By stewartb – a long read

In recent days, British Labour Party politicians as well as journalists writing for ‘patriotic’ British media outlets have been trying to make mountains out of the molehill of Scottish Enterprise not awarding Rolls-Royce a £2.5 million grant.

It’s tough competition but pellisonrhaps the prize for the ‘best’ headline – the most ridiculous –  goes to the ‘Scottish’ Daily Express (May 31) with this (my emphasis):  ‘SNP’s ‘student politics’ threaten Scotland’s ‘national security’ after it blocks £11m investment’.

From the Express, we learn: ‘the SNP have been accused of threatening Scotland’s national security after blocking plans to build a specialist welding centre on the banks of the Clyde. Rolls-Royce were set to invest £11m in the facility but proposals fell apart after Scottish Government quango Scottish Enterprise pulled a £2.5m grant.’ Accused by a senior British Labour Party minister in the UK government it appears!

Let’s leave aside some misrepresentation of the details in the Express’ piece (see below) and deconstruct the claim. Firstly, on ‘Scotland’s national security’ threatened by the withholding of this ‘huge’ sum of £2.5 million – really? Is ‘national security’ for Scotland in Union not bound up in the UK’s ‘national security’ aka UK defence? Is that not a reserved responsibility of the UK government – ‘better together’, ‘broad shoulders’ of the UK and all that?

If a specialist welding centre for Rolls-Royce is critical to naval ship building for the defence of the Union (as is being implied), why would a funding gap of £2.5 million cause the Westminster government the slightest concern? Of course it wouldn’t – it doesn’t!  But anyway, why should we in Scotland pay twice over – directly through a Scottish Government budget line and through our contribution to the funding of the reserved matter of UK defence? Do we need to seduce major commercial recipients of UK government defence spend with relatively minor grant funding to get a share of the direct economic development benefits? After all, according to the latest GERS figures (for 2023-24), Scotland is assigned a share of UK public expenditure on defence amounting to c. £4.6 billion. For the obvious perspective, £2.5 million is just 0.05% of that annual GERS stated defence spend made on Scotland’s behalf by Westminster.

The Express ‘explains’ that the welding centre would “support the construction of naval vessels”. It quotes the president of submarines at Rolls-Royce warning Scotland’s First Minister that the project “cannot continue” without the public funding and could be axed within days. On the day when the. UK Prime Minister announces his government’s decision to build (’up to’) 12 new ‘attack’ submarines for the Royal Navy, a senior executive at the major defence contractor most likely to benefit hugely from new UK submarine procurement announces that a specialist welding centre of ‘national security’ significance related to Royal Navy submarines will simply be axed for the sake of £2.5 million.  What do they take us voters for?

The Express also quotes a Scottish Enterprise spokesman: “We were approached about a defence-related project. … While no formal application for support has been received for this project, during discussions we indicated funding could only be considered if the project aligned with Scottish government guidelines on the manufacture of munitions.” So eligibility criteria explained in advance of any formal application for funding – a ‘national security’ outrage?  And contrary to the Express’ earlier assertion, its own piece tells us here that Scottish Enterprise did in fact NOT PULL a £2.5m grant.

Support for Royal Navy shipbuilding on the Clyde

The BBC got in on the ‘threat to national security’ act!Appearing on BBC Scotland’s Sunday Show, the Secretary of State for Defence, John Healey was asked about reports that plans for what was here termed a specialist skills centre to support submarine manufacture were at risk of being cancelled without Scottish Enterprise support.

Are Royal Navy submarines built on the Clyde? Anyone? We know that naval surface vessels are built on the Clyde, by BAE Systems. Might the latter need to avail itself of a new specialist welding centre at Rolls-Royce Inchinnan? You can judge.

From the UK Defence Journal (April 12, 2024) ‘Glasgow shipyards benefit from biggest investment in decades.’

‘…  at a newly unveiled robotic welding panel line in the steel fabrication facility, Euan Fullerton, head of manufacturing engineering at BAE Systems, emphasised the cutting-edge nature of the new facilities. “This is state of the art, world-class technology,” he said, highlighting the inclusion of an advanced robotic system that is automated by programmers on site, designed to increase efficiency and reduce the costs of ship construction.’

‘The cumulative effect of these substantial investments is expected to revolutionize shipbuilding at the Govan shipyard. By integrating advanced robotics and a highly skilled workforce, BAE Systems anticipates that ships will be constructed much quicker and at a lower cost, providing significant advantages in a competitive global market.’

Regardless of eligibility criteria for a Scottish Enterprise grant, what scale of net additional benefit to actual naval shipbuilding on the Clyde might be forthcoming from the specific Rolls-Royce welding centre project? As no formal application was received, I suspect no ex ante economic impact appraisal has even been undertaken.

There is more. From Defence Online (November 18, 2022): ‘A British shipyard has been awarded a £4.2 billion contract to build the second batch of Type 26 frigates for the Royal Navy.’

This relates to the decade long programme of work at BAE Systems’ sites in Govan and Scotstoun, Glasgow: ’In the manufacturing supply chain, £248 million worth of work has been committed to Scotland, with £16 million to Wales and £749 million to England.’

For more obvious perspective relating to naval ship manufacturing in Scotland, £2.5m – the grant that won’t be given by Scottish Enterprise to Rolls-Royce – equates to 1.0% of just the supply chain expenditure in Scotland being forecast by BAE Systems in order to deliver on its existing naval shipbuilding contracts on the Clyde. – National security threatened?

Is Rolls-Royce starved of public money?

