The Ministry of Defence (MoD) has revealed that boats 4-7 of the Astute Class submarine are now £838 million over budget. The news came in their annual Finance and Economics Bulletin. 

The Astute class are the largest and most advanced attack submarines ever operated by the Royal Navy, combining world leading sensors, design, and weaponry in a versatile vessel. It is the replacement for the Trafalgar-class that entered service in the 1980s.

The class has frequently been cited as one of the most advanced submarines ever made. Indeed during HMS Astute’s sea trials in 2012, Commander Iain Breckenridge said he had “never before experienced holding a submarine at the range we were holding USS New Mexico. The Americans were utterly taken aback, blown away with what they were seeing”

According to the MoD UK Maritime Power doctrine, the Astute class:

‘provide the principal sea denial capability due to having both anti-submarine and anti-ship systems. When combined with an appropriate land attack missile, such as the Tomahawk, SSNs have a power projection capability of considerable range and penetrability, with important uses for deterrence and coercion’

In the MoD annual Finance & Economics Bulletin (found here), it was evident that boats 4-7 were well over-budget.

An MoD communications officer quoted the current costs for boats 4-7 to me as:
‘At approval, expected forecast cost to completion: £5,859M
Current forecast cost to completion: £6,697M’

That’s a 14% increase. For the purpose of perspective, the £838m over-budget sum could pay for 3 Type 31e frigates at the £250m per ship requirement price.

It should be noted that whilst the Astute class is over budget, it remains cheap in comparison to other similar classes:

  •  US Virginia class: £2.0B
  •  French Shortfin Barracuda class: £2.4B

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71 COMMENTS

  1. Initial budgets should be more realistic and the same for contingencies. The blunt truth means the RN needs these subs going forward and, in some cases, their cost is immaterial in times of crisis.

    • Looking at most of the programmes, the MoDs initial budgets are generally accurate. The problems started decades ago at the initial design stage, and the peace dividend at the end of the Cold War killed any urgency in sub building after the Vanguards. BAE’s inexperience with the 3D design software they were touting also caused innumerable issues until they brought in an American who’d used it before. It’s unfortunate that a better contract wasn’t negotiated at the time so that the builder covers costs related to build issues, but that appears to be in the past after recent procurement disasters

    • the news that a swedish conventional submarine(costing 100 million) pierced an entire modern u.s carrier screen and carried out a 4 torpedo simulated attack on a u.s carrier. this submarine, conventionally powered. costing just 100 million compared to the astute is 14 times cheaper. a submarine costing roughly the price of 1 f-35 shows yet another example of the rudderless disjointed thinking in u.k naval procurement 14 submarine instead of 1 astute? speaks for itself.

    • builders are not being made to deliver to timelines, the first battleship dreadnought was built in a year, yet we accept these delays companies that fail to deliver should NOT get the next order.

  2. Please update when we will be building an additional five irrespective of cost increase and the installation of supercavitating torpedoes. We need both in numbers.

    £39 billion to be given away in a brexit handshake alone, so yes we do have the money!

    • Assuming the money is split between all departments based on budgets, the MoDs share only comes to roughly about £800mn.

      Even in a dream world where the MoD got a far bigger share, where would they be built? Barrow has boats 4-7, then it needs to build the Dreadnoughts. By the time there is capacity to start building attack subs again, it’ll be the 2030s and HMS Astute will be at the end of her 25 year life and in need of replacement.

      The only chance for expansion of the submarine fleet will either be in the future when the MoD and BAE reap the benefits of a constant drumbeat of orders, or if we acquire a fleet of diesel electric boats from somewhere. A squadron of perhaps 5-8 DE boats to provide near water protection for the CASD and our undersea pipelines would be a relatively cheap way of expanding the fleet, and would also give us some cheap subs to train commanders so that we don’t get a repeat of the Ambush incident.

      • One serious issue is the building capacity. We have just one centre of excellence…Barrow! The idea of any additional Astutes out of that plant is a nonstarter. The Dreadnoughts will take over the majority of the building floor for some years to come. Any possibilities of contracting another yard to build Astutes would prove to be a very time-consuming exercise. Teaching a whole new build team would possibly take years before one piece could be made. Centralising excellent has huge cost dividends, but can result in very limited options beyond confirmed contracts.

