Carrier Strike Capability

Stewart Hosie Excerpts

Thursday 10th May 2012 Commons Chamber

[Mr Hammond]

My right hon. Friend is correct to focus on that point, and I thank him for his comments. As I think I said in my statement, fitting cats and traps retrospectively to the Queen Elizabeth, after her completion, would undoubtedly be significantly more expensive than even the current £2 billion estimate for fitting them to the Prince of Wales in build. It is therefore not unreasonable to think of a likely cost of between £2.5 billion and £3 billion for retrospective fit to the Queen Elizabeth, making that project, as I suggested in my statement, in practice unlikely ever to occur.

[Stewart Hosie (Dundee East) (SNP)]

Can the Secretary of State confirm that the terms of business agreement signed in 2009 provide that on completion of the carrier build, the UK will be spending perhaps only £230 million a year—0.7% of the MOD budget—to maintain essential shipbuilding skills? More important, will he tell us whether, as a result of the additional costs announced in today’s statement, he envisages that very small figure being reduced further in the future?

[Mr Hammond]

The hon. Gentleman is absolutely right: the terms of business agreement with the shipbuilding consortium commits the MOD to underwriting overhead costs of about £230 million a year to maintain skills. The challenge for the MOD is so to manage the shipbuilding programme as to recover as much of that as possible. After the carrier programme is finished in the shipyards covered by the TOBA, we will move on to the Type 26 programme and recover costs in that way. As far as I am aware, there is no mechanism for reducing that £230 million—it is a contractual figure.