Leonardo sign £328m contract with Poland for four Merlin helicopters

The cost numbers for the JLTV including add on’s and R&D I understand are around US$400k.

The foxhound using the same terms is US$1300k.

It would be good if UK industry could produce a low cost Foxhound which matches the JLTV in terms of price and capability, but it hasn’t and probably cannot.

We have to deal with the reality of the situation, money is short and decisions have to be made taking that into account.

Unfortunately it’s that very basic neoliberal paridigm that has turned the UK into a net importer. Government spending should always take into account the whole cost vs benefit of any procurement, that should include:

1) total created tax revenue (probably around 50% of the total cost base will come back at some point).
2) opportunity costs in loss of manufacturing capability, if you don’t support your industry it can’t sell to others and create even greater tax revenue.
3) social cost, lost industry means you end up with a population on welfare.

Neoliberalism is a generally 0 point game in which the cheapest option/market purity is taken even if it strengthens the competition and weakens you.

The fantasy that the more money we spend the richer we will be regardless of the economic outcome has only one destination, bankruptcy.

@Mike Saul – well that is a simplistic statement Mike and one has to have regard to the context. If you compare apples and apples (as in two products bought abroad) then yes your argument stands up. But when you compare the import apple against the home build orange I’m afraid it doesn’t.

This is the point our civil servants just either ignore or are too fixated on buying foreign to admit. If we build something here paid for by the public purse then we must also calculate how much of that taxpayer money is recycled back to the taxman for re-use in other projects. There is a formula for each project that can be calculated:
1) How many man hours at what rates and therefore labour cost
2) What is the Income Tax and NI paid on that labour cost
3) How much Corporation Tax is payable by the contractor
4) How much VAT is payable for sub assemblies and components.

And then you get the less easy calculation of the amount recycled back into local UK economies through supply chains which then fund other labour and supply revenues for the tax man (person). I have reason to believe the direct tax take is worth some 40% of the project costs but have no idea of the wider economic benefits but they will be positive. This isn’t a justification for high prices but just making the point that if we pay £250 Mn for something from the USA that is the total out-turn cost. If we paid a UK company £400 Mn for a similar product the real out-turn cost would be (£400 – 40%) or £240 Mn. Plus the wider economic benefits from the supply chains, the extra benefits of developing that industry and the ability to train new people.

To me its a no brainer but then as I said before we are dealing with Civil Servants and a completely different mindset.

All of what of what you have stated has been tried before and the UK armed forces have ended up with overpriced equipment, which in some cases means they end up with poor capability equipment.

The UK armed forces should be equipped with the best equipment we can afford, hopefully from the UK but if necessary from.foteign suppliers.

Our recent history is littered with UK industry military projects that have failed and cost a future the process.

The aim of the defence budget is provide equipment to the armed forces not a subsidy to UK industry.

I agree to disagree. This country is very good at “make do and mend” and thus keeping a system in service well past its use by date – Challenger 2 is a very good example as the life enhancement program today is what the mid life enhancement program was 10 years ago but was cancelled.
However, this country is also very good at innovation and thinking outside of the box, put poor at program management and not letting mission creep distort the original purpose.
A good example of this is Nimrod AEW. The radar was truly pushing at the boundaries of what was possible with 80’s technology. When the radar was tested on the ground at Malvern it was awesome, but then when it was fitted to the test aircraft it was hopeless. Why was this? A number of issues one being the small size of the airframe, the other being the computer used for signal processing. The ground test facility used a different computer to that being used for the aircraft. It had dedicated watercooling, more proessing power and larger memory, whereas the one in the Nimrod didn’t, so it constantly overheated and shut down. To make matters worse the system that was being used on the ground would require an aircraft at least twice the size of the Nimrod to fit everything in.
The radar was truly better than the AN/APS-125 of the Hawkeye and AN/APY-1 of the Sentry when it was working! It had better range and resolution. But more strikingly the moving target information could also resolve vehicles. It had a limited synthetic aperture mode where low resolution images could be produced.
What killed it off from the start was it had two different program leads, one for the aircraft and one for the radar system rather than one overall lead. So the aircraft team developed the Nimrod without really seeing the radar until the last minute and vice versa. There didn’t seem to be any control or coordination over the project from the RAF, as it was industry led. So perhaps if they had a dedicated lead, penalties and competition, some of the problems might not have happened.
The whole debacle cost the UK taxpayer approximately £1 billion. However, not everything was totally wasted. The MTI and SAR techniques were used on the Searchwater upgrade then being used in the Nimrod MR and then in the Seaking ASAC.
Its’s interesting to note that the fore and aft radar antenna method as used on the Nimrod hasn’t been used on any other AEW platform. The only radar system that uses this method is the T45’s Sampson. To think it’s taken nearly forty years to resolve the issue of combining two conjoined radars together to generate one picture.
We can develop competitive programs, we just need government (civil service) buy in and proper controls to see it through.

The aim of HMG is to secure the future well being of the United Kingdom, using ever possible tool, including investing In industry.

