Britain’s shipyards are the latest victims of a rudderless industrial policy
Joe Wright, 6 November 2013
BAE Systems, one of the world’s biggest defence, security and aerospace companies, is to announce today that 1,775 workers will be made redundant from three of its shipyards: Portsmouth, Govan, and Scotstoun yard in Glasgow. Portsmouth shipyard, the last place in England that can build advanced warships (something to bear in mind in the lead up to the Scottish independence referendum), will be closed. The fate of Govan and Scotstoun on the river Clyde is yet to be decided. There are currently 3,200 people employed by BAE at Govan and Scotstoun, and roughly 1,200 employed in shipbuilding at Portsmouth.
BAE’s downsize, or ‘rationalisation’, comes after having completed major phases of projects to build two new warships for the Ministry of Defence, led by a £5.4bn aircraft carrier programme. BAE has calculated that the next project for the Royal Navy, the building of the new Type 26 combat ship, is not big enough to sustain all three sites.
The company’s decision to downsize its UK maritime operation is a complicated one and there is little the Government can do to stop it aside from commissioning more ships, for which there may be no need or funds to do so (the Government is already planning to announce that it will need to spend an extra £800m on the carriers currently under construction, taking the total costs to more than double the original estimate). But the decline of yet another industry that provides many high-skilled manufacturing jobs is simply indicative of the misdirection and lethargy of the Government’s wider economic policy.
The Government will no doubt seek to offset this blow with the announcement that 1,000 new jobs are created every day in Britain. These have been created mainly by a surge of growth in the services sector. Seemingly good news: the recently unemployed in Portsmouth can turn to – somehow – a new line of work. But if the recession that followed the financial crisis has taught us anything, it is that ‘GDP growth’ and ‘1,000 new jobs created’ does not necessarily equate to greater, long term prosperity for the UK. The difference between loosing 1,000 highly-skilled jobs in manufacturing and gaining many more in services is not necessarily a good thing.
The continued decline of manufacturing in favour of services is precisely the biggest problem facing Britain’s sluggish growth and economic vulnerability. The Government itself has called for a more diverse economy: Vince Cable’s industrial strategy was to lead growth with a renaissance in manufacturing, which George Osborne called ‘part of rebalancing and rebuilding the British economy’.
Far from diversifying, our recovery has so far been generated by yet more debt-fuelled consumption (60% of our economy is still consumer spending). The size of our trade deficit also remains colossal. The ONS states the current account deficit doubled in 2012, ‘the highest since 1989 (4.6% of GDP)’. These are not signs of a rebalancing, and the decline of one of Britain’s more prestigious and historical manufacturing industries is just another reminder.