Harland & Wolff shipyard bailout ‘too risky’ for taxpayers

The Business Secretary said yesterday he was confident Royal Navy warships would be built in Belfast, despite ruling out a government bailout for troubled manufacturer Harland & Wolff.

Jonathan Reynolds said there was a “very substantial risk of taxpayers’ money being lost” if such a bailout went ahead. 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 Airshow if he was sure Royal Navy ships would be 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 163-year-old firm revealed the government had rejected its request for a £200m loan guarantee. Reynolds also said yesterday that an emergency cash injection has also been ruled out.

He said: “While this decision is not easy, I believe that…

Government funding would not necessarily guarantee our objectives and there is a very significant risk that taxpayers’ money could be lost. The Government considers, in this case, that the market is best placed to resolve the commercial problems facing Harland & Wolff.

The firm’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 at the time that it was in talks with its current Wall Street lender, Riverstone Credit Management, and expected to secure new financing within days.

Reynolds blamed the previous administration for prolonging the crisis by offering the possibility of government aid, something he said delayed the search for a private sector solution.

More than 1,500 people work at Harland & Wolff’s four plants, which include the historic Appledore shipyard in Devon, two in Scotland and the Belfast plant where the Titanic was built.

Reynolds told the Farnborough Air Show yesterday that the situation “should have been sorted out before we came to power”.

He added: “When you have multiple lenders and they are going to have to reorganise their finances (i.e. accept a haircut on their own lending to the company), they are not going to do that as long as there is the prospect of the state stepping in to guarantee that money.

“The presence or suggestion that the state is still in the game has effectively delayed a private sector solution. We are committed to UK shipbuilding and have every confidence that a market-driven solution exists that will allow this to happen and move forward.”

Asked whether jobs would be saved, Reynolds said he was confident a solution would be found that was “best for the workers and the company in the long term.”