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By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

06 Nov 13. Speculation is most often a dangerous thing and one that is fraught with risk particularly if you happen to get it wrong or maybe latch on to just one part of a wider story. Worse is that speculation can also be irresponsible and hugely damaging for those that it is most likely to affect. For that reason alone following on from various stories yesterday talking only of job cuts and potential plant closures within BAE Systems (BAES) naval shipbuilding operations in Glasgow and Portsmouth I made a conscious decision to await the formal announcement expected from BAES and the Coalition Government together with the others that this huge and very positive change in naval shipbuilding policy might affect before commenting.

Now that all parties including the Prime Minister, the Secretary of State for Defence, BAES, the Aircraft Carrier Alliance including Babcock International and Thales have signed up to what in my view should be seen as a truly excellent and workable blueprint for the future of UK military shipbuilding industry I can make some additional comment which I hope will be helpful. Firstly let me say that all that have worked so hard both in government and industry over the past 15 months to achieve the agreement that has been announced on the future of naval shipbuilding today and through what I imagine to have been difficult and very tough negotiations should be pleased that common sense has at last prevailed. All sides have won in this and while the loss of jobs is always regrettable they are an inevitable part of adapting to requirement change. The bottom line is that the UK naval shipbuilding industry has not only been made fit for purpose but also sustainable.

That a deal of this substance would of necessity require jobs would need to be lost was hardly in doubt. Shipbuilding might just have got leaner and fitter but it also just got a little smaller. The result is not only that the UK should now be able to sustain a strong position in navy shipbuilding in the years ahead but also that this deal should be seen as another set of strong positives for the proposed Type 26 Global Combat Ship development.

Brilliant in theory, concept and to a point in practice as well that the various separate TOBA (Terms of Business Agreement) looked for a time in a world that has been rapidly looking to downsize defence capability the BAES TOBA has looked increasingly unworkable particularly from the point of view of Government. When it was done back in 2009 the TOBA had been based on an attempt to match affordability with balancing and spacing out of procurement requirement. But with a fast decreasing number of commissioned Royal Navy capital ships envisaged it became harder to imagine how the Government could keep its side of the bargain in providing a consistency and a balanced number of new orders for new surface ships. Thirty years ago the Government would take just short of four ships a year – today we take on average about 0.7% of a ship per year.

With what the Government and BAES and separately on the two Queen Elizabeth class carriers (the Aircraft Carrier Alliance) have signed up to now we have at least achieved reassurance and commitment from Government. Leaving the carriers aside for BAES this will be hugely important in regard of building the planned Type 23 replacement – the Type 26 Global Combat Ship – but also that to fill the gap the Government plans to procure three Offshore Patrol Vessels (OPV’s) for the Royal Navy. This appears a most satisfactory outcome to what for some time has been regarded as an unsustainable problem of retaining capability that would not in future be required.

I am not going to get into the Scottish political argument and the independence debate other than to say that problem created by the TOBA preceded the notion of a vote on Scottish independenc

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