    • What £39b are you talking about? Is it the amount that we have already committed to pay as part of the EU and now have to pay becasue we have decided to leave, leaving the EU with approved budgeted expenditure that we suddenly think we don’t have to pay (some of which will be spent here)? We are giving the EU nothing that we didn’t already committed to pay, it was a myth pushed by the press that we were paying our way to a deal.

      So far the real Brexit dividend is looking like a negative figure, but too early to really tell.

      Back on topic, slow build rate and dithering by the government is probably responsible for most of the increase, neither of which is the MOD fault. Yes probably some project mismanagement but when has such a complex project ever come under budget.

  3. Am i the only one NOT upset by the price that we are paying for these subs ? Look at the QE carrier overspend !!! I just hope that the release of these figures this is not the MOD preparing the ground for an announcement in the reduction of subs to be purchased.

  4. On Astutes and QEs the prime villains reside at numbers 10 & 11 Downing Street over the past 20 years. Defence needs a long term procurement plan with a consistent drum beat of work to ensure retention of skills at scale.

  5. If this was for boats 1, 2 or even maybe 3 I wouldn’t be so surprised since change orders might be required in early builds as issues are discovered either during build or during the sea trials and/or early deployments of the first and perhaps second in class but at boats 4 through 7 is the design really not stable? And if these cost overruns are not coming from design change orders being implemented then where are they coming from?

    If it’s just general cost overruns and not a result of change orders initiated by the MoD then why is the MoD taking such a big hit? Why wasn’t more aggressive fixed-pricing negotiated, necessary change orders notwithstanding? The only things that I am coming up with for this cost overrun is either that the MoD did negotiate a poor contract or that change orders and/or deliberate QEC-like slowdowns of the build program are being imposed on BAE that are increasing the cost.

    Had the UK placed a firm, well-negotiated order for 8 Astutes at the outset and not meddled with the schedule beyond any necessary change orders for lessons learned early in the program that £838m overspend would probably have been enough to have an 8th Astute in the commited build program right now. I did read a claim on another forum that early in the Astuts program BAE did offer the MoD a very good price for adding an 8th Astute to the program but the MoD declined. I have no idea if that is true but in any event it’s all so frustrating.

    • This is what I was thinking. I can fully understand cost overruns on the first couple of boats as I think the initial budgets are always too tight and never properly account for problems and adjustments to designs and requirements. However I can’t understand how the later boats are going over budget.

    • Depreciation of the Pound since the Brexit Referendum result, many defence components are bought in dollars and so costs have risen. Its affecting other defence procurement projects as well.

      • Most projects have a fixed exchange rate that is a lot higher than the actual national exchange rate to take out such fluctuations. The A400 project exchange rate had ,I think, some 20% float built into it.
        So I reality if the national currency rises or falls it doesn’t matter to much

    • why no penalties for delayed delivery if the nation is spending the money, then builders must pay for late delivery when future contracts are given out

  6. This is further evidence that BAE is incapable of keeping costs under control. Any further contracts awarded to BAE should make them liable to cover any future cost overruns – not the tax payer.

    • This is not entirely the fault of BAE. Orders have been slow to come in, so there have been inefficiencies. The government is equally to blame.

  7. I recall the QE were delayed around 2008 and by pushing the project to the right to save money then the project increased by 1 billion or so. Nice work.

    Same with the Astute. We need firm commitments and long term building for continuity.

    Instead. Defence is a political football, kicked between two equally useless teams in the Tories and Labour as far as defence is concerned.

    This countries political establishment need a major kick up the arse. Sadly a major war may end up being that kick.

    • That decision saved £100m in year, but cost £1.5bn…

      Then Dr. Liam Fox added in another £150m cost due to him thinking about getting F-35C instead of B, before someone managed to stop him…if he’d been allowed to proceed it would have cost billions. Admittedly we did manage to get £100m from the French for access to CVF design that they eventually backed away from.

      Everyone knew that the QE Class were quoted at far too low a price. Everyone knew that the price would rise from the original baseline, it was all designed to get it past the Treasury. Even then the price that they’ve come in at is incredible, without the additional £1.65bn the politicians added in through incompetence they would have been probably the best procurement pound for pound ever.

