Written evidence submitted by ADS Group Ltd (DIS0024)
MILITARY SHIPBUILDING IN SCOTLAND: ADS SUBMISSION TO SCOTTISH AFFAIRS COMMITTEE INQUIRY, MAY 2022
1. INTRODUCTION
1.1. ADS is the premier trade association for the UK’s defence, security, aerospace, and space sectors. ADS has more than 1,100 member companies across all four sectors, with over 95% of these companies identified as Small and Medium Size Enterprises (SMEs). The UK is a world leader in the supply of defence, security, aerospace and space products and services. From technology and exports to apprenticeships and investment, our sectors are vital to the UK’s growth, with companies in 2020 generating £79 billion turnover in the UK, including £45 billion in exports, and supporting over one million jobs.
1.2. ADS and ADS Scotland are proud to represent these vital companies in Scotland, who make a significant and valuable contribution to economic prosperity and national security.
2. EXECUTIVE SUMMARY
2.1. Industry welcomes the recent publication of a refreshed National Shipbuilding Strategy, which includes a detailed 30-year Master Plan for 150 maritime vessels, giving the military shipbuilding industry in Scotland and the UK a greater level of visibility and certainty to encourage further innovation and investment. Effective implementation of the strategy is now key to maximising its potential.
2.2. ADS and its member companies support the commitments made to the skills agenda in the National Shipbuilding Strategy and the Defence and Security Industrial Strategy. To support and sustain a strong skills base in Scotland, effective coordination, collaboration and alignment is required by the UK and Scottish Governments in the identification, attraction and development of talent well into the future.
2.3. Finally, while Scotland and the UK has already seen some important export and collaboration successes, there are clear opportunities for further progress. To maximise the opportunities through the new Maritime Capability Campaign Office (MCCO), the Government need to swiftly mature a standardised Government to Government (G2G) commercial mechanism for defence and security sales, fully embrace the “Team UK” approach to exports and ensure the ‘design phase’ is effectively considered in exports campaigns.
3. THE 2022 NATIONAL SHIPBUILDING STRATEGY: IMPLICATIONS FOR SCOTLAND
3.1. ADS and its member companies welcome the 2022 National Shipbuilding Strategy (NSbs) which sets out the Government’s plans for investing £4bn in UK shipbuilding over the next three years, the creation of the Maritime Capability Campaign Office (MCCO), and a 30-year cross-government shipbuilding pipeline of more than 150 new vessels. Swift and effective implementation of the NSbS, as well as further detail on the procurement programmes in the 30-year pipeline, is crucial to further strengthening the military shipbuilding industry in Scotland and across the UK.
3.2. The NSbS also reaffirms the new procurement approach, as initially outlined in the Defence and Security Industrial Strategy (DSIS), which emphasises the UK Government’s shift away from the 2012 ‘global competition by default’ policy to a more nuanced approach, which will be determined on a case-by-case basis. If enacted in an effective manner, this will ensure the UK’s sovereign capability and strengthen Scottish and UK prosperity perspectives in the long-run.
3.3. The announcement that the National Shipbuilding Office (NSO) is planning to open an office at the new UK Government hub in Edinburgh is another positive announcement in the NSbS, ensuring a direct link to the shipbuilding enterprise in Scotland. ADS and ADS Scotland look forward to engaging with the NSO and the Edinburgh office in the delivery of the NSbS.
4. PROSPERITY AND SKILLS
3.1 The UK defence and military shipbuilding industry has a significant and rich presence in Scotland, with representation across the country and supply chain.
3.2 In 2020, the contribution of the defence industry to the Scottish economy includes a turnover of almost £2 billion and employment of over 10,000 people, producing almost £1 billion in added value. Average salaries in the industry are £36,500 a year - 20% higher than the UK average. All in all, defence makes a significant contribution to the UK and Scottish Governments’ economic and prosperity agendas, and the Prime Minister’s levelling-up agenda.
3.3 The prompt delivery of the new MOD SME Action Plan and its thirteen commitments, such as the establishment of a UK-wide Defence Technology Exploitation Programme as well as Regional Defence and Security Clusters, can further contribute to fostering and strengthening the wider supply chain in Scotland.
3.4 The defence industry in Scotland further plays a vital role in keeping Scotland, the UK and our NATO allies safe, such as through its contribution to maintaining the UK’s nuclear deterrent and the Quick Reaction Alert Aircraft at RAF Lossiemouth.
3.5 ADS and industry further welcome commitments in the NSbS that the NSO and the UK Department of Education will work to establish a UK Shipbuilding Skills Taskforce, which will seek to create a future focused skills strategy, with the aims to improve skills availability and quality. It is crucial that this Skills Taskforce develops a strong working partnership with the Scottish Government in order to ensure the effective identification, attraction and development of talent to support shipbuilding in Scotland well into the future.
5. MAXIMISING THE POTENTIAL OF SCOTTISH MILITARY SHIPBUILDING EXPORTS
5.1. While Scotland and the UK have already seen some important export and collaboration successes, there are clear opportunities for further progress in this field with the effective implementation of the NSbS and the development of the Maritime Capability Campaigns Office. In this light, ADS and its member companies welcome the commitment by UK Government Ministers to increase UK shipbuilding exports by 45% by 2030.
5.2. In order to maximise UK and Scottish exports opportunities, the UK Government need to swiftly mature a standardised Government to Government (G2G) commercial mechanism for defence and security sales, as referred to in the Defence and Security Industrial Strategy (DSIS), and work with its global partners and industry to implement this policy effectively. This will require an effective international partnerships strategy, which understands the wants and needs of the UK’s global partners, so that industry in Scotland and the UK can tailor solutions and further develop exports opportunities.
5.3. Furthermore, the UK and Scottish Governments need to fully adopt a ‘Team UK’ approach to pursuing exports opportunities in the region, in the way that other allied nations do and as referenced in the DSIS, while also securing the widest possible access to opportunities through the CPTPP as the UK approaches accession.
5.4. Finally, ADS and industry believe that appropriate consideration of the ‘design phase’ in exports campaign is essential to enabling export success, as demonstrated by recent successful UK exports campaigns.
May 2022