Role of shipyards in economic growth

Louisa Brooke-Holland; Matthew Ward

Economic output of the shipbuilding industry

The economic output of shipbuilding is captured within the wider category, building of ships and boats. This includes the building of ships and other floating structures (such as oil rigs) and the building of pleasure and sporting boats.

In 2024, the economic output of this sector was £2.7 billion. This was equal to 7.9% of the manufacture of transport equipment sector, 1.3% of the output of the total UK manufacturing sector and 0.1% of total UK economic output.^[1]

Between 2019 and 2024, the economic output of this sector increased by 72%. Over the same period the economic output of the manufacturing sector overall declined by 1.4%.

Note, economic output is measured by GVA, a measure of economic output similar to gross domestic product (GDP). GVA measures the value of products and services produced minus the costs incurred in production, though not including labour costs. GDP is GVA plus taxes and minus subsidies on products.

Employment in shipbuilding

In 2023, there were around 38,650 employee jobs in the building of ships and boats in the UK, according to the Office for National Statistics and Northern Ireland Statistics and Research Agency (2022) estimates from the Business Register and Employment Survey. This was equal to 1.6% of manufacturing jobs.

Of this total, 29,000 (76%) were employed in the manufacture of ships and other floating structures in Great Britain, and 9,000 (24%) were employed in the manufacture of pleasure and sporting boats.

These jobs were concentrated in a small number of areas – the North West and South West both accounted for 34% of employee jobs in this sector, while Scotland accounted for 19%.

Shipbuilding Strategy

The National Shipbuilding Office (NSO) was created in 2021. This body oversees the Government’s interests in UK shipbuilding as well as working with industry to improve productivity and competitiveness. It also owns the National Shipbuilding Strategy.

The National Shipbuilding Strategy was published by the Ministry of Defence in 2017, following an independent review into naval shipbuilding by Sir John Parker, published in November 2016.

The Strategy set out a “two-fold vision” for the UK shipbuilding industry, based on:

A Royal Navy “with more ships, which are modern and are capable of being incrementally modernised and improved, are exportable and can work with allies.”
A shipbuilding industry “encouraged by a clearer grip by Defence, and with greater certainty about the Royal Navy’s procurement plans” that would have “confidence to invest for the long term in its people and its assets to raise productivity and innovation and improve its competitiveness in the domestic and overseas markets.”

A review of the National Shipbuilding Strategy was published by Sir John Parker in 2019, reporting that “progress on implementing the National Shipbuilding Strategy is encouraging.”

A refreshed version of the National Shipbuilding Strategy was published in 2022. This confirmed £4 billion for new vessels first announced in the 2020 Spending Review and the 2021 Autumn Budget and funding for the Home Shipbuilding Credit Guarantee Scheme (HSCGS). It also published for the first time a 30-year pipeline of all government vessel procurements, including but not limited to the Royal Navy.

Following recommendations in Sir John Parker’s 2019 review of the National Shipbuilding Strategy, the refreshed shipbuilding strategy announced plans to create Shipbuilding Enterprise for Growth (SEG). This is an industry-led forum, with members from the shipbuilding sector, supply chain and government, tasked with determining “what further action is required to tackle barriers to growth, boost exports and grow high-value skilled jobs across the enterprise.”

The government has not confirmed whether it will appoint a new shipbuilding Tsar. The position was created by Prime Minister Boris Johnson, who appointed then Defence Secretary Ben Wallace was the first Shipbuilding Tsar.[2] This practice continued under subsequent Conservative Prime Ministers.[3] In December 2024, Lord Coaker, Minister for Defence, said that a decision had “not yet been made on the appointment of a new shipbuilding Ministerial lead”.[4]

Naval vessels

The Ministry of Defence (MOD) is currently working on a new strategic defence review which is expected to set out the UK’s future naval requirements. The MOD is also working a new defence industrial strategy.

Several dockyards around the UK are currently involved in building new vessels for the Royal Navy, including two new classes of frigates to replace the current Type 23 frigates:

BAE Systems is constructing new Type 26 frigates at its dockyards on the Clyde in Glasgow.[5] In March 2025, the MOD confirmed current plans for eight ships to enter service between 2028 and 2035.[6] Babcock in Rosyth is building new Type 31 frigates, the first of which is expected to be in service by the end of the decade. All five are expected to be in service by the early 2030s.[7]
HMS Venturer will be the first in Class of the Type 31 and is scheduled to be in service and ready for operations by the end of the decade. All five Type 31 ships are planned to be in service by the early 2030s.

Navantia UK will build the three new fleet solid support ships for the Royal Fleet Auxiliary to enter service in the early 2030s.[8] The Spanish company won the bid in 2023 as part of a consortium with designers BMT and Harland & Wolff (H&W), the owner of shipyards in Belfast and Appledore. The original intention was for the ships to be assembled from blocks which were expected to be built in Belfast, Appledore and Navantia’s shipyard in Cadiz, Spain, with assembly and integration to take place in Belfast.[9] After concerns about H&W’s financial future, in December 2024 the Business and Trade Secretary announced Navantia UK will buy all four of H&W’s shipyards (Belfast, Appledore and two in Scotland).[10] He said the government had agreed with Navantua UK on the “absolute minimum of changes to the contract, ensuring its continued delivery”.[11] In March 2025, the government said the impact on the in-service dates of the change in ownership is “still being assessed and will be mitigated as far as possible”.[12] Navantia said it is also looking to secure the future contract for the Royal Navy’s multirole support ships.[13] Plans for these ships are at the concept phase.[14]

Ministry of Defence, 14 May 2024

Role of shipyards in economic growth

Economic output of the shipbuilding industry

Employment in shipbuilding

Shipbuilding Strategy

Naval vessels

Parliamentary material

Press articles

Press releases

Further reading

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