Call to overhaul defence spending after £200m Royal Navy contract goes Dutch

GMB Scotland has urged ministers to overhaul UK defence procurement rules after a £200m contract to replace Royal Navy support vessels was sent abroad.

The union warned awarding the work to Damen, a Dutch defence giant facing allegations of corruption and sanction busting, exposes a dismaying lack of UK political oversight and industrial strategy.

Louise Gilmour, GMB Scotland secretary, has written to defence secretary John Healey warning the Defence Maritime Services (DMS) fleet replacement has exposed “a procurement system needlessly allowing the off-shoring of contracts without supervision or strategic consideration”.

She warned it was “deeply troubling” that Serco, the private contractor supplying naval port services, was under no obligation to ask UK shipyards to tender for the contract to build 24 vessels, including tugs, pilot boats and crane barges for naval bases at Faslane, Devonport and Portsmouth.

In her letter, copied to Scotland secretary Douglas Alexander, Gilmour said the decision to send the work overseas flouted the National Shipbuilding Strategy, intended to support UK industry, adding: “These are vessels that could easily have been built by a number of UK shipyards.”

Gilmour also highlighted claims that ministers had been unaware of the decision to send the contract overseas and asked Healey to confirm ministers were fully informed of the decision before the contract was offshored.

She said: “If ministers were not aware that a programme of this scale could be placed overseas without scrutiny, serious questions must be asked about accountability and oversight.”

GMB, one of the biggest unions in manufacturing, has called for the contract to be urgently reviewed and, if possible, halted and shared among UK yards including publicly-owned Ferguson Marine, in Port Glasgow, just ten miles from the Faslane submarine base where some of the support vessels would be based.

Gilmour also called calling for a fundamental overhaul of defence procurement rules, including mandatory engagement with UK shipyards and recognised trade unions, stronger ministerial oversight of major defence service contracts, and enforceable social value criteria to ensure public money supports domestic industry.

Scrutiny of the decision to send the contract overseas has intensified as the prosecution of Damen over alleged corruption and breaches of Russian sanctions continues. The company has denied any wrong-doing while UK ministers are monitoring the inquiries by prosecutors in the Netherlands.

Gilmour warned the “reputational and operational risks associated with these proceedings are significant but entirely avoidable” and said the decision to send the contract to the Dutch company had clear consequences for UK workers.

At Fergusons – the last remaining commercial shipyard on the Clyde – the union has been campaigning for the direct award of a shipbuilding contract to open a new pipeline of work for the state-owned yard.

Gilmour said a skilled but blameless workforce deserves the opportunity to restore a reputation unfairly damaged by overspends and delays affecting the two ferries most recently built there.

She said: “The work so summarily sent to the Netherlands could and should have provided valuable short-term infill contracts at Ferguson Marine and other UK yards.

“That would have safeguarded jobs, apprenticeships and hard-won industrial capability while delivering essential vessels for the Royal Navy.

“Our members are entitled to expect that government procurement decisions will support, not undermine, their jobs, communities and the nation’s long-term defence resilience.”

Our wish for 2026? Let Scotland make again
By Louise Gilmour, GMB Scotland secretary

After a year that veered from the unexpected to the unprecedented, the file labelled You Couldn’t Make This Stuff Up was already bulging like Santa’s belt.

We needed to squeeze in a late entry, however, because the off-shoring of a £200 million contract to build Royal Navy tugs without a word to UK shipyards, unions, or, apparently, ministers is a doozy. It sounded preposterous even before discovering that a few weeks after Damen proudly announced the deal in September, the multi-billion pound Dutch defence giant was in court for alleged bribery, fraud, money laundering, and, oh, violating sanctions against Russia.

The company denies all wrong-doing and insists prosecutors have grabbed the wrong end of every stick but the optics, as the PR types used to say, are not great. The company’s reputational issues are a less pressing concern, however, than the competence issues of our ministers – on both sides of the border – who cannot, apparently, stop sending contracts abroad. In this case, the agreement between the Ministry of Defence and Serco, the multinational being paid £1bn for port support, apparently means ministers did not need to be told UK taxpayers would be paying Dutch shipbuilders to build workboats for our navy.

A little awkwardly, some of those tugs and pilot boats will help guide submarines in and out of Faslane, just ten miles from Port Glasgow where our own publicly-owned shipyard Ferguson Marine has been urgently seeking exactly this kind of work and exactly this kind of contract. In what world is this acceptable? If you look up dysfunctional in the dictionary, you will find this contract. Having said that, if you look up UK industrial strategy, you find only white space.

Ministers at Holyrood and Westminster never get tired of telling us how their hands are tied, how procurement rules force them to send work abroad, to build buses in China, ferries in Turkey, anything anywhere but here. The obstacles blamed by our hand-wringing politicians and advisers only go so far, however, when other countries are clearly able and willing to support their industries without becoming fankled in red tape and elaborate excuses.  Whatever the rules, their governments seem able to pull on the levers of public support - slow loans, patient taxes, whatever - to keep contracts at home, safeguard manufacturing skills and protect jobs.

For example, the German government recently froze a £600m payment to Damen for missing targets on a frigate contract, causing, the company admitted, “a temporary cash flow problem.” Did Dutch politicians in The Hague sombrely insist rules were rules and nothing could be done or did they immediately agree an emergency £240 million bailout? Go on, guess.

The enduring and dismaying failure to build in Scotland is about far more than Fergusons, of course, but the parlous position of the last non-naval shipyard on the Clyde sums up the myopic, abject failure to create an industrial strategy fit for publication never mind purpose.

Scotland has 10,000 miles of coastline needing ships of all sizes for all seasons yet it is beyond the gumption of our government to propel a state-owned shipyard, that has successfully built boats for more than a century, into a secure future? Never mind that a fast-changing world has just put a new premium on our defence, security and industrial capability. Or that these good, skilled, and unionised jobs are the foundation of strong communities, supporting families and firms alike.

Enough is enough. UK defence ministers - encouraged and cajoled by Holyrood – must review this contract with Damen, and, if possible, halt it, before sharing the work with Fergusons and other equally capable UK yards.

We must let Scotland make again. So start here.

This column first appeared in The Sunday Post