Shipyard rescue ‘too risky’ for taxpayers
THE Business Secretary yesterday said he was confident Royal Navy warships will be built in Belfast – despite ruling out a government rescue for troubled manufacturer Harland & Wolff.
Jonathan Reynolds said there was a ‘very substantial risk that taxpayer money would be lost’ if such a bail-out were to happen. Instead, he said he believed a ‘market solution’ would be found for the company, best known for building the Titanic but now racing to secure new funding.
Asked at the Farnborough Air Show whether he was confident there would be Royal Navy ships built in Belfast, he said: ‘Yes’.
Harland & Wolff joined forces with Spain’s Navantia in 2019 to win a £1.6bn Navy shipbuilding contract. But last week the 163year-old company revealed its request for a £200m loan guarantee had been turned down by the Government. Reynolds also said yesterday that an emergency cash injection has also been ruled out.
He said: ‘While such a decision is not easy, it is my assessment that Government funding would not necessarily secure our objectives and there is a very substantial risk that taxpayer money would be lost. The Government believes, in this instance, that the market is best placed to resolve the commercial matters faced by Harland & Wolff.’
The company’s chief executive John Wood took a ‘leave of absence’ last week to be replaced on an interim basis by former PwC partner Russell Downs. The firm said then that it was in talks with its existing Wall Street lender Riverstone Credit Management and hopes to secure new finance within days.
Reynolds blamed the previous government for prolonging the crisis by dangling the prospect of government help – something that he argues delayed a private sector solution from being found.
More than 1,500 workers are employed across Harland & Wolff’s four sites, which include the historic Appledore shipyard in Devon, two in Scotland and the Belfast site where the Titanic was built.
Reynolds said at the Farnborough Air Show yesterday that the situation ‘should have been dealt with before we came to power’.
He added: ‘When you’ve got a number of lenders and they’re going to have to reorganise their finances – effectively take a haircut on their own lending to the company – they’re not going to do that while there’s a prospect of the state stepping in to guarantee that money.
‘The presence or the suggestion that the state was still in the mix here has effectively delayed a private sector solution. We are committed to UK shipbuilding, we’re very confident there is a market-led solution out there that will enable that to happen and go forward.’
Asked whether jobs would be saved, Reynolds said he was confident that a solution would be found that was in the ‘long-term best interest of the workforce and the company’.