Labour ministers have sought legal counsel regarding a £1.6 billion Royal Navy shipbuilding contract amid concerns over a Spanish takeover of the struggling British company involved in the project.
Harland & Wolff, based in Belfast and known for constructing the Titanic, was contracted alongside Navantia, a Spanish state-owned shipbuilding firm, to build three Navy vessels. However, Harland’s recent decision to call in administrators has thrown the project into turmoil.
Defence Secretary John Healey and his team have requested legal advice from civil servants on the terms of the shipbuilding contract as the Ministry of Defence explores options for the Fleet Solid Support (FSS) programme, a government initiative to provide additional support vessels for the Navy.
Harland urgently seeks a potential buyer after entering administration, with Navantia emerging as the leading candidate. In the midst of this uncertainty, Admiral Sir Ben Key, the First Sea Lord, traveled to Cadiz two weeks ago to meet with Navantia executives.
However, unions have expressed concerns that the Spanish company may only be interested in Harland’s Belfast facility, leaving the futures of hundreds of workers at its other three locations, Appledore in Devon and Methil and Arnish in Scotland.
They are urging the Defence Secretary to leverage the Government’s influence over the FSS contract to ensure that any buyer of Harland commits to retaining all four yards in a bid to protect jobs. Harland’s portion of the deal, valued at approximately £700 million, is considered the company’s most significant asset amidst its financial struggles.
Mr. Healey reportedly discussed this issue, along with others, with representatives from the GMB union—one of his party’s key supporters—during the Labour conference in Liverpool earlier this week.
In a letter earlier this month, the union cautioned that any potential buyer should not be allowed to “cherry pick” which yards or contracts to save. The Irish Congress of Trade Unions reiterated this concern in a meeting with officials from the Department for Business and Trade last week.
However, it remains unclear what authority ministers have to directly intervene in the sales process. The Sunday Times noted that the appointment of administrators could potentially allow the Ministry of Defence to retender the FSS contract.
In this context, Labour ministers are believed to have discreetly sought advice from officials on their legal options, focusing on the timely and budget-compliant delivery of the three Navy ships intended to supply Britain’s aircraft carriers with supplies and munitions starting in the early 2030s. They are also concentrated on ensuring the preservation of national shipbuilding capacity and honoring commitments made to UK yards.
According to the initial plans, Harland & Wolff and Navantia were to each fabricate different sections of the ships, referred to as blocks, at their respective yards in Appledore and Cadiz. These blocks would then be transported to Belfast for final assembly, with the first ship scheduled to enter service in 2031 and the last by 2033.
For the first two ships, Navantia was responsible for fabricating the engine, superstructure, and lower cargo blocks, while Harland & Wolff would create the upper and mid cargo blocks and the bow, as detailed in documents reviewed by The Telegraph. For the third and final ship, Harland & Wolff was also set to build the lower cargo section, with Navantia handling the remainder.
The company’s situation escalated from a lingering concern to a full-blown crisis in July when Business Secretary Jonathan Reynolds declined to underwrite a £200 million restructuring loan for the firm, citing fears that taxpayers would face unacceptable risks. This decision led to the departure of former CEO John Wood and the appointment of interim managers, including restructuring expert Russell Downs.
