MP gains significant commitment – Government vows to play fair on £1billion ship deals

– ALL INTERNATIONAL FLEET SOLID SUPPORT CONTRACTS SUBJECT TO EU STATE AID RULES –

An SNP MP has gained an assurance from the UK Government that all international bids to build Fleet Solid Support ships will be subject to EU rules on state aid – a commitment described as “a significant development.”

Carol Monaghan, MP for Glasgow North West, had previously warned that the National Shipbuilding Strategy would leave UK shipbuilders severely disadvantaged against overseas industries. Not bound by EU rules on state aid, some international shipyards are heavily financially subsidised by their own governments and thus are able to bid for contracts offering artificially reduced costs.

EU rules on state aid forbid, in principle, any advantage granted by public authorities through state resources to organisations that could distort competition and trade.

Writing to the Minister for Defence Procurement, Guto Bebb MP, Monaghan described this as “governments…effectively buying industrial contracts” and urged that UK bids are considered against the real, non-subsidised, costs of overseas builds.

In response, the Minister stated that although EU rules on state aid do not apply to non-EU companies, the MOD would make no such distinction in their application and all bids will be judged against the same standards, which Monaghan has described as “a significant development.”

Commenting, Carol Monaghan MP said:

“Whilst it is accepted that these Fleet Solid Support contracts should be put to international competition, in the past this has been done in such a way that has left UK shipbuilding at a major disadvantage. The contracts were offered to ‘open’ competition – not fair competition.

“I am delighted that the UK Government has made a commitment to carry out procurement in accordance with EU rules on state aid to ensure a level playing field for all bids, and to enable UK companies to participate equitably in the procurement process. We have been seeking guarantees on this issue for several years now, and this a significant development.

“This commitment will prevent overseas governments effectively buying industrial contracts by heavily subsidising their own industry bids. This is important and welcome news for the shipbuilding industry across the UK.”

You can read Carol Monaghan MP’s letter to the Defence Procurement Minister below, along with his response:

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