  8. Whilst funds are very tight I’m surprised that Boats 4-7 have an increase in cost,its usually the case that later builds tend to be significantly cheaper,perhaps there were some major issues in the supply chain.I hope the MOD learn from the Astutes and keep the building cycle of Submarines continuous rather than leaving gaps which impacts Skill retention etc.A blank cheque approach is never a good idea for a programme of this size but presuming the quoted costs of a Virginia and a Barracuda are correct the Astutes do seem rather good value.

    • The Astute class is amazing value for money. They are superior strength kdubmarines compared to Virginia and Barracuda classes.
      £800 million is small change to a government that gives £15 billion away per year on foreign aid and a soon to be paid £39 billion divorce bill to the EU.
      Meanwhile in the real world of UK home circumstances the NHS in England is heading for a £4 billion deficit and staff are haemorrhaging from the health service (110,000 vacancies that cannot be filled and growing at 9000 more every quarter) due to crap pay and conditions, ditto police, education and armed forces. We need to pay our public sector more and give them better conditions.
      Astute should be expanded and a further 2-3 subs added to the programme.
      We have to rearm and increase military power. Too much governmental focus is on BREXIT whilst the UK itself lacks investment, growth and infrastructure. There is no forward planning for anything but BREXIT.

  10. Value for money. I second the call for another 5 at least please. Preferably an entire batch 2. Agincourt is a very much improved boat from Astute and compared to the French and American peers (not to mention Spanish debacle) these are real value for money.
    They should be publically celebrated not complained about by people or groups with I suspect anti military or at best naive or partisan motives.
    Look at the Typhoon £230m a pop (RAF figures not mine).
    Getting good kit that works does not come free!

    • In what way is HMS Agincourt improved vs HMS Astute? Is it stuff that can be upgraded to the HMS Agincourt spec when HMS Astute comes in for a refit or is it more fundamental/invasive stuff than internal electronics refreshes and the like?

      • Astute, as lead boat in class is in just about everyway the prototype. Lessons learnt were applied to the following boats along with a few giant leaps forward in technology over the years. Some of the changes have been quite fundamental and the cost of a retrofit will reflect that.
        From memory not so long ago there was quite rightly an attempt to pursuade the MoD to fund an eighth boat and keep Astute for trials and training.
        We live in hope.

  11. So how much will T26’s cost escalate with the first ship not ready til 2027?

    Are we heading down the same old road again? Delay to save now and spend more long term.

    • Has the T26 cost not already escalated?
      There is the vefy much delayed ordersfor the Astutes and there is significant American input… and the Pound has suffered recently.

  12. I wonder how much of the increased cost is down to the slow build times requested by the MOD. There was a huge gap between boat 6 and boat 7 being ordered, so production was probably slowed even further on boat 6 to maintain jobs.
    It is frustrating as the whole point is the costs go down and production speeds up as additional units are ordered. If they had not slowed things down to the extent they did, they may very well have got 8 boats for the price of 7 on the same delivery schedule.

  13. So nothing in the Graphic shown for the T31?

    Given the investment in technology would it not make sense to build some conventionally power subs and leverage the investment in sensors etc from Astute program?

  14. Weak pound, high recent inflation, slow build rate and improved capability incrementally through the class. Simple, no shouting down bae required, maybe the government yes. But still huge value for money compared to others. Shrug shoulders and keep building as long the extra cost is fairly justified.

      • (Chris H) Totally agree with the “Stay Calm and Carry On” concept. So they are over budget? So what? I learned many years ago in my first tentative steps up the managerial ladder a ‘Budget’ is an ‘educated guess’. Braver people than me call it a ‘forecast’. And then reality bites. As long as I was able to explain any delta to the ‘budget’ it was always OK. Its when you don’t know that you feel the cold draught of a sacking. Unless you work at the MoD apparently. At Intel we got a bigger bollocking for going UNDER budget than going over as it deprived other sections of their planned developments right at the start.

        And as we do need more Astutes why not give BAE a clear order for 3 more making 10 in total? Using the past build schedule for any 3 Astutes this could delay Dreadnought by 5 years if built together as now. However building the first Dreadnought alongside the last Astutes has already started (2016) with planned delivery in 2024 before HMS Vanguard is due for retirement. Long term orders for the Dreadnought nuclear power systems (presumably PWR3?) could be diverted, or added to, for the extra 3 Astutes. Total extra cost: £1.8 Bn at latest figures.

