Labour will abandon plans to build support ships for the Royal Navy in Northern Ireland, with the loss of 500 jobs, and transfer the work to Cadiz in Spain, The Mail on Sunday can reveal.
Belfast-based Harland & Wolff, which built the Titanic, was hired last year alongside Navantia, a Spanish state-owned shipbuilding giant, to build three Navy vessels in a £1.6 billion deal.
Anger that some of the work went to Spain was assuaged by the promise that much of it would go to Northern Ireland.
Under the original plans, H&W and Navantia would each have constructed various sections of the ships, known as blocks, in their respective yards.
On the brink: Belfast-based shipbuilder Harland & Wolff has called in administrators with Whitehall making it clear it will not provide support
These blocks would then have been taken to Belfast for final assembly, with the first vessels entering service in 2031 and the last by 2033.
But Harland’s decision to call in administrators on Friday has plunged the project into crisis and could result in all the work being moved to Cadiz.
The plans are being drawn up by Business Secretary Jonathan Reynolds and Defence Secretary John Healey.
H&W has appointed restructuring specialist Teneo to find buyers for the dockyard and other operations.
Hopes are a UK company with deep pockets such as Babcock International – which runs the naval yards at Devonport in Plymouth and Rosyth in Scotland – can still save H&W and the project.
But Whitehall has made it clear it will not provide support for H&W. Earlier this year the company revealed its financial plans were built on the assumption that it would receive a state guarantee for a £200 million loan that would tide it over until the money started to flow in from support ships and other contracts.
After lengthy negotiations, the company finally admitted in July that the Government had turned it down.
That triggered the exit of boss John Wood and the appointment of caretaker managers, including restructuring expert Russell Downs. The support ships are urgently needed for the Royal Navy to make best use of its new aircraft carriers, HMS Queen Elizabeth and Prince of Wales.
The only support ship still afloat, RFA Fort Victoria, built by H&W in 1990, is undergoing a lengthy refit. A senior Downing Street source said this was yet another problem that Labour had inherited from the Tories. He said: ‘There are several options which include UK companies buying the company, but they will want to re-negotiate the work which will cost the UK taxpayer and likely delay production and delivery of the ships.
‘The preferred option is for Navantia, who have the contract to now fabricate, assemble and deliver the ships on time and within budget.’
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