BBC: "Royal Navy Aircraft Carrier Costs 'To Double'"

soleil

War Hero
FT, November 3rd 2013

Britain will this week reveal another substantial increase in the cost of building its two new aircraft carriers, declaring that total funding for the programme will rise by another £800m to £6.2bn.

Philip Hammond, defence secretary, is expected to say that a new set of demands – including the need to build a sophisticated aircraft landing system on the ships – have added to the financial burden of the Royal Navy’s flagship project.

The revised price tag for the 65,000 ton carriers – which will not operate until the end of this decade – will alarm some opposition MPs. When the last Labour government gave the green light to build the ships in 2007, it set the projected cost at £3.5bn. That figure is now close to being doubled.

Two months ago, Labour’s Margaret Hodge, the chairman of the Commons Public Accounts Committee, said she was “not convinced the MoD has the carrier programme under control,” adding that it remained “subject to huge technical and commercial risks, with the potential for further uncontrolled growth in costs”.

The announcement of the new cost over-run comes amid growing debate in Britain about the management of big infrastructure projects as the government presses ahead with plans for the HS2 high speed rail link. Within parts of the MoD, there has also been concerns that the cost of the carriers is crowding out other spending on defence equipment at a time of deep cuts.

Mr Hammond will seek to mitigate concerns over this new cost increase by saying that the new £6.2bn figure represents a “realistic price”. He will also announce that he has renegotiated the contract to build the carriers on terms that have more benefit to taxpayers.

MoD officials say that, until now, some 90 per cent of any cost over-run on the project has been paid for by the taxpayer and only 10 per cent by industry. Mr Hammond believes this was a flawed arrangement that reduced the incentive for industry to ensure the carriers were delivered on time and at cost.

Mr Hammond is expected to announce that any additional costs – above the new baseline of £6.2bn – will be split 50-50 between the government and contractors.

Two years ago, Mr Hammond announced the UK would buy the vertical take-off and landing – or STOVL – version of the US-built F-35 to fly from the carriers. This replaced a plan to buy the conventional take-off version.

As a result of that decision, Mr Hammond says the UK must now spend some £200m on landing systems that allow the STOVL aircraft to land on the carriers with greater precision.

However, Mr Hammond is expected to say that the newly revised cost will not imperil the MoD’s equipment budget. This is because the department has recognised the risk of cost pressures in the programme and decided to set aside extra funds.

An MOD spokesman said on Sunday night: “Negotiations between the MoD and the Aircraft Carrier Alliance regarding the re-baselining of the Queen Elizabeth Carrier Programme are at an advanced stage.

“No final decisions have been taken and the Department will make an announcement in due course.”"
 

pie.thatcher

Lantern Swinger
Surely this was obvious, every new build warship in the past 30 years has gone wildly over budget. Nothing unusual in this, but the question to ask is ... WHY, and who is to blame.
 

Ninja_Stoker

War Hero
Moderator
The reason for the changes and increased costs were caused by government dithering and changing their mind twice over which F-35 variant they wanted & wholly unrealistic cost estimates.

In any case, a Labour Government cannot really credit themselves with being any better with regard fiscal savvy - wasn't it they who watched the slow motion train-smash "recession" occur & thought it funny when voted out to leave a note to new Treasury: I'm sorry to tell you there is no money

How short the memory of politicians.
 

scouse

War Hero
The reason for the changes and increased costs were caused by government dithering and changing their mind twice over which F-35 variant they wanted & wholly unrealistic cost estimates.

In any case, a Labour Government cannot really credit themselves with being any better with regard fiscal savvy - wasn't it they who watched the slow motion train-smash "recession" occur & thought it funny when voted out to leave a note to new Treasury: I'm sorry to tell you there is no money

How short the memory of politicians.
Always thought it was a global recession, started over the pond by the collapse of Lehman Brothers, and the greedy bankers , in the UK?????
The financial crisis happened because banks were able to create too much money, too quickly, and used it to push up house prices and speculate on financial markets. Strange thing is that nothing has changed in the banking world , and it can happen again, as we are back to the 95 % mortgages, again:sweatdrop:
 

trehorn

War Hero
The reason for the changes and increased costs were caused by government dithering and changing their mind twice over which F-35 variant they wanted & wholly unrealistic cost estimates.

In any case, a Labour Government cannot really credit themselves with being any better with regard fiscal savvy - wasn't it they who watched the slow motion train-smash "recession" occur & thought it funny when voted out to leave a note to new Treasury: I'm sorry to tell you there is no money

How short the memory of politicians.

The labour government ordered the carriers for a couple of reasons.

1. To stitch up the incoming government with ships that the country couldn't afford.
2. To keep the labour constituencies
in work building them.

They ordered the wrong type of carrier and the wrong aircraft. The Cons tried to reverse the decision and found it would cost too much to cancel thanks to the contracts the labour lot signed up to. They also tried to revise the design to get cats and traps but again it was too late and would have been more expensive.

I love the way everyone makes out it's the present governments fault when labour went all out to screw over the incoming government.

I don't necessarily like the blues but they haven't had much choice in some of their decisions and the reds wouldn't have done any different.
 

