that the Minister made about the importance of this contract to the whole of the United Kingdom. Therefore, is he absolutely clear that the steel that will be used in all different parts of these frigates will actually be made in the United Kingdom?

The noble Lord raises an important point. As has been noted in this House before, the Department for Business and Trade has slashed electricity costs for steel producers and is in the process of streamlining grid access for major investment projects, while reaffirming this Government’s commitment to supporting Tata Steel through a £500 million grant to modernise its steel plant in Port Talbot. But I emphasise, in reassuring the noble Lord about this, that we absolutely want to see much more use of UK-made steel in public projects, including and perhaps especially in defence.