Unity Contract

11:00:00

It is almost a shame to interrupt the flow of the hon. Member for North Dorset (Simon Hoare). With permission, Madam Deputy Speaker, I would like to update the House on an important development relating to our Royal Navy submarine fleet that will boost national security and economic growth, and deliver savings to the taxpayer. This morning, my right hon. Friend the Defence Secretary is visiting the Rolls-Royce nuclear skills academy site in Derby to announce our new Unity contract with Rolls-Royce Submarines. Unity is worth around £9 billion over eight years and, as its name implies, brings together eight contracts into one, covering the research, design, manufacture and in-service support of the nuclear reactors that power the current and planned Royal Navy submarine fleet, which helps to keep the nation and our allies safe. This is the biggest contract that Rolls-Royce has ever had with the UK Ministry of Defence. The contract will help Rolls-Royce to operate in a more integrated and efficient way, driving efficiencies, reducing waste, saving more than £400 million and delivering on the Government’s commitment to provide value for money for the taxpayer. It will ensure that our committed submariners, who, alongside their families, sacrifice so much to keep us all safe, can continue to protect us around the clock, every minute of every day. Not only is this new deal a boost for our national security, but it underpins the Government’s triple-lock guarantee to our continuous at-sea nuclear deterrent and our important AUKUS defence and security partnership with the United States of America and Australia by enabling the development of our next-generation SSN-AUKUS nuclear powered, conventionally armed submarines. The Unity contract is also a boost for British industry, for the resilience of our defence supply chains, and for jobs, skills and economic growth in communities in the east midlands and across the country. The Unity deal will create more than 1,000 new jobs, sustaining around 5,000 skilled and well-paid roles in total—the majority in Derby, but also around 200 in Glasgow and Cardiff. The deal will also help to deliver the next generations of skilled workers we need in our nuclear defence enterprise, with the Rolls-Royce nuclear skills academy offering 200 apprenticeships each year. Unity also paves the way for the use of safer and more sustainable materials in our fleet, supporting the commitment made by defence to better environmental performance. The new contract with Rolls-Royce—an historic British industrial success story—comes as we consult industry partners and trade unions on our new defence industrial strategy, and as we seek to create a new partnership with Government fit for our more uncertain age. The Government recognise not only that defence is critical for our national security, but that it is a key driver for economic growth. It makes the UK more resilient. Through our defence industrial strategy, we aim to strengthen the virtuous circle that connects a more resilient UK-based defence sector and economic growth across the country. That virtuous circle will enhance our military capabilities and in turn make them more resilient, which not only deters our enemies but acts as an engine of growth for opportunities, skills and well-paid jobs across our devolved nations and regions. By onshoring and putting British manufacture first wherever it is in our national interest to do so, we will build on the 200,000 skilled British jobs currently sustained by MOD expenditure, delivering on the Government’s plan for change and our primary mission to kick-start economic growth, while simultaneously delivering on the first duty of any Government: to keep their people safe. We in this House are all passionate about defence. The defence of our nation should be too important for political point scoring, and I hope we have a consensus on that. It is in that spirit that we are consulting on our strategic defence review, so that we have a national plan for defence—not just a Labour plan for defence—that will inform our path towards spending 2.5% of GDP on defence. In that spirit, I thank my predecessor in the role, the current shadow Secretary of State for Defence, the hon. Member for South Suffolk (James Cartlidge), for the groundwork he put into this deal. What he started, we are finishing. On Wednesday, the Defence Secretary updated the House on the key role of our submarine fleet and the role it plays in deterrence. We all saw it warding off the Russian spy ship Yantar from UK waters. We should be under no illusions: this was just the latest example of growing Russian aggression targeting the UK and our NATO allies. In our increasingly dangerous world, the UK’s nuclear deterrent is our ultimate insurance policy that protects our freedoms and our way of life. This deal underpins that insurance policy for the next eight years, as we begin to phase in our new fleet of Dreadnought nuclear-powered and nuclear-armed submarines. This deal also foreshadows a brighter future for the UK defence sector, guided by our defence industrial strategy, which will make us more secure and prosperous at home and strong abroad. I commend this statement to the House.

I call the shadow Secretary of State.

