Ian King, chief executive of BAE, has indicated in a letter submitted to the Scottish Affairs Committee that shipyards on the Clyde would likely have to close if Scotland votes for independence. The future of the yards at Govan and Scotstoun is directly tied into the Type 26 frigates and Mr King has said BAE would build the ships at a location compatible with the contract awarding process of the Ministry of Defence.
The indication comes from a letter submitted to the chairman of the Scottish Affairs Select Committee Ian Davidson, Mr King stated “the major investment decision known as Main Gate, will be made by MoD at the end of this year” after the referendum on 18 September. Mr King also said that “in the event of a Yes vote, and as we have made clear, we would be required to discuss the future of the Type 26 programme with our customer, the MoD. It would be for the MoD to determine how the vote affects the final decisions they have yet to make on the programme, including the future location of the build of the ships. We would take our customer’s lead in these circumstances. We cannot determine this outcome in advance, or without the direction of the MoD.”
Mr Davidson said: “This shows clearly that, as we have previously stated, the only guarantee for the future of shipbuilding on the Clyde is for Scotland to remain part of the United Kingdom.” A view shared by the industry and MoD itself.
Other than procurement activity undertaken during the World Wars, the UK has not had a complex warship built outside of the UK since the start of the 20th century at least. All the Royal Navy’s new complex warships are being built in UK shipyards and the UK Government remains committed to utilising the strengths of UK industry in this specialist and complex area. The MOD has a 15-year Terms of Business Agreement with BAE Systems MNS, giving the company certainty about the UK Government’s commitment to a minimum level of capacity in the areas of warship design and build work, including the Type 26 as mentioned above, and elements of support covering complex warships. The MOD has a similar 15-year agreement with Babcock Marine in respect of support work for surface warships and submarines.
Companies based in an independent Scottish state would no longer be eligible for contracts that the UK chose to place or compete domestically for national security reasons (due to Article 346, I’ll explain that later in the article). Where they could continue to compete, they would be pitching for business in an international market dominated by major economic powers.
There’s also the matter of contracts using US technology, defence contractors that work with items or technology of US origin are also covered by undertakings given in accordance with the US International Traffic in Arms Regulations (ITAR), under which any change to an existing US export licence requires US State Department approval. An independent Scottish state would be a third-party country, not covered by existing UK-US ITAR agreements. UK companies would not have authority to transfer items and information that is subject to ITAR licence to their subsidiaries or other companies in an independent Scottish state or to a Scottish national, without US approval, anymore than it could transfer such material to organisations or individuals in other foreign states. Every licence held by companies in Scotland working on ITAR-controlled items would have to be re-approved if Scotland became independent.
However, the claim was dismissed by a spokesman for SNP Deputy First Minister Nicola Sturgeon who insisted the new ships would be built in an independent Scotland while pointing out that under current plans one of the Clyde’s two yards – Govan – may close anyway.
He said, seemingly ignoring the shipyards dotted around England that aren’t Portsmouth: “The threat to Govan and its possible closure is happening now under Westminster rule, and the fact is there will be nowhere else on these shores but the Clyde to build these ships once Portsmouth closes its shipbuilding facilities.”