UK awards £1.6bn Royal Navy contract to Spanish-led consortium

The UK government has awarded a £1.6bn contract to build three support ships for the Royal Navy to a consortium that includes a state-owned Spanish shipyard, snubbing a rival bid from an all-British team.

The decision on Wednesday sparked a furious reaction from unions and Labour, which has pledged to build the ships entirely in the UK. John Healey, the shadow defence secretary, called it a “betrayal of British jobs and British business”. 

The ships will be built by a consortium led by Spain’s Navantia and including the UK’s Harland & Wolff and naval architect BMT, which was named as the preferred bidder for the contract.

It edged out Team UK, which included incumbent military shipbuilders BAE Systems and Babcock International. Two other consortiums had been shortlisted.

The 40,000 tonne Fleet Solid Support vessels will supply the Navy’s aircraft carriers, destroyers and frigates with equipment, ammunition and food.

The vessels will be built in blocks at H&W’s facilities in Belfast and Appledore in Devon, as well as at Navantia’s shipyard in Puerto Real in Cadiz, south-west Spain. The final assembly of all three ships will take place at H&W’s historic Belfast yard, where the Titanic was built.

The Ministry of Defence said the contract would create 1,200 jobs at UK yards and about 800 jobs across the supply chain. The consortium has pledged to invest £77mn across UK yards as part of the project.

Ben Wallace, the defence secretary, said the selection of the consortium as preferred bidder was a “welcome boost to the UK shipbuilding industry”. 

He added that the government was “bolstering technology transfer and key skills from a world-renowned shipbuilder, crucial in the modernisation of British shipyards”.

John Wood, H&W group chief executive, insisted the contract would strengthen “UK sovereign design and shipbuilding capability, as well as generating around £1.4bn in national social and economic value”.

He played down union fears that work would migrate to Spain, saying the contract would have a “minimum UK content of 60 per cent”.

The partnership with Navantia, he added, would enable the consortium to “deliver the vessels on time and on budget, something which UK shipbuilding have never managed to do”.

Navantia set up its UK subsidiary — which is the official prime contractor of the winning consortium — only in April. The company is owned by the Spanish state via Sepi, a government holding company that controls 100 per cent of its capital.

Navantia has stressed its ability to fit vessels with new technology such as 5G equipment, hydrogen fuel capabilities and “digital twins”, sophisticated computer models that facilitate operations and maintenance.

Gavin Robinson, Democratic Unionist party MP for Belfast East, called the decision “fantastic news for Belfast and Northern Ireland as a whole”.

Steve Aiken, a legislator for the Ulster Unionist party and a former Royal Navy submariner, said the contract was “a very visible way to get shipbuilding back” in the Belfast shipyard and a great opportunity for jobs and skills. Northern Ireland is one of the most disadvantaged regions of the UK, with the highest skills gap.

The drawn-out competition has been controversial from the start, with the MoD flip-flopping over the classification of the ships, which were initially not labelled warships even though they will carry defensive weapons.

The GMB union said it wanted reassurances on the amount of work that would be done in the UK.

Production of the ships is due to start in 2025 and all three support ships are expected to be operational by 2032, the government said.