Tim Jones: 'Stakes are high for Appledore Shipyard'

It has been somewhat of a pleasant surprise to many of us that the normal pedestrian process of change in Whitehall has been reversed by a clutch of rapidly compiled business facing initiatives.

All generated by a new government keen to hit the ground sprinting.

If this is a marker for the future then it is encouraging as we can anticipate a real chance to break out of the frustrations of the low-growth malaise which has sapped our confidence and enthusiasm for the last two years.

It is necessary to look back to the period prior to the financial crash in 2007-2009 to find the last time the UK economy and it's productivity grew strongly. Since then it has languished, lagging behind the performance of many other countries not least the US.

Led by the new Chancellor Rachel Reeves, the agenda for growth has included regulatory changes to planning rules and efforts to bolster investment in green technologies.

We should not however be in anyway expectant of an instant cure to our general economic prospects. These remain 'subdued', bogged down by a huge burden of debt (91% of gross domestic product), taxes at a 70 year high, public services at crisis point, a 'broken' NHS, persistent difficulties in improving productivity growth, the ever increasing problems of an ageing population and the higher than expected inactivity numbers caused by long-term illness.

One unexpected bonus is a judgement by financial markets that, arguably the UK will have the most stable government in the G7 over the next five years. A good news story in establishing strong support for sterling and encouraging international investment into the UK.

All of this will be put to an early test of the resolve of the government. This is on our doorstep at Appledore shipyard.

A quick reminder may help. When this was rescued from closure, the company behind this also acquired the Belfast shipbuilder Harland and Wolff.

This group, famous for building the Titanic, set about establishing a solid order book with work packages being delivered both in Belfast and Appledore. The workforce has increased and there has been general confidence that a decent five-year order book is in place. This has been substantially boosted by the MOD contract order to build part of a £1.6bn Royal Navy contract for three new support ships.

What has recently emerged is that the H&W recovery has been based on core funding from a US credit facility which is costing 14% in interest and needs to be repaid by December 2024. To replace this H&W have been in talks for several months with Whitehall to secure a loan guarantee from UK Export Finance to underpin new credit of £200m at a lower interest rate. As a statement of the serious nature of this crisis, the company suspended trading in its shares on the London Alternative Investment Market, by any judgement a drastic step in what looks increasingly like a game of poker with Whitehall.

Timing for this negotiation is complicated because of other industries in need of a bailout. Tata Steel are threatening 2,800 job losses in Wales, the Grangemouth oil refinery is scheduled to cease operations and Dyson is consulting on cutting 1,000 jobs from his UK operations. The Government is also holding its breath on whether it will need to nationalise Thames Water, Britain's largest water company.

Timing is another key factor here. However difficult it might be to justify the economic case for supporting H&W, politics is also a very significant factor. A new government, seeking to change direction and passionate about the protection and creation of jobs, will be in a very tight spot if they refuse or duck this issue.

Clearly the stakes are high for Northern Devon. Appledore Shipyard is one of our crown jewels. The Clean Maritime Innovation Centre (£15.6m) business case has been built around the yard which it immediately adjoins. All the evidence suggests that this new centre will be at the leading edge of marine research and provide a wide range of new jobs and startup businesses.

Just as powerful for our future growth is the Floating Offshore Wind programme where Northern Devon is very well positioned to secure long term benefits.

These are nervous times in Appledore, a minnow in some heavy-duty financial manoeuvrings. We all know that this is a central part of the heart and soul of our business sector and community.