11:06:00

I thank the right hon. Lady not only for early sight of her statement, but for her kind words in recognising my contribution to delivering this deal—Unity by name and by nature. As with the Annington deal and the UK-Germany barrel-making deal, I can safely say that this deal is profoundly to the benefit of our country. While I would have dearly loved to conclude those deals while in office, it is better that such deals are delivered under any Government than not at all, and I am delighted to be responding to the statement today. While it is unusual to have statements on a sitting Friday, I thank the Government for announcing this deal to the House today, because it speaks to its huge importance to our national interest. Before explaining why the deal is so important, may I first thank all those involved in bringing it forward: those at the Ministry of Defence and the Royal Navy, and in particular the commercial teams, who have worked so hard to iron out all the complex details needed to get it over the line, and of course Rolls-Royce itself? On that note, I thank everyone in the defence nuclear enterprise, and, as the right hon. Lady said, we give particular thanks, as we always should, to those who crew our nuclear submarines, and in particular the 24/7 continuous at-sea deterrent. My personal experience—I am sure the right hon. Lady will have discovered this in the many international engagements in the export role that is so important to any Ministry of Defence procurement—was that Rolls-Royce was the single UK defence company, possibly only matched by BAE, that seemed to have greater success in penetrating major export markets. Visiting Raynesway last April to keep this project moving forward, I saw the sheer scale of Rolls-Royce’s commitment to apprenticeships and manufacturing excellence. That underlined how it is a domestic and international industrial success story for UK plc, and we should do everything possible to support it. The deal is economically crucial, helping sustain our sovereign defence nuclear industry, as the right hon. Lady said, and in turn sustaining thousands of skilled jobs. I was struck, while speaking to apprentices at both Barrow and Raynesway, that of particular appeal to them was the assurance of a long-term career pathway. Today’s announcement will underwrite not just a major corporate investment, but the life plans of thousands of young people, and I wish them all well. Skills remain a challenge, given the sheer scale of the nuclear undertaking, so will the right hon. Lady update us on how she is taking forward the work of the pan-civil and defence nuclear skills taskforce, which I launched together with the then civil nuclear Minister, my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie), in August 2023? This deal clearly builds on the good work done by the previous Conservative Government, who always backed our armed forces, our continuous at-sea nuclear deterrent and our defence industrial base, and who brought the mighty AUKUS partnership to life with the US and Australia. Can the right hon. Lady provide further detail on her very welcome confirmation that this deal will underpin AUKUS? In talking about the economic importance of this announcement, we should also be clear about its military significance. The right hon. Lady was right to refer to the Secretary of State’s statement on Wednesday regarding the Russian spy ship Yantar and its grey zone activities in our waters and economic zone. I said in response that we stood shoulder to shoulder with the Government not just on Ukraine but in standing up to the Russian threat, which I still regard as by far the most immediate and serious in terms of the UK homeland. I urged him to lean into being more open with the country about the Russian threat, while of course protecting operational security, so that the country can understand the nature of the treat and what it will inevitably mean for defence expenditure. The strategic defence review is expected in the spring, and I hope that it will be published as early as possible—ideally in March—but whenever it is, it appears likely that there will be a particular focus on homeland security and missile defence. That is entirely right, but we must all understand a fact of military reality: there is one UK capability that matters above all in the Kremlin, and that is our continuous at-sea deterrent. There is a strong argument for reinforcing our conventional missile defence capability for the UK homeland, but that is not what deters Putin from striking our cities; rather, it is our potential to retaliate. For that reason, we must continue to give absolute priority to the deterrent in our defence budget, and that budget must be urgently increased. Whatever else is announced in the SDR, I hope the right hon. Lady will confirm both that investment in our deterrent will remain central to all future plans and that we will hit 2.5% during this Parliament. While the deterrent is inevitably a multibillion-pound undertaking, it remains a way to guarantee our security for a fraction of overall public expenditure. Today has shown that it also offers a huge economic return to the country, underpinning manufacturing excellence. As such, and given the threats that we face, it has never been more vital that we continue to strengthen our defence nuclear enterprise.

I find myself agreeing with a lot of what the shadow Defence Secretary said—unity, indeed. He asked about 2.5%. I think we all agree that defence spending needs to increase, and he knows well that we have just increased it by 5.9% in real terms this coming year—it is up by £2.9 billion—as a step on the way to getting to 2.5%, which is a cast-iron guarantee. The hon. Member referred to the strategic defence review, which as he knows we said will be coming in the spring, and that is still the plan. He will have to wait a little longer to see the precise details of the threats that that identifies and, therefore, the capabilities we need to develop. I think there is general agreement across the House about the dangers of things like the Yantar incident, which the Secretary of State spoke about on Wednesday, and we will all have noted that it was dealt with by one of our nuclear submarines. That reinforces the point that the hon. Member made about the importance of our deterrent.

The contract that our Defence Secretary has announced at Rolls-Royce in Derby today is the biggest Ministry of Defence contract in its history. It will make a major contribution to the long-term investment in our city that I and neighbouring MPs have been calling for, creating 1,000 jobs and protecting 4,000 more. It is an investment not only in industry and nuclear, but in the skills and expertise for which our city is famous. Does the Minister agree that this represents a landmark deal for British defence?

