A Spanish state-owned shipbuilder is reportedly pressing the UK government for improved terms on a deal to supply the Royal Navy with three vessels, in talks that could prove key to rescuing the Belfast shipyard that built the Titanic.
Navantia, owned by the Spanish government, is poised to buy Belfast-based Harland & Wolff (H&W) in a deal that could save up to 1,000 jobs.
Talks have been taking place since H&W went into administration in September, after the government refused to provide taxpayer-funded support to keep it going.
Navantia is now understood to be trying to secure a better deal on its contract to build three Fleet Solid Support (FSS) ships, which supply navy vessels with dry goods such as food.
The fate of 1,000 workers at four UK shipyards could rest on the Ministry of Defence (MoD) agreeing to more “realistic terms”, a source close to the Spanish company told Sky News, which first reported the story. The MoD received a 2.3% spending increase in last week’s budget.
Navantia has reportedly been providing H&W with cash to fund its day-to-day operations while takeover talks continue.
Parallel discussions between government officials in London and Madrid are reportedly critical to the deal, with the UK likely to demand that any renegotiation of the £1.6bn FSS shipbuilding contract comes with job guarantees.
H&W is slated to build three FSS ships, which transport crucial supplies to aircraft carriers for the Royal Fleet Auxiliary, the civilian branch of the Royal Navy.
Under the original plans, Harland & Wolff and Navantia would each have fabricated sections of the ships in their yards in Appledore and Cádiz, respectively. The sections would then have been joined together in Belfast.
The future of the project was plunged into doubt when H&W’s main company was placed into administration last month.
If Madrid and London can come to an agreement, a takeover deal could be announced within days, Sky News reported.
H&W has been looking for buyers for the companies operating its shipyards after government officials raised concerns that a £200m loan guarantee could result in taxpayer losses.
In August, the business secretary, Jonathan Reynolds, ruled out giving the loan guarantee, which had been announced by the previous Conservative government.
Earlier this year, about 1,600 people were working across H&W’s businesses, which include shipyards in Devon and Scotland as well as Belfast.
The Belfast yards alone employed as many as 20,000 people in their heyday and the yellow Samson and Goliath cranes installed in the 1970s still loom high on the city’s skyline. The yard most famously built the Titanic ocean liner, which sank on its maiden voyage in 1912.
The Guardian has approached Harland & Wolff and the MoD for comment. Navantia declined to comment.