MOD Denies Money Shortage Causing Delays on the Clyde In the Construction of Navy Frigates (excerpt)
It now appears that, whether for lack of funds or design delays, the construction of the Royal Navy’s new frigate class, the Type 26, will be put off for up to three years, risking a loss of jobs and of technical know-how at BAE’s shipyards. (BAE image)
Former first sea lord Admiral Lord West last month told the House of Commons Defence Committee that cutting steel on the new ships on the Clyde had been put back from 2016 because "there's almost no money available this year, and we are really strapped next year".
But the MoD's chief executive for equipment Tony Douglas told the committee on Wednesday that no start date had yet been set because design of the warships was only 60% complete.
And defence minister Harriett Baldwin denied that suppliers involved in the £8 billion programme had been told to "mothball" their contributions for up to three years.
Defence committee chairman Julian Lewis warned that delays in getting the state-of-the-art warships into service could end up costing money, as the operating life of the Type 23 craft they are replacing may have to be extended.
"It's hardly best value for money to penny-pinch now and then end up spending something like 50-60% more on the project later, as happened with the aircraft carriers," said Dr Lewis.
Industry insiders and experts had told the committee that there was a shortfall of around £750 million in the sums needed to press ahead with construction, he said, adding: "We believe that if the money was there, this programme could start very soon."
But Mr Douglas said that cash was not the issue, as the MoD was still negotiating with BAE Systems over the final design of the ship's communications systems and computer networks.
Some £1.8 billion had already been committed to long lead-time elements of the project, he said.
"If you were building an extension on the back of your house, you wouldn't get it priced if it was only 60% designed," he said.
"We are in a good place right now, but with 60% design fixity, this is about driving it to closure, which is the road we are on."
Mr Douglas declined to say when the Government would be in a position to name a start date for construction, but said it should come in "the relative short term". (end of excerpt)
Click here for the full story, on the Herald Scotland website.
(EDITOR’S NOTE: Despite MoD’s denials, it is clear that its acquisition plans, whose funding base has been questioned since the release of the latest defense review in December 2015, are being further disrupted by the post-Brexit 15% drop in the pound sterling’s exchange value.
This makes all equipment bought in the United States 15% more expensive, despite claims of sufficient currency hedging by former defense procurement minister Philip Dunne, as hedging is cost-effective only in the short term, while most defense contracts take over 5-6 years from signature to delivery.
The contracts for AH-64E Apache helicopters and P-8A Poseidon patrol aircraft awarded July 11 by the Conservative government, two days before it resigned, will cost at least $5.5 billion – and an extra £550 million in sterling terms.
Also increased by 15% are the UK government’s annual payments to the F-35 program, which are due to increase substantially as the next order will cover eight aircraft.
This points to a cash shortage to MoD, whose most likely victims are programs that have not yet been launched, like the Type 26 frigate.)
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