I thank my hon. Friend for making that point. She knows a lot about the subject, and she is correct that it is a landmark deal. It is particularly beneficial for Derby. As she said, there are many skills there already, but the Nuclear Skills Academy will be creating 200 apprenticeships and opportunities a year for young people to get into nuclear skills. Of course, those are transferable skills that are relevant not only on the military side but on the civil side, which will give young people with those skills great opportunities in life. That is one of the most important parts of the deal.

I call the Liberal Democrat spokesperson.

I welcome this announcement of the UK’s new Unity contract with Rolls-Royce Submarines. This £9 billion investment will create 1,000 new jobs in the industry, and this sort of investment represents a boost for not only our national security but communities across the UK. It is right that we celebrate this success for British industry and its skilled workforce. However, while we welcome this development, the Government must go further to create the stability and certainty that businesses need to thrive. Long-term growth requires an industrial strategy that incentivises investment in ethical, inclusive new technologies such as artificial intelligence and clean energy. We must position the UK as a global leader in these sectors, so that we tackle the climate crisis while creating good jobs and driving economic growth. Furthermore, we urge the Government to work in closer partnership with businesses of all sizes. Small and medium-sized enterprises are vital to the defence supply chain, yet too often they are left out of the major procurement processes. What are the Government doing to ensure that SMEs are included in the MOD procurement process? We also want to unlock British businesses’ global potential by bringing down trade barriers and building stronger relationships with our closest trading partners, including by fixing our broken relationship with Europe. Universal liberal principles are at the core of what we believe as Liberal Democrats, not least among them internationalism, human rights, the pursuit of peace and the rule of law. That is why we continue to champion the liberal, rules-based international order, which provides a strong basis for multilateral co-operation to address the world’s biggest problems. The Liberal Democrats believe in a policy of pursuing global disarmament. However, in the meantime, and in the light of all the current threats, we call on the Government to maintain a minimum credible nuclear deterrent and maintain the current posture of continuous at-sea deterrence. I urge the Government to rebuild trust with our European allies. Our security is inseparable from Europe’s, and we must work towards a UK-EU defence and security agreement. Recent agreements with Germany are promising, but they must be a starting point for deeper co-operation. What steps are being taken to strengthen the AUKUS partnership with the United States and Australia, particularly in the light of concerns about potential shifts in US foreign policy? National security and economic growth—

Order. The Liberal Democrat spokeswoman will be aware that she is allocated two minutes, which she has already exceeded significantly.

I welcome the hon. Lady’s support for the deal and for our continuous at-sea deterrent; that has not always been the Liberal Democrats’ position, so I welcome the fact that consensus has increased in this House. The point that the hon. Lady made about enabling SMEs to get involved in the defence supply chain is tremendously important. We are currently consulting on the defence industrial strategy, and I am particularly keen to ensure we take steps to make that better, because the potential for innovation, agility and pull-through of new technologies is tremendous. I invite her to contribute to the consultation and to watch out for the defence industrial strategy when it is published.

I very much welcome this statement. As the hon. Member for Epsom and Ewell (Helen Maguire) said, we need SMEs to support our defence sector. One of the key challenges facing our defence sector, as Ukraine has shown, is that we need to speed up the pace of innovation in this new era facing defence. In Stevenage, we have many excellent SMEs supporting our local defence primes, Airbus and MBDA. Will my right hon. Friend show her support for what SMEs are doing and support them in the future?

I completely agree with my hon. Friend’s point, which is that SMEs form a central part of our industrial base and can do more, if we encourage and enable them to do so, to boost our defence, boost jobs and boost economic growth in all regions and nations. I invite him to get involved in our defence industrial strategy consultation, which is ongoing.

I welcome the Unity contract and the work done by the previous Government to initiate it. It is a critical step in maintaining our submarine fleet and facilitating our continuous at-sea nuclear deterrence. The Minister recently confirmed to me that, excluding Trident, our defence spending as a percentage of GDP is actually only 1.9%. That puts the UK 23rd of 32 NATO countries, below North Macedonia, Montenegro, Albania and others. Our non-nuclear NATO partners currently spend proportionally more than we do on conventional forces, while Trident is a measure of last resort. To ensure that we are properly resourced for high-intensity, multi-domain collective defence, should our NATO spending commitment not be to meet that target on conventional forces, with our nuclear capability in addition to that?