        I don’t see building extra Astutes delaying the Dreadnought programme significantly but I am as always open to correction.

  15. It’s easy to jump on the BAE bashing band wagon but the MOD and governments are primarily to blame with their on off will they won’t they approach to ordering.It was not long ago there were strong rumours that boat 7 was going to be cancelled ,these after all are very complex machines that require a very consistent ordering cycle to have any hope of controlling costs.Many of the sub systems themselves have a long lead time and need to maintain a strong skill base in their work force which still needs to be payed even if their doing nothing.

  16. Whats the chunk of money on that graph for ‘Marshall’? Is it referring to the engineering firm? What are they spending it on?

    • Isn’t project Marshal the replacement of all airfield radar and associated nav aid stuff on all Mod owned airfields.

  17. It doesn`t matter what you buy,as the old saying goes, `you get what you pay for`, pay Lada price get a Lada.
    World class kit costs and I believe these boats are good value for money compared to their international peers. Shame we can`t have more of them.

  18. My eye caught the Type 26 line. On target for (going by eye) approx 1.8 billion budget.

    Seeing that 3 have been ordered, doesn’t that make the budget for each ship about 600m?

    Not quite the one billion that folks here state frequently.

  19. The Governments that have resided in No.10 and 11 over the last 30 years have all been culpable of gross negligence when it comes to military matters. They are ignorant and at worse divisive when it comes to defending this country. There is no long term plan – period. Each successive Government believes they are right and the previous was wrong. This generates yet another review and successive white papers using think-tanks and consultants who have their own party political leaning agendas sheparding the Government in the “right” direction.
    All major equipment programs have suffered from Government interference, botched ordering or enforced reviews. These programs such as Typhoon, Type 45, Challenger, FRES (Ajax/Boxer) and Astute to name but a few have all been delayed, cancelled or restarted (8×8 armoured vehicle). This must stop, not only are these decisions damaging our Armed Forces and capability, but also our industry and sustainability. The Challenger 2 program should really be looking at replacing the tank with one that can over-match the T14 Armata. But the lack of a long term commitment has seen the extinction of the infrastructure to build additional batches of upgraded Challenger’s let alone a replacement. The Israelis with their Merkava program (<800 tanks) seem to manage, so why can't we?
    The answer I believe is something similar to the warship sustainment strategy, that looks at all major programs especially when the design, research and implementation will take longer than the term life of the Government. I think we require some form of long term strategy that all parties must agree to and that a minimum defence budget of 3% is written in law much like the foreign aid budget. The present/future Governments and MoD mandarins must be made to see common let alone financial sense, especially when delayed projects inevitably lead to inflated costs, but more importantly a reduction in capability and the addition of lower troop morale having to soldier on with obsolete kit.

    • (Chris H) DaveyB – totally agree with everything you have written there Sir. I would only add a comment regarding your rhetorical question about Israel and its 800 tanks and so why can’t we?

      Well for a start we don’t get a cheque every January 1st from the USA for $3 Bn+ for military spending and know another will be along in 12 months time. We also don’t get added to US weapons programmes and piggyback discounts as if we were the USAF, US Navy or whatever. If you think the F-35As Israel are buying cost the same as Australia’s then you need to think again. Plus the Israeli aircraft even have unique software mods by LM to allow Israel to add in their own discrete systems. We also do not get hugely preferential loans, economic aid and foreign aid from anyone to support our economy worth $134.8 Bn since 1949 and Israel is only 8.5 Mn people today!

      Without the USA Israel would never have come into existence let alone existed for 70+ years. It is as good as being the 51st State of the Union.

      • Good point Chris. It does put things in a clearer perspective. So in essence Israeli defence is also funded by US foreign aid and they wouldn’t be a World leader in military development or capability without it.

        The question remains: How do we ensure our politicians don’t screw up military procurement or development?