Firstly, as an aside, research in 2022 by the intellectual property services and R&D tax credit firm GovGrant found that Rolls-Royce has secured more UK innovation funding than any other firm in 18 years. (https://www.business-live.co.uk/enterprise/rolls-royce-secures-more-uk-25191980 )

‘The company, which has its UK sites in Filton, near Bristol, and Derby, has been handed £689m by Innovate UK over nearly two decades – equivalent to nearly £38.2m each year. It is over four times more than any other company has received for their innovation projects, and accounts for 7% of all funding awarded by the government’s innovation agency.’

And of greater significance, on January 24, 2025 the British Labour Party government in Westminster announced this:  ‘Landmark £9 billion contract for British business to boost jobs, growth and nuclear deterrent. A major deal, worth approximately £9 billion, has been struck with British firm Rolls-Royce to bolster support to the Royal Navy’s fleet of nuclear submarines, boosting national security and economic growth and delivering on the government’s Plan for Change.’

Source https://www.gov.uk/government/news/landmark-9-billion-contract-for-british-business-to-boost-jobs-growth-and-nuclear-deterrent

This commitment of a £9 billion spend by the UK government is a BIG deal commercially for Rolls-Royce. No doubt it will involve the company in a lot of ‘specialist welding’ for these particular submarines too. For obvious perspective, the sum of £2.5m – the grant that won’t be forthcoming from Scottish Enterprise – equates to c.0.03% of £9 billion! – National security threatened?

How affordable is £2.5 million for the UK government with its present ‘fiscal rules’ – the government which has (reserved) responsibility for the UK’s ‘defence’? The same government press statement (above) has this about an altered contractual relationship with Rolls-Royce: ‘Alongside backing thousands of UK roles, the agreement also streamlines previous contracts and incentivises more efficient delivery, resulting in better value for money for the taxpayer through savings of more than £400 million over the eight-year contract.’ At the risk of boring readers, £2.5m – the grant that won’t be forthcoming from Scottish Enterprise – equates to 0.6% of the UK government’s savings alone on existing contracts with Rolls Royce. – National security threatened?

Gross misrepresentation by a Labour MP

A British Labour Party MP representing a constituency in Scotland couldn’t resist this opportunity. The BBC News website’s coverage of this story quotes Graeme Downie, the Labour MP for Dunfermline & Dollar: ”The SNP are actively hostile to the creation of skilled jobs in our defence industry and the opportunities it creates for working-class young people across Scotland. This is yet another short-sighted SNP policy that is blocking investment in Scotland. The SNP care more about their own out-of-date, ill-informed dogma and, sadly, Scottish people are losing out on jobs because of it.”

Keep in mind the ‘actively hostile’ claim with respect to skilled jobs in defence companies as you read on!From the UK Defence Journal (May 31, 2024) ‘Scot Gov support to Clyde shipbuilders criticised by Greens’.

‘Scottish Enterprise awarded BAE Systems a £360,000 grant on 4 April 2024’, adding  ‘it is crucial to understand that the grant to BAE Systems was designated explicitly for training staff in “new ways of constructing naval ships on the Clyde.”

‘This funding is part of a broader £300 million investment in shipbuilding on the Clyde, including constructing a £12 million shipbuilding academy in Glasgow. The grant aims to support local industry and job creation within Scotland. It is entirely focused on shipbuilding activities, not on the production of munitions or weaponry ….’. – Actively hostile’ Mr Downie?

The same article in 2024 quotes Labour MSP Paul Sweeney: ‘I am delighted that Scottish Enterprise has supported this visionary project with a grant of £360,000. It is precisely the investment that the state should be making to support the growth of what remains the largest manufacturing industry in the West of Scotland and the country’s biggest employer of apprentices, with 300 apprentices and graduates joining the Clydeside workforce this year alone.’

The BBC News website (November 18, 2024) had this headline: ‘Amnesty criticises ministers for arms firm funding’. It reports that: ‘Amnesty International has accused the Scottish government of turning “a blind eye” to the risk of being part of the supply chain of arms which could be used in the war in Gaza.’  And notes: ‘The Scottish government said no grants were given for the manufacture of arms in Scotland, and that the funding supported research, training and apprenticeships.’

And of relevance to Labour’s Graham Downie’s ‘actively hostile’ claim, this BBC article also has this: ‘BAE Systems Surface Ships LTD received £9,600 from Scottish Enterprise in 2023 and £360,000 in the first half of 2024. Leonardo received £786,125 in 2023 and Raytheon Systems received £500,000 in the first half of 2024.’ These are all defence companies who employ thousands of people in Scotland. – ‘Actively hostile’ Mr Downie?

As recently as August 2, 2020, even the Daily Record could publish this headline: ‘Fury as Rolls-Royce handed £350k taxpayer cash months before jobs axed at Scots site’.

Source https://www.dailyrecord.co.uk/news/scottish-news/rolls-royce-handed-public-cash-22455065

‘Rolls-Royce received hundreds of thousands of pounds of public cash to train staff months before­ announcing mass redundancies at its Scots site.’ And: ‘But the cost-cutting comes despite the firm receiving £357,011 from grants agency Scottish Enterprise this year to support staff development at the plant.’

‘A taxpayer-funded handout of £437,945 was also given in 2019 along with £802,110 in 2016 – taking the four-year total to £1,597,066. Rolls-Royce has claimed it intended to repay money given by Scottish Enterprise to develop its engine services department.’

And the company noted: at the time“We’re grateful to the ­Scottish Government for the support it has been able to give us.”  – ‘Actively hostile’ Mr Downie?

In the same article, the Record also quotes the then Labour leader Richard Leonard: “With hundreds of jobs cut at Rolls-Royce so soon after the company benefited from over £1.5million of public money, serious questions need to be asked about the ethics of the Rolls-Royce management and the efficacy of no-strings-attached business support.”  But that was then: Mr Downie is an MP for LINO – the Labour in Name Only party!