I am not sure that is even the policy of the Conservative party—the shadow Defence Secretary can confirm whether that is the case. If I may say so, it is a bit sleight of hand to say that taking out a big chunk of our spending, which we are actually spending, will leave us well in deficit. Of course it would. However, I understand the point that the hon. Gentleman makes and the importance he attaches to spending on conventional defence. That is an important point, and once the strategic defence review is published he will be able to see the threats it identifies and how we will improve our capability to deal with them.

I congratulate the Government and Rolls-Royce on their fantastic and innovative Unity project. As today’s welcome announcement shows, defence is a fantastic pipeline for building skills and refining the jobs and growth that this country needs. That is felt and needed nowhere more than in my constituency, the home of the Royal Navy and of so many defence companies, be they national or SMEs. Alongside my hon. Friend the Member for Portsmouth South (Stephen Morgan), I intend to hold a roundtable later this year on growth strategy. Can the Minister assure the House that the defence industrial strategy will have a focus on training and skills and will promote and prioritise British industry?

I commend my hon. Friend for holding a roundtable; I have done a few of those around the country lately. It is quite illuminating to hear what comes back, particularly from small firms, and it will be informing our defence industrial strategy. I agree that there is much potential in all our constituencies across the nations and regions to get economic growth and jobs from boosting SMEs.

I very much welcome the Minister’s announcement, but can she tell us where we are getting to with the industrial strategy in utilising Rolls-Royce’s expertise to produce small modular reactors? There seems to have been a lot of delays in actually delivering on those, yet Rolls-Royce has demonstrated by this contract that it is a leading global player in that field.

I thank the hon. Gentleman for his question. He is right that there is much innovation in the defence industries in our nations, and often with dual-use technology, which means that it is not just about defence but about a broader range of potential opportunities. I see no reason why all those opportunities cannot be exploited using our defence industrial strategy to kick things off. I hope to see that in future.

As a former official of the GMB shipbuilding and ship repair union, I warmly welcome today’s announcement. Does the Minister agree that an aim of the defence industrial strategy should be to open up opportunities for jobs and apprenticeships to people from disadvantaged communities?

I very much agree with my hon. Friend. Our defence industries are largely based outside of London and the south-east and are in all our nations and regions. Quite often they are focused already in areas that have some deprivation. My hon. Friend is right to identify that defence industries across our nations and regions can be a part of regional development as well as boosting national growth.

The nuclear defence enterprise for the UK is an extortionate vanity project. We would much rather the money was spent on conventional defence capabilities. The Minister states that the contract will drive efficiency to reduce waste and save over £400 million. Given that no major nuclear contract has ever come in under budget, how does she expect this to happen? On the 200 jobs that will be split between Cardiff and Glasgow, can she let us know when during the course of the contract these jobs will be delivered? Will it be at the end or earlier on, and what will the split be between Cardiff and Glasgow?

I opened the centre in Glasgow that has some of those jobs, and I can assure the hon. Lady that it is well under way, and although the Cardiff centre is not quite up and running yet, it soon will be. So those jobs are already there. I disagree with her first point, of course, but that is fair enough. I hope that she will see the importance of manufacturing skills and job opportunities, many of which have dual-use applications, as indeed do the apprenticeships at Rolls-Royce in Derby. There is nothing to suggest that the young people who obtain those nuclear qualifications will not go and work on the civil side of nuclear in the future, and even she ought to be able to see the importance of skilling up young people and creating job opportunities across the nations and regions.

I think we all want to live in a world where we do not need a nuclear deterrent, but it is clear from some of the conflicts we have seen recently that that is not the world we currently live in. Does the Minister agree that the first duty of a Government is to protect the country, and will she welcome the work being done at Raytheon, which we both visited—it seems a lifetime ago, but it was actually only seven months ago—to ensure that we are manufacturing and producing defence systems in-house, rather than relying on foreign imports?

I very much agree with what my hon. Friend has said, and I fondly remember that visit to his constituency during, I think, the general election campaign. Defending the country is clearly the first duty of any Government. My hon. Friend will have noted from the statement of intent in respect of our defence industrial strategy that one of our key aims is to build more in Britain and to improve British jobs and economic growth through the money that we spend on our defence, and I think that that is a win-win.

This deal is absolutely the right thing to do, and I very much welcome the Minister’s commitment to our continuous at-sea deterrent, which has not always received universal support on the Labour Benches. My hon. Friend the shadow Secretary of State asked the Minister a very clear question about how she sees this underpinning the AUKUS deal for the long term, but unless my hearing is even worse than I thought, I am not sure that she gave a clear commitment in that regard. May I give her another opportunity to make absolutely clear this Government’s commitment to AUKUS and this deal’s central role in its long-term future?

