Ministry of Defence
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MoD to Order Two New Aircraft Carriers
Minister for Defence Equipment and Support, Lord Drayson, welcomed the announcement of the decision to build the two 65,000 tonne aircraft carriers, to be named HMS Queen Elizabeth and HMS Prince of Wales, and BAE Systems and VT Group's creation of a Joint Venture (JV) which will be a key part of the alliance of MOD and Industry constructing the ships.
Lord Drayson said:
"When I launched the Defence Industrial Strategy in December 2006 I said that 2007 was the year in which I wanted to see results. Today's announcements deliver just that. Confirmation by BAE Systems and VT of the creation of a Joint Venture, brings together both surface ship build and support, and provides exactly the through life provider we identified as necessary in the DIS and marks a major step in the creation of a globally competitive UK maritime industry".
"The DIS is first and foremost about clarity from government allowing industry to deliver value for money. The announcement today of this very significant new warship order together with the formation of the BAES/VT Joint Venture go a long way to clarify the future for UK naval shipbuilding over the next 10 years, even down to saying what will be built in which yards, and to delivering the capability we need in the naval sector against clear time and cost goals."
This unique project will be a very considerable test of the UK maritime shipbuild industry. It creates a through-life entity managing major surface warships from design to disposal.
HMS Queen Elizabeth and HMS Prince of Wales are expected to enter service in 2014 and 2016 respectively. The order will be placed with an alliance of companies (including the JV) and will cost around £3.9Bn, although the alliance and MOD have agreed to work together to reduce this figure before a final price is settled in 2009.
The announcement of the JV, together with the decision on Carriers and the Naval Base Review, allows the delivery of the most cost effective and efficient long-term support to the Royal Navy.
The JV, as it drives to bring together both ship build and support, will maintain the current VT facilities at Portsmouth with Fleet Support Limited continuing in the developing Surface Ship Support Alliance. It is now, therefore, intended to retain all three naval bases (Devonport, Faslane and Portsmouth) with Portsmouth being the base for the future carrier and bringing together surface ship building and support through the Joint Venture; Clyde being the focus of the future submarine force; and Devonport delivering deep upkeep and sea training.
The bases will be optimised through the change initiatives at each of the naval bases and in conjunction with our initiatives for Submarine and Surface Ship Support. This will require some rationalisation, though any reductions in the 17,800 personnel currently employed will be taken forward in consultation with the Trades Unions in the usual way. There will also be a rationalisation of infrastructure and space capacity and building on partnering and other commercial arrangements. This includes a £1Bn partnering arrangement, also announced today, with Rolls-Royce, for the in-service support of the Nuclear Steam Raising Plant that powers the RN's submarines over the next decade.
Following on from a 2006 Memorandum of Understanding, through which France paid for use of the carrier design, both UK and French industries are now exploring further co-operation opportunities including sharing of procurement of equipment and support.
The Carriers will be built in separate blocks. Lower Block 4 of the Carrier will be built at BAES Govan. Lower Block 3 will be built at BAES Barrow and Lower Block 2 at VT Portsmouth. Lower Block 1 will be allocated to Babcock (BES) Rosyth although this may be outsourced given capacity restraints at the yard. All of the blocks will be assembled at BES Rosyth. Some upper blocks may be undertaken at Barrow but this will depend on final decisions on the level of investment in infrastructure. The blocks above Lower Block 4 will be allocated to BES Rosyth with support from the Clyde, subject to value for money. The other upper blocks will be competed, including amongst the Aircraft Carrier Alliance shipyards (BAES, VT, Babcock). In addition, Carrier work will involve other suppliers across the country.
Notes to Editors:
1. The Defence Industrial Strategy was published on 15 December 2005. The BAES/VT Joint Venture was initially announced by the companies on 14 December 06. The new company will have a combined turnover in excess of £700M and employ 6900 people at facilities on the Clyde and in Portsmouth. The company will be owned by BAES/VT 55/45%. The arrangement will now be subject to regulatory approval.
2. The Surface Ship Support Alliance is the contracting approach being explored by MOD and three dockyard companies (Babcock Support Services Limited, Devonport Management Limited and Fleet Support Limited) to deliver sustainable, efficient and affordable support for Royal Naval surface warships. The development of the strategy was announced by the (then) Secretary of State for Defence (John Reid) on 14 February 2006, and it was advised that an Exclusion Order to the 1998 Competition Act would be made for future surface ship support while the alliancing strategy is being developed. This work is ongoing.
