Question to the Ministry of Defence:

To ask the Secretary of State for Defence, whether under the Commercial Principles Agreement signed with BAE MNS the public purse bears any cost of future rationalisation of UK warship building.

Under Government accounting conventions, it is normal for provision to be made for some redundancy costs to be met at customer expense. Such liabilities do not stem from the Commercial Principles Agreement, but from the conventions laid down in the ‘Yellow Book’, the Government Profit Formula and its Associated Arrangements, which covers single source procurement.

As these conventions currently stand, the Ministry of Defence could be liable for any reasonable and appropriate costs that are attributable to single source warship procurement in the event of future rationalisation.