I was attempting to answer a great many questions from the shadow Defence Secretary and did not reach that one, so the hon. Gentleman is right to raise it with me again. The deal enables us to boost production and the capacity that we need in order to deliver SSN-AUKUS as a follow-on from our Dreadnought submarines. Without it, we would be in much more difficulty in ensuring that we can do everything that we need to do on time to deliver those commitments. It is essential to the delivery of our AUKUS commitment, as it is to the delivery of our own continuous at-sea nuclear deterrent.

Like many people from Gateshead, I am proud to say that I come from a long line of people working in the defence manufacturing industry. Can the Minister assure me that this deal, and other defence manufacturing deals, will benefit those in all the nations and regions of the country, especially Gateshead?

Yes, I can assure my hon. Friend of that. This is the biggest deal that Rolls-Royce has ever signed. It is a long-term commitment between the Government and Rolls-Royce. It increases efficiency and resilience, creates jobs, and makes savings. These are virtuous circles, and if we can achieve them in other parts of our defence spending, they will benefit the entire nation and all the regions within it.

Immediately before the Minister came to the House, we were debating environmental protections to secure our country and the future of our globe. In the spirit of unity, will the Minister agree that there is little point in talking about environmental protections and security without also securing our world through robust defence spending? There is nothing worse for the environment and humanity than war, and we need to invest in defence in order to secure our globe and to secure this country.

In the spirit of unity—that pun is becoming a bit wearing, but I have just used it, too—I very much agree that the foundation of security and deterrence is a key part of us being able to advance as a nation. Without that security, we cannot secure any of our public services or our way of life.

Today’s announcement will help deliver long-term growth, boost British industry, and create and support thousands of skilled jobs. Can my right hon. Friend confirm that a key ambition of our defence industrial strategy will be to deliver jobs in every nation and region, and indeed in smaller towns such as Rugby, where GE Vernova is doing fine work to support the Royal Navy with advanced hybrid electric propulsion technology for the Royal Fleet Auxiliary’s frontline fleet?

Yes, I can confirm that. MOD spending already supports over 200,000 jobs directly, and many more besides, and my hon. Friend has set out an example from his constituency. The defence industrial strategy will aim to create jobs in every nation and region of this country.

I thank the Minister for a very positive statement—it is always good to have positive statements, and today is one of those occasions. It is great news to hear of the wonderful investment, which is needed to shore up not only defence but our manufacturing industry. Looking at the job allocation, I see that there are 800 jobs for Derby in England, and 200 for Glasgow in Scotland and Cardiff in Wales. I have no doubt whatsoever about the Minister’s commitment to job creation, but will she outline how the Government will ensure that businesses and factories in Northern Ireland can be involved in the supply or provision of parts? Particularly, will she outline whether the skills of Harland and Wolff can be utilised in fulfilment of the contract, and whether UK-wide involvement was a stipulation of the deal with Rolls-Royce?

The hon. Gentleman, as ever, is fighting for his constituents. He makes some good points about Harland and Wolff and skills. We do have defence contracts based at Harland and Wolff, and I will be visiting Belfast in due course—I will not give him the exact date, but it is soon—in order to galvanise and understand what is available, particularly in the SME community, in Northern Ireland. I look forward perhaps to talking to him about that at the time.

Today’s announcement is a fantastic boost to British industry and British manufacturing. In my constituency we have a proud history of supporting our national security. What steps will the Minister be taking in the defence industrial strategy to support local economic growth in constituencies such as mine in west Wales?

My hon. Friend is right that there is great potential for economic growth in all of our nations and regions, and in every one of our constituencies, in respect of the extra spending that the MOD is now able to offer to keep our nations safe. I am sure that he has SMEs in his constituency that can benefit from defence contracts if we can make it easier for them to engage with defence, which is one of the problems that they all tell me they have at present.

As the final word comes back to the east midlands, I thank the Minister for her hard work. Many of my constituents in Rushcliffe work for Rolls-Royce and will wholeheartedly welcome the announcement today. Could the Minister briefly explain how skills development will link to the evolving defence industrial strategy, and how she will work with our fantastic Mayor of the East Midlands, Claire Ward, to maximise the opportunities for our region?

My hon. Friend is right that skills are key, which is why this deal has established a defence nuclear skills academy to ensure that 200 apprentices a year can benefit from gaining those skills. I have no doubt that long-term partnerships with defence industries will enable us to do that on a broader scale. The defence industrial strategy will be a key part of giving that confidence to companies that it is the right time to invest in skills.

I thank the Minister for her statement. While the Ministers switch places, I inform Members that we are going to return to the Climate and Nature Bill.