Apart from the main points people make I always look at their use of language. You use terms like ‘subsidy’ and ‘littered’ and ‘failed’. And then of course ‘overpriced’ to cast a negative prognosis.

I could use your terminology and say “So you prefer to subsidise foreign industry?”. I can tell you very clearly that in the USA they very firmly believe their tax dollars should be used to support (note the positive term) home industries rather than foreign. The French also have that sentiment embedded in their Government and their purchasing record proves it.

Just to repeat my earlier point I have no issues with identifying and buying foreign designs if they are better. BUT we should always ‘build here’, use licencing where necessary and make them ‘UK Specific’ here at our cost not pay someone else a premium to do it. The B-57 looked like a Canberra but it was a very different aircraft in detail as, for example, it used UNF threads and tools and we used BSF and UK Imperial. It was why each Packard Merlin came with a set of US specific tools even when they were fitted to Lancasters for example.

I am sorry you cannot differentiate between the gross price of buying abroad and the nett cost of buying here and again I would suggest we are in apples and oranges territory. As to ‘we are unable’ well I would comment if UK industry can produce two state of the art carriers on time and to budget (after a Government induced delay) then I suspect given steady state ordering we can do anything. And the key point here is found in my comment right at the start – It is more efficient use of capital, tax payer money and industrial resources and produce a better overall out-turn if you establish a steady state of orders (what industry calls a pulse rate) rather than the nothing for 2 years and then need 20 by next week. The BAE production line for the F-35 demonstrates this perfectly and also proves we can do it as well as anyone in the world. What lets us down are successive political failures and the pro foreign Civil Service that supports them.

What he said.

Always build here even if we use a foreign design.

For example Watchkeeper UAS? We made a right pig’s ear out of that one. 10 years late, grossly over budget and still not working properly. 10% of WK have crashed during training exercises.

What about Apache WAH1? For the cost of one WAH1 we could have purchased four US built Apache helicopters.

Going back even further, the Phantom F4K/M. We managed to produce the most expensive and slowest F4 ever built by insisting on a high UK content.

The defence budget is finite, we need to spend the money wisely to give our armed forces personnel the best equipment we can afford in the quantity required. Hopefully from UK suppliers, but only if they meet the affordability and capability tests.

Its pointless taking this further because you just do not acknowledge the difference between Gross cost of imports and the Nett cost of UK build. So you are doing the apples and oranges thing again. Lop 40% of the costs of the UK build variants you mentioned and then do a comparison. And I challenge your WAH1 comparison anyway.

Of course the Phantom F4K and M were not built here. We paid McDonnell Douglas a premium to put Speys and other UK specific kit in them. And of course they had to be modified anyway because the UK carriers were all smaller than the US carriers of the day. Hence the high AoA and long oleos on the forward landing gear on launch. And the use of fire hoses to cool the deck afterwards. They were ordered to be used on two new carriers cancelled mid project by the then Government. Remind us of anything? The major difference between the F-4J and the British Phantoms was the absence of the Rolls-Royce Spey turbofan, the former being fitted with the GE J79-10B. This produced less power than the British engine, but had a faster afterburner light up, giving it better performance at high altitude, at the expense of slightly poorer acceleration at low level. So not quite as you describe Mike.

And in response to your final point spending UK Taxpayer’s money here to support and develop UK industry IS VERY MUCH ‘spending money wisely’. When you get one benefit from buying abroad (the product) and many more (the product, the investment, the training, the jobs, the supply chain investment and local economies) from building here I think the case is proven.

But I suspect we must agree to disagree. Thank you for having a polite disagreement Mike…

The business that does not spend is dead, the nation that does not produce doomed. The fallacy of cheapest wins is as created the monster that is China and the national sham which is our “production sector”.At some point the consumer will have nothing left and the producer will own everything.

There is a difference between spending and investing.

Throwing money at problems, rarely solves the problems.

You need to invest wisely to.maximise sustainable returns.

I don’t disagree, I don’t believe in wasting money. But we need to have a properly funded industrial strategy and part of that should be all government procurement has a total cost and opportunity review that includes, increased tax returns, industrial development, infrastructure investment etc and not just basic cheapest wins…we should always look to make our nation stronger and wealthier if we can not by cheap.

We also need to ensure department budgets reflect this complexity…. so if we by British at a 40% cost increase, because we will get 30% back in revenue, save 5% on unemployment, have 10% invested back in infractstuture then the MOD budget needs to be uplifted by the 40% increase to reflect this…

It’s gone up since then. Last I saw was $540,000 per unit. And that is before the major cuts in orders that are about to happen take place which will boost the per unit cost up significantly.
The important thing to realise with Foxhound is that the development costs have already been paid by the UK taxpayer for the limited numbers purchased already. That R & D cost wouldn’t be incurred again. Essentially it is a sunk cost already.

It will be the UK, the main merlin production line is on Yeovil, the Italian line is purely for the Italian armed forces. Any export models are UK built.