MoD To Release £1Bn For Stealth Submarines

1 August 2016

The Ministry of Defence is planning to release more than £1bn, possibly as early as September, to enable BAE Systems and Rolls-Royce to begin manufacturing the first of four ultra-stealth submarines that will form the centrepiece of Britain’s renewed nuclear deterrent.

The funding, which is expected to last for 12-18 months, will mark the start of industrial production in a programme which has been budgeted at £41bn, including £10bn for contingencies. It will be the first payment since MPs confirmed Britain’s commitment to renewal of the Trident nuclear deterrent system with a parliamentary vote in July.

The scope of the financing package is still being negotiated by the MoD with industrial partners, BAE and Rolls-Royce. Unlike most previous defence contracts, financing for the industrial phase of renewal will only be released in stages to try to keep costs under control. At each stage new conditions for performance and delivery could be agreed.

So far £4bn has been spent. Industry sources said the new round of funding would be used for continued design work and to order components that take a while to manufacture. It would also be used to secure production in the supply chain, which accounts for roughly half the cost of building a new submarine. The first steel is expected to be cut by the end of the year.

An MoD spokesperson said the ministry continued to “deliver the Successor submarine programme milestones. We will announce key programme milestones in due course.”

One official said an announcement could be made in September, although industry sources suggested this could slip to October.

The UK’s fleet of Vanguard-class boats has been on patrol since 1994 and is expected to start being retired in 2028, so the pressure is on to begin building the “Successor” subs that will replace them. The first of the new nuclear-powered boats will not enter the water for a decade after production starts.

However the government is keen to avoid the mistakes of the past and has set out a new structure for delivery of the next submarine programme, where estimated costs have already ballooned from £20bn in 2006. A long delay in starting production of the Astute class, which carry conventional rather than nuclear weapons, led to billions in extra cost and much later than planned deployment.

This time round the government wants to set up a new authority to deliver the Trident renewal project, led by an outsider with experience in big, complex procurement projects. The “director-general, nuclear”, will be expected to “deliver a step-change in the performance of the defence nuclear enterprise”, according to the job ad. The new director-general will manage an annual programme budget of more than £3bn.

Trident’s renewal has been hotly debated, dividing the Labour party, given that the costs not only of building but of running and maintaining the vessels in service will soak up roughly 6 per cent of the MoD’s annual budget over its lifetime. One Conservative MP, Crispin Blunt has estimated that this would amount to £167bn.

This does not include the costs of renewing the US-made missile system, which uses UK-made nuclear warheads.


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