Scottish ship building will flourish, not fail, after independence

The committee took evidence for their inquiry into defence in Scotland from two witnesses, Professor Keith Hartley, emeritus professor of economics at the University of York, and the president of the not-for-profit research institute RAND Europe Hans Pung.

In the absence of Wishart, Ross took the chair and within minutes, the discussion moved to warship-building in Scotland post-independence. On this, Hartley, with an enthusiasm which took even Ross by surprise, advanced a view as emphatic as it was fatalistic and I would like to examine some of his assessments here.

The professor asserted a range of thoughts on the future of the industry after independence, the first being that “at the moment, the industry’s future depends on the Royal Navy. Without the Royal Navy, you would not have an industry”.

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It is entirely unremarkable that the industry in Scotland is, while we remain part of the UK, dependent on the Royal Navy. And, if you build warships, having the Royal Navy as a customer, as Babcock and BAE do, is extremely advantageous.

But to say independence will kill the industry relies on two flawed assessments. Firstly, the implication that the Royal Navy will remove remaining or future orders from Scotland and place them in yards in England is inconsistent with the industrial reality that there are no other rUK yards with the skilled workforce or the capacity ready to take on this work. While they could be created over time, this could not be generated at a pace consistent with the operational demands of the Royal Navy or its fleet replacement programme schedule. Hartley’s contention also relies on the entirely unfounded belief that an independent Scotland will not have a navy, a notion he expanded on further with encouragement from a now very excited Ross.

The professor advised: “An independent Scotland will presumably have a minute navy – it will be like Ireland’s, for example, with offshore patrol vessels. It won’t have the demand for deep-water frigates and destroyers of the sort that are currently being built in Scotland, such as the Type 26 and Type 31.

“It won’t have that demand and it couldn’t afford them anyhow– the unit cost for a Type 31 frigate is £250 million at least. I do not know the size of an independent Scotland’s defence budget but it is not going to be large. I do not think it would put a lot of resources into building advanced warships. In short, no, I do not see a future for a Scottish warship-building industry in an independent Scotland.”

I would make several rebuttals to these assertions. This speculation about the minimal size of a future independent Scottish Navy is entirely wrong, it is not a feature of the 2014 White Paper on Independence, and it is inconsistent with the prevailing narrative of advocates for independence in both Holyrood and Westminster.

Scotland has one of the largest Exclusive Economic Maritime Zones in Europe with the North Sea and North Atlantic and is committed to Nato membership after independence. These two key facts demonstrate that Scotland will require a robust and capable naval fleet of significant size.

IT is extremely unlikely that Scotland will pursue our share of Royal Navy assets after independence, as many of them would be a poor fit for Scotland’s independent defence posture, but principally because the UK has no assets to spare. Scotland’s ships will be new, not reflagged.

As a Nato member, Scotland will have responsibility for naval constabulary operations in our EEZ, working with neighbouring navies to secure and protect our interests and those of our allies from threats in the air, on the surface and subsea. This will require sophisticated warships working in a range of locations with ocean-going capability. The idea that an independent Scotland would abandon or shirk our responsibilities in the Greenland-Iceland-UK Gap is wholly unevidenced.

Comparisons with neutral Ireland are entirely inaccurate, as is the baseless assertion that Scotland won’t be able to afford to commission or operate complex warships. After independence, we will evidence our commitment to collective defence and security by applying to join Nato. We will need to demonstrate this commitment in both words and deeds. That will require a significant defence budget.

Douglas Ross got very excited – but the problem is the evidence he was hearing was based on false assessments

We also have extensive and growing offshore energy infrastructure in Scotland’s seas, the defence of which will be a matter of critical national security to Scotland.

Factoring our 2020 GDP by the European average defence budget could, subject to the will of Parliament, see Scotland establish an initial annual defence budget of approximately £3.5 billion. This will naturally increase as Scotland emerges from the economic constraints of the Union.

The capital element of this budget available for procurement will – by any measure – be significant. Moreover, when it comes to warship procurement, we should bear in mind that this investment will remain here in Scotland – generating employment, investment and training in yards here, with the attendant economic return.

Scotland looks to our English friends over land but the rest of the world, friend or foe, is across the sea. We must therefore invest in a significantly larger naval presence with independence than we are provided with under the Union. Our fleet will command modern frigates, aircraft, offshore patrol vessels, mine countermeasure and autonomous and ancillary support craft – and not one penny of Scotland’s significant defence budget will be spent on nuclear submarines.

Scotland will be in the enviable position of designing our new fleet to our requirements, and procuring these ships from domestic yards with a proven track record of delivery – with the skills and industrial capacity in place which Scottish orders will consolidate further.

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We know warship orders do not need to be completed internationally but the idea of maintaining UK production in independent Scottish yards is considerably less remarkable than the three Royal Navy orders the UK has awarded to Navantia, a Spanish company.

It’s important to consider also how much of the supply chain and design capability of Scottish-built warships are located in other parts of the UK and beyond. Scotland, for our part, would wish to access these products and services and would have to pay with investment in rUK.

It will, of course, be for the rUK to decide whether it follows the cost-effective path of honouring and increasing orders to Scottish yards or spending billions on delaying them and repatriating them to unspecified yards in the rest of the UK. Scotland will also procure other defence equipment from UK manufacturers, as is normal between allied states.

In summary, contrary to what was asserted at the committee, Scotland will maintain our shipyards with future orders – funded from our substantial independent defence budget and resulting in an exceptionally modern and capable naval force.