    • Broadly agree with you, although I think the MOD needs to shoulder some of that responsibility too; my understanding is that they have been consistently unable to tell anyone where all the money has gone, on what. If I was the exchequer, or whoever hands out all the cash, I’d be very reluctant to give out any more until the recipient can prove what they’ve done with what they have already. The fact that they can’t show this would suggest a level of financial mismanagement too. With the current size of our military budget I honestly think we should be getting what we order and more without any extra, I really believe there is a high degree of waste somewhere that we cannot afford.
      You mention Israel, they have a smaller budget than ours (even when taking into account the benefits they receive from the US). The Merkava is an excellent example, they’re on Mark IV of the design now, it’s got an APS and they’re trial fitting a 360 degree virtual vision system that lets the crew “see” through the walls of the tank. They can consistently push through upgrade programmes for bleeding edge level technology to formation-sized groups of vehicles on a smaller real budget, while we are going overbudget on a level 2 upgrade to our 20-year old MBTs. I think the biggest problem is a lack of urgency/focus on the part of government and MOD to get these things through…

      • Joe, Israel is surrounded by enemies with a land border, they need to invest in their MBT force as a matter of national survival. We’re an island and so we don’t need a single MBT to defend these shores. Who cares if chally is upgraded or scrapped, lets spend on what is the most versatlile and useful defence capability.

      • Joe, Israel has a land border with lots of enemies that have actually invaded it and so has to invest in MBTs. As an island surrounded by reliable military allies we don’t need a single MBT to defend these shores. Who cares if chally gets upgraded or scrapped. Let’s spend what we have on the most versatile and useful capabilities.

  20. Shame we can’t build a couple of icbm tubes into each astute and increase their number to 12 or so. Cancel dreadnought. Wishful thinking. Would it work?

    • The ideal would be if we had a nuclear capable cruise missile capable of hitting Moscow from anywhere in the Atlantic. Suddenly our nuclear deterrent would change from a line hidden SSBN to every Astute and T26 – possibly T45’s too if they ever get those additional launch tubes. The Dreadnaught program could then be cancelled and the funds directed to even more Astutes. However as far as I’m aware no cruise missile has that capability, yet…

      • (Chris H) Sean – we had that capability until 1998 in the WE.177 nuclear bombs carried by most RAF and FAA aircraft. WE.177A was some 600Ib in weight, the B and C variants were 1000 Ib in weight. They could be delivered by torpedo or by launch from a ship as Nuclear Depth Charges against submarines or dropped from aircraft as wide ranging as Vulcan, Buccaneer, Harrier and were planned for TSR-2 and the P1154.

        They were parachute delayed free fall bombs but we have the capability today to mount these very safe and capable warheads (ET.317 from the Polaris programme) into cruise missiles like Storm Shadow or Tomahawk. Or use the more advanced nuclear warheads we fit into Trident missiles as we did with WE.177.

        In 1982 all RN ships carried them and because the Falklands War started so quickly all three variants of WE.177 had to be scrambled off ships on to RFA ships as they entered South American nuclear free waters. Rumour is not all could be removed and some remained in the heavily armoured magazines on Hermes. Its doubtful the 6 subs we had down there were ever cleared of nuclear weapons.

        I am starting to form the opinion (triggered by something Elliot wrote) that maybe we should start looking at adding more but smaller nuclear Tomahawks and torpedoes to Astutes, fit Tomahawks to more surface ships, add airborne nuclear weapons to Typhoon and F-35 and maybe forget Dreadnought altogether and divert those funds to build more RN submarines and surface ships. The problem is they have become a political icon which must never be challenged. 20 Astute nuclear Tomahawks would deliver a devastating blow at far less cost. And given they would be spread in a much wider area more difficult to counter.

  21. We need more boats, more ships, more planes, more tanks, more troops, more sailors… More Bootnecks, more Paras, more Poor Bloody Infantry and more of those fantastic F35b’s for the FAA, where they belong.
    We all have our own lists mine includes some Ospreys and a lot more Merlins and Wildcats. More of everything really!
    Maybe a batch of 40 or so Typhoon 4’s to keep BAe busy until the Tempest arrives.
    BUT…more Astutes would be a really good start!
    What we need to do IMO while we wait for such glorious orders is to praise great work and identify those that would seek to spread sedition and anti military clap trap.
    Sadly such groups are numerous nowadays and surprisingly quite well organised with and without aid from elsewhere.
    The POTUS Trumpeter (btw, ex RN lend lease carrier, Ruler class. FTR I am not a member of his fan club) calls it:- fake news! This is really a classic example.
    The Astutes are a world leader.
    They need celebrating. We need more of them, a lot more.