Ninja_Stoker

War Hero
Moderator
Always thought it was a global recession, started over the pond by the collapse of Lehman Brothers, and the greedy bankers , in the UK?????
The financial crisis happened because banks were able to create too much money, too quickly, and used it to push up house prices and speculate on financial markets. Strange thing is that nothing has changed in the banking world , and it can happen again, as we are back to the 95 % mortgages, again:sweatdrop:
There's no reason doubt you are correct. Nevertheless it was under Labours governance, so where anyone wishes to apportion blame, it matters not as one is much the same as the other.
 

drewfester

Lantern Swinger
It doesn't help that the consortium building them was actually asked to slow down the build to save money??
Anyone know how this works as employment costs obviously rise and material costs rise over time.
Have to agree with an earlier comment about stitching the current government up and keeping your constituents in a job. Believe Mr Broone lives up near Rosyth and is there local MP!
 

tomcat24

Lantern Swinger

The labour government ordered the carriers for a couple of reasons.

1. To stitch up the incoming government with ships that the country couldn't afford.
2. To keep the labour constituencies
in work building them.

They ordered the wrong type of carrier and the wrong aircraft. The Cons tried to reverse the decision and found it would cost too much to cancel thanks to the contracts the labour lot signed up to. They also tried to revise the design to get cats and traps but again it was too late and would have been more expensive.

I love the way everyone makes out it's the present governments fault when labour went all out to screw over the incoming government.

I don't necessarily like the blues but they haven't had much choice in some of their decisions and the reds wouldn't have done any different.
Labour failed to plan properly before ordering.
 

WreckerL

War Hero
Super Moderator
Can't do reply with quotes where I am but I'd change your post, Tomcat, to "Labour failed to plan when ordering" or even just "Labour failed".
 

tiddlyoggy

War Hero
Book Reviewer
I think it's a little harsh to balme it all on the previous government. That's the job of successive governments to do that ad nauseum. Wasn't Cameron's lot in office when the u-turn over the catapult launch/VSTOL variant was going on? Even if not I don't think anyone can say that their record on defence policy and spending is fantastic.
 
Designing the Carriers around the F35B only was always likely to end in tears. If the US decides to reduce costs on the aeroplane, it's likely to be the B that they pull out of as the one least useful to them. Insight: Expensive F-35 fighter at risk of budget death spiral | Reuters

If the previous lot are guilty of anything regarding the contract for the ships, it's likely to be the haste to start production before they were voted out of power. At the time, it had all the signs of a scorched earth policy. I bet they were bricking it at the prospect of being voted back in.
 

tomcat24

Lantern Swinger
If Labour had planned for at least one EMALS carrier, would the cost still have changed by now and would the commissioning dated be pushed further back?
 

cjg375

Lantern Swinger
If Labour had planned for at least one EMALS carrier, would the cost still have changed by now and would the commissioning dated be pushed further back?
What would the point be in having one EMALS carrier and one VSTOL? You either need two lots of different types of aircraft or to retrofit one of the carriers at massive cost later on. The decision at the beginning needed to be go EMALS or go VSTOL and stick with it. Most of the extra costs and delays have been from the decision to switch and then switch back which was only ditched because it was going to cost an enormous amount more than predicted given that QE was pretty well built by that point (or at least the sections were well into production).


Posted from the Navy Net mobile app (Android / iOS)
 

trehorn

War Hero
I think it's a little harsh to balme it all on the previous government. That's the job of successive governments to do that ad nauseum. Wasn't Cameron's lot in office when the u-turn over the catapult launch/VSTOL variant was going on? Even if not I don't think anyone can say that their record on defence policy and spending is fantastic.
They were tiddly but for a change it seemed (at least to me) to be taking the advice of the people who would be tasked with using the equipment.

"Right, we're stuck with these things, how can we make sure we get the most out of them?"
The obvious answer is EMALS. The planes are cheaper to buy, cheaper and easier to maintain, carry a heavier pay load, can stay in the air longer and work better with our partners (US, France (spit) ).

Unfortunately they rushed into announcing it before looking at the costs first - Doh!

Edited to add that I know that EMALS cost loads to fit but in the long term surely the benefit outweighs the cost?
 
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scouse

War Hero
Sad thing about it all, is that it will only carry helicopters, until 2020. For a 65,000 ton ship, it is scandalous.
 

tiddlyoggy

War Hero
Book Reviewer
Trehorn, your last seems contradictory to me. Now I'm not a WAFU or spotter in anyway, but I thought that the users, ie the WAFU's and our Lords of the Admiralty, wanted EMALS. By reverting VSTOL the government have not heeded their advice. Or have I misinterpreted your post? Not being argumentative, possibly a bit thick though.....
 

trehorn

War Hero
Probably me Tidley, I dunt do inglish that good.

Labour ordered the stovl - bad choice. Cons tried to change to EMALS - correct choice. Unfortunately too late in the game, to expensive to do so have to back track to stovl.

So, in summary, while the execution by the blues was bad drills (to put in mildly) the actual idea to try to change to Emals was the right one one and taken for the right reasons. They just look silly because they didn't investigate the full implications before shooting their mouth off.

Better?
 
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