Shipbuilding Strategy for the Type 31 Frigate announced – a great day for the Royal Navy?

After much delay, the Defence Secretary today outlined the National Shipbuilding Strategy, specifically the intention to build at least five Type 31e frigates for the Royal Navy.

“This new approach will lead to more cutting-edge ships for the growing Royal Navy that will be designed to maximise exports and be attractive to navies around the world. Backed up by a commitment to spend billions on new ships, our plan will help boost jobs, skills and growth in shipyards and the supply chain across the UK. It’s a great day for the Royal Navy.”
(Michael Fallon)

Construction of the ships will be shared between shipyards around the UK with assembly at a “central hub” site. This is a potential boost to several smaller yards in the UK that are already seeing a modest revival in commercial shipbuilding. Block building the QEC aircraft carriers made sense because a single yard was unable to take on such a large project. Unfortunately sharing construction of a small frigate between several yards may actually add to costs and be less efficient. The Type 26 Frigates are being constructed by one company in 2 yards, close together in Glasgow. Already local media and politicians with interest in yards around the UK are speculating about their involvement. Cammel Laird (Birkenhead), Babcock (Appledore and Devonport), Ferguson (Port Glasgow), Harland & Wolff (Belfast), A&P (Tyne) are all looking for a possible share in this modest programme.

The block-built £150 million polar research ship, RRS David Attenborough, being built at Cammell Laird offers a little hope that yards are becoming more competitive. Apart from Backbock Appledore building OPVs for the Irish Navy, no one other than BAE Systems has constructed a warship in Britain for a generation. Building steel blocks for ships is not especially complicated, it is the integration of very complex and high-specification systems that separate the warship builder from the commercial builder. How much of this specialist expertise is available outside BAES is unclear.

It is not yet known where the main assembly site for these ships would be. Some suggest that the Babcock site in Rosyth would be well suited to this work when HMS Prince of Wales is completed. In Scotland, there is still anger amongst unions that they had been promised all 13 frigates, not just the 8 Type 26 Frigates. This is somewhat excessive as the Clyde has a fat order book of OPVs and frigates and a very secure future.

BAES have so far been ambivalent about involvement in Type 31 saying it could potentially be “a race to the bottom”. The project is effectively a challenge to their monopoly and they cannot be expected to be overjoyed. Babcock, with yards in Appledore, Devonport and Rosyth is the nearest thing BAES has to a competitor in the UK naval market. Type 31 may give Babcock an opening to become a long-term warship construction competitor to BAES, something which would be very good news for the taxpayer.

The intention has always been that Type 31e should be designed with the export market in mind. If Britain was able to break back into the frigate export market, from which it has been absent for almost 30 years, this would drive down units costs, benefiting the RN and the economy as a whole. To fulfill Sir John’s vision of economies of scale will require building far more than 5 ships, the project needs to attract foreign interest quickly.

A price cap of £250 million has been placed on each ship. Building to a target cost may produce mixed results but should focus minds. The RN needs to become a more ‘disciplined’ client and avoid mid-project changes, while industry needs to be more efficient. Considering a Type 26 is priced at more than £800M, then £250M is a very ambitious target. Other Europen nations who have produced frigates at comparable cost but this would represent a very aggressive reversal of UK warship cost trends. The timescale is also exceptionally demanding and calls for the first ship to be at sea by 2023. If the first steel needs to be cut by the end of 2018, then the design will have to be rapidly completed. Of the available concepts, this time pressure gives BAES’ Cutlass and the BMT’s Venator a slight advantage, being more mature than the Steller Systems’ Spartan or the, soon to be announced, Babcock Arrowhead.

“I am very impressed by the courage that the Secretary of State has shown – and the Government – in adopting my recommendations, which were very extensive, and will change the shape of naval shipbuilding over the country in the future. The next challenge is to come up with a world-leading design; one that can satisfy the needs of the Royal Navy and the export market.”
(Sir John Parker)

The NSS marks a significant change in procurement funding. As recommended by Sir John, the Type 31 and subsequent programmes will now have a set and assured capital budget at the start. Full funding will be allocated at the main investment decision point (known as “Main Gate”) subject to 5-yearly SDSR reviews. Navy Command itself will then be responsible for the successful management and delivery of the programmes.

In cash terms, the defence budget is slowly rising but there is still a £20Bn gap between commitments in the equipment programme and available funds. Tory politicians refuse to admit it, perhaps knowing it is their successor that will have to deal with the consequences, but there will be further cuts to UK defence somewhere soon. It will be interesting to see if having its own previously allocated capital budget will serve to protect the Type 31.

From the RN’s point of view, there is great hope that the Type 31 project can deliver. It is right that someone has finally said “enough is enough” to the ballooning cost of new warships. Diversifying the suppliers of warships has got to be a good thing and offers the opportunity to strengthen industry, manufacturing and skills base across the country. Whether a credible warship for the 2030s and 2040s can be delivered at this price, in this time frame remains to be seen.