As expected, Harland and Wolff, the legendary Belfast shipyard which built the Titanic, has formally entered administration. This comes as a surprise to no-one: last year, the firm lost £43 million, on top of a £70 million loss in 2022, and it had become reliant on a high-interest loan from US investment managers Riverstone.
Harland and Wolff’s management had hoped to restructure its borrowing with a loan guarantee from the government, and had spent months negotiating with UK Export Finance, which deals with export credit guarantees. In July, however, the newly appointed business and trade secretary, Jonathan Reynolds, told the House of Commons that he would not offer such a guarantee, nor any emergency liquidity funding, because there was ‘a very substantial risk that taxpayer money would be lost’.
The future of Harland and Wolff is now in doubt. The company is expected to run out of money to pay salaries next week, and may be broken up for sale or asset stripped. But the government has another pressing problem: Harland and Wolff are part of a consortium called Team Resolute with a contract to build three Fleet Solid Support ships for the Royal Fleet Auxiliary. Another member of the consortium, Spanish marine engineering firm Navantia, could be a possible buyer, but the defence secretary, John Healey, has requested legal advice about the prospect of these vessels being built by a foreign-owned manufacturer or the work transferred to Navantia’s facility in Cádiz.
There are two curious issues in this sorry saga which raise questions over the government’s determination not to provide the loan guarantee for Harland and Wolff. The first is its general policy towards support for industry. Labour has already proved that it firmly believes in intervention in some cases, so it is interesting that the construction of three Royal Fleet Auxiliary support vessels worth £1.6 billion was not of sufficient strategic importance to merit the guarantee – not the payment, simply the guarantee – of a restructuring loan.
After all, Whitehall’s coffers have been opened in other circumstances. A few weeks ago, the government found £500 million to subsidise the modernisation of Indian-owned Tata Steel’s facility in Port Talbot despite the expectation of substantial job losses. Only this week, UK Export Finance saw fit to underwrite a £136 million loan for a paper manufacturing facility in Shotton Mill in Deeside, owned by Turkish conglomerate Eren Holding. For London-headquartered Harland and Wolff, there is no such accommodation.
It would be the act of cynic to observe that the Port Talbot steelworks lie in the Labour constituency of Aberafan Maesteg (held by health minister and ‘red prince’ Stephen Kinnock), and that Shotton Mill is in Alyn and Deeside, the seat of the government’s deputy chief whip, Sir Mark Tami. Harland and Wolff, of course, is in Northern Ireland, where Labour is not even registered as a political party and does not nominate candidates for elections. Still, there is a faint but disturbing whiff of clientism about the comparisons.
The other strange element is the attitude of John Healey, the defence secretary. When the contract to build the Fleet Solid Support ships was awarded to Team Resolute in November 2022, the Labour Party was incandescent with rage that the presence of Navantia meant that some of the work would be undertaken in Spain. Despite the fact that at least 60 per cent of the construction would be in the United Kingdom, and that final assembly of the ships would take place at Harland and Wolff’s Belfast site, Healey thundered that ‘this decision is a betrayal of British jobs and British business’. He added that ‘Labour would build these ships in Britain’.
The whole contract is now in doubt, and the government’s refusal of that £200 million loan guarantee is a major factor. Of course the public finances are under enormous pressure: ministers tell us that often enough. But when money is found for foreign-owned businesses in Labour heartlands, and when the chancellor of the Exchequer, Rachel Reeves, can find £9 billion for public sector pay awards which benefit among others NHS staff in Unison and Unite, both unions affiliated to the Labour Party, the principles underlying the government’s investment decisions start to seem shaky.
‘In government,’ Healey declared less than two years ago, ‘we will make it fundamental that British defence investment is directed first to British business, with a higher bar set for any decision to buy abroad. We will buy, make and sell more in Britain.’
If only the voters of Belfast East had had a Labour candidate to swing behind at the general election, perhaps all this would be different…