  22. Lack of spares for operational astutes resulted in cannibalism of parts from the subs being built.
    This resulted in associated build delays and cost increases.

    There needs to be a properly resourced maintenance spares pool.

  23. Folks can someone tell me what is meant by “never before experienced holding a submarine at the range we were holding USS New Mexico. The Americans were utterly taken aback, blown away with what they were seeing” not as clued up as you lot.

    • I would assume Paul they mean ( passive and active) detection and tracking of the other boat at advantageous ranges across various depths.

      After all, modern homing torpedoes are extremely difficult to decoy, weapons like the upgraded spearfish will simply ignore noise makers and slam into the enemy.

      Getting a firing solution first is what it’s all about..

    • Paul – can I add that the said HMS Astute could detect,track and likely offer a firing solution to the USS Mexico without it knowing that the Astute was there ?

      • “To hold a vessel at range” means that the submarine is able to detect the “enemy” vessel while remaining undetected itself; or are able to remain out of range of their weapons while they remain in range of yours. Without knowing the specific ground rules of that particular exercise, it’s difficult to totally interpret just what that comment means.
        It should be noted that the exercise between the Astute and New Mexico occurred in 2012. Since that time the Virginia class subs have had a new block with totally redesigned and improved sonar arrays.

  24. The only issue with Astute is weaponry. We’ve ignored significant advances in torpedo defence systems. The Russians have not. Will our Spearfish be effective forever? We need to at least contemplate new capabilities, even if the conclusion is that the existing weapons will be sufficient for the foreseeable future.

  25. I have a vague memory of reading somewhere about improvements after the first 3, which would account for higher cost. It could be to do with longer term lessons learnt from Astute, not in time for 2 and 3. Memory, eh? A vague thing at times.

    • That’s the problem with presenting data in concise, bite-sized chunks. There often isn’t enough analysis and qualification accompanying it to know what it is really saying.

      If this increased cost is due to significant capability enhancements specified and implemented after boats 1 – 3 then extra capabilities do tend to cost extra money so it is not really any big deal (apart from having to be funded somehow) if we spent more vs the original budget to get more capability compared to the original specification vs these cost overruns being mostly down to badly negotiated contracts and/or politically-motivated interventions in the build rate that loaded unnecessary extra costs onto the project. From what we see in this report I’m not sure we have the data broken down enough to make such a determination.

  26. The 823 million quoted is an accounting figure projecting inflation, depreciation, replacement of fixed assets and currency exchange costs going forward. The figure stands at 2018, By next year it could be more or less. The alternative would be to cancel a course that is not cost free and has very significant political and strategic risks. This figure covers the four remaining orders. These will be stratified, the costs varying with each new boat in turn. Much of this cost is probably already built in. A greater concern is the speed of construction and follow on projects. A vertical launch cruise missile primary weapon ‘Astute II’ would be an obvious development, but I take it from knowledgeable types around these parts that would not be possible from the one single yard capable of building these boats.

  27. As many have rightly pointed out here, that UK warships prices or costs compare favourably to foreign-built ships and in many cases, the total value cost price of UK built ships is given including all missiles as an example etc. An interesting point here too, is the MARS tankers. Save the Royal Navy pointed out, the final construction cost due to the pound was 550 million pounds and not including the plus 150 million pounds UK content and 15 million pounds customisation contract that makes these very expensive tankers and, although a little smaller, the Waves compare favourably against. But we include design and any other UK content in these and other ships, so do not get a real picture. The carriers was made by non producing people, several billion pounds more expensive, but how much did they really cost to build when UK content like the design and other things is taken into consideration and taken away from the cost as with those tankers. Along with delay and a look at big versus small in which anyone involved in this project should be able to easily tell without a huge cost in investigating a more expensive smaller ship, which we nearly had that big is cheaper. Thankfully we had big. But we need to separate, beaurocracy, design, UK content that was removed from the total of the MARS tankers to make them look cheap, along with net versus gross, time taken to build and if made longer by outside influences etc, is it the fault of the contractor!

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