MINISTRY OF DEFENCE
News Release (186/2007) issued by The Government News Network on 25
July 2007
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.