UK shipbuilding output up 72% but civil sector lacks backing

The UK’s approach to civil ship procurement is leaving Scottish yards at a disadvantage against heavily state-backed international rivals, the Scottish Affairs Committee heard in oral evidence on 16 July 2025.

Tom Chant MBE, Chief Executive of the Society of Maritime Industries, told MPs that while the defence sector provided a reliable base of work, the same could not be said for civil contracts. “In the defence world, that is a given, with all the activities previously mentioned. In the civil pipeline, though, that is something that really needs to be addressed. It is basically impossible to split apart the defence and civil shipbuilding worlds; they are totally connected.”

Asked by Elaine Stewart MP about the 72 per cent increase in UK shipbuilding output between 2019 and 2024, Chant pointed to both international and domestic factors. He highlighted disruption and opportunities arising from the Covid pandemic, as well as the launch of the Type 26 and Type 31 programmes. “It is not generally understood that 80 per cent of the value of a complex vessel will be the systems and components in it… for Scotland during that period, as the Type 26 and Type 31 work kicked into action, the local supply chain would have generated some more Scottish-focused benefits and turnover.”

Committee members pressed Chant on the effectiveness of the National Shipbuilding Strategy. He acknowledged its value for defence and some government projects, but said it had not delivered the same impact for civil contracts. “The simple answer to that is no… The defence work has always been ringfenced as a UK priority, and the NSO has been brilliantly successful in making the Border Force vessel bids and tendering a UK-focused procurement opportunity. But the rest of the government pipeline of roughly 130 vessels is open to international competition by default, which is such a lost opportunity for UK shipyards.”

Mr Angus MacDonald MP expressed concern that contracts were often awarded abroad despite the capability existing domestically. Chant pointed to the current Trinity House lighthouse tenders as an example. “There are certainly UK yards that would be very interested in that project. The SRO in charge of those types of projects is commanded to deliver the project within certain risk, timeframes and budgets. But it goes out to the international playing field of opportunities, and you get the feeling they think it is a level playing field while actually not understanding that all the state-owned and state-backed companies it is going towards are kind of buying the work.”

Chant argued that overseas competitors benefited from subsidised financing and government guarantees unavailable to UK yards. This created an imbalance, even when foreign bids were only marginally cheaper. “There will often be a delta of perhaps 10 per cent or 20 per cent in the pricing if it goes to an overseas yard, but that is forgetting that if you award a UK yard, all those taxes will come back to the UK. There is a well-known RUSI study that has recently been refreshed that looks at around a 36 per cent return on UK procurement back to the Treasury.”

He added that awarding contracts domestically also meant stronger through-life benefits, as vessels could be serviced and supported in the UK over their typical 30-year lifespan. “It is not just a one-off procurement; it is the next 30 years as well.”

The Committee will continue to take evidence on industrial transition in Scotland, including further testimony from Ferguson Marine’s Chief Executive Graeme Thomson.