'Isle of Inishmore' and 'Jonathan Swift' in Belfast. The Irish Ferries operated vessels 'Jonathan Swift' and 'Isle of Inishmore', seen here in dry dock at Harland and Wolff in Belfast.

The UK’s new Labour government appears set to reject a £200m loan guarantee request from Harland & Wolff, the owner of the Belfast shipyard that built the Titanic.

The firm, which has 1,500 workers on its books at its four UK shipyards, had been in elongated talks with the UK’s previous Conservative government seeking a loan guarantee to help lower interest payments on its borrowings.

In May, the GMB union urged the chancellor to ensure the £200m loan guarantee for Harland & Wolff to protect jobs. 

While no formal announcement has been made, the Financial Times quotes an unnamed Whitehall source who says the government has decided the guarantee would be a “deeply irresponsible” use of public funds.

In a media statement, the shipyard says it has not been informed of any decision, ‘and we stand ready to meet with the new government at their convenience’.

Before the election, the company warned: ‘Should there be any material delays to securing the facility post the general election, the company’s ability to execute new and large contracts would be adversely affected.’

Prince Charles Visit to Harland & Wolff Shipyard Belfast by David Cordner Photography

King Charles III paid a visit to Harland & Wolff in 2021, when he was the Prince of Wales. Image courtesy of David Cordner.

A 100 per cent guarantee is an unusual step as this leaves the taxpayer liable for the full amount if the company fails.

On Tuesday (16 July 2024) Harland & Wolff said it had reduced its request for the guarantee from 100 per cent to 80 per cent. The Guardian reports the firm has presented legal opinions showing that a guarantee would not violate state aid rules.

The lossmaking company was forced to temporarily suspend trading of its shares two weeks ago after a row with auditors.

Amid the row, Harland & Wolff issued a statement saying the “multi-year and complex nature” of some contracts had led to “extensive discussions” with auditors on how to record revenue throughout build programmes.

The firm revealed this issue is particularly relevant to the seven-year contract with Spanish shipbuilder Navantia, expected to generate £750m for Harland & Wolff through the construction of fleet support ships for the Royal Navy.

The yard’s 1,500 workers are now fearful the company is running out of time to secure the funds it needs to build the warships.

It’s reported that the firm held a board meeting on Tuesday, but has not updated workers on the outcomes of the talks.

The Guardian reports that if a government guarantee for the loan is not forthcoming, the company would be forced to ask private lenders for money at standard market rates to refinance its £191m in liabilities.

Harland & Wolff also owns ports across England and Scotland, including Methil on the Firth of Forth, Appledore in North Devon, and Arnish Point on the Isle of Lewis.

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