The NAO report found that the MoD had not included £9.6 billion of forecast costs in the equipment plan.

The NAO report found that the Department has not included £9.6 billion of forecast costs in the Plan. This variance arose as a result of the Department’s 2017 budget setting process not being able to match costs to available budgets. In addition, the NAO’s review found that the Department has understated forecast costs by at least a further £1.3 billion as the planned cost of buying five Type 31e frigates are not included in the Plan, while the cost of nuclear-related projects continues to grow.

There are also significant risks to the cost of the Equipment Plan: over-optimism in forecast costs of £3.2 billion as calculated by the Department’s independent Cost Assurance and Analysis Service; and the risk of increased costs of £4.6 billion due to the Department not using foreign currency exchange rates that reflect market rates at the date of the Plan.

The Department is also relying on ambitious savings to help fund the Plan. The Department reports that it has achieved savings of approximately £7.9 billion against an increased savings target of £16 billion, with approximately £8.1 billion still to be achieved by 2027. However, there is a lack of transparency on the full amount of savings included in the Plan and the Department does not have evidence to support all the savings it has claimed to date.”


The build plan for the Type 31 Frigates is expected to follow a similar pattern to that of the Queen Elizabeth carriers and early Type 45 Destroyers in that blocks will be built in yards around the UK and assembled at one main location.

Modern shipbuilding makes considerable use of prefabricated sections. Entire multi-deck segments of the hull may be built elsewhere around the UK, transported to the building dock or slipway, then lifted into place and assembled into one ship. This is known as block construction and is far more cost effective. Yards pre-install equipment, pipes, electrical cables and any other components within the blocks, to minimise the effort needed to assemble or install components deep within the hull once it is welded together.

Where is the Type 31e Programme today?

Recently Babcock announced that it would lead a team of industry partners in a bid for the new £1.25 billion Type 31e Frigate with work to be undertaken in Scotland, England and Northern Ireland.

Babcock say work would be shared across the UK its facilities in Fife and Devon being among the prime locations for building. Ferguson Marine on the Clyde will also be in line for the work. Babcock will act as the overall programme lead, whilst Thales will have overall responsibility for the development of the Mission System solution. The make-up of the team, the company say, will ensure that the economic benefits of the programme are shared across the UK. Ferguson Marine on the Clyde, Harland & Wolff in Belfast and the Babcock facilities in Fife and Devon will all have ‘key roles to play’, while much of the equipment provided by Thales and others will support jobs across the UK.

Babcock CEO Archie Bethel said:

“Team 31 will allow Babcock and Thales to take forward the key lessons from the Aircraft Carrier Alliance and apply them in a new and highly capable team with Harland & Wolff, BMT and Ferguson Marine. We firmly believe that our combined skills can deliver an affordable and effective Type31e Frigate programme for the Royal Navy and offer something new and exciting in the export market. With a high degree of UK content and the use of innovative technologies, we believe that our approach will deliver real benefits to UK plc.”

Victor Chavez, CEO of Thales UK said:

“Thales UK is delighted to be working with Babcock and our partners as part of Team 31. We recognise the diversity of roles anticipated for Type31e and, together, we will create and exciting, innovative and flexible capability for the Royal Navy based on the best of UK and international technologies in an open-system architecture that will ensure long term value for money.” 

Sarah Kenny, BMT CEO said: 

“BMT has supported the UK and global maritime sector for decades. As a proud member of Team 31, we are delighted to be shaping the Type 31e programme, and we welcome the opportunity to bring our substantial global engineering experience to bear on this vital UK defence programme. We are confident that the combined Team 31 offering will meet the exacting requirements of the UK MOD whilst creating UK shipbuilding industry momentum and a competitive offering for wider export opportunities.”

Babcock were originally offering the ‘Arrowhead 120 while BMT were offering the Venator 110, the companies now say that they will be exploring both available designs to determine the best possible option. The companies say that new arrangement draws on combined strengths and will deliver ‘innovative, capable, affordable and flexible customer solutions, within a fast changing and increasingly demanding environment’.

As we reported last year, BAE Systems announced a partnership with Cammell Laird, who would ‘Prime, build and assemble’ the vessels at their Merseyside facility while the Clyde will focus on the Type 26 Frigates. If the bid is successful, Cammell Laird would be main contractor with BAE providing design and combat systems.

BAE themselves say that shipbuilding capacity on the Clyde will be full until the mid 2030s while the Ministry of Defence want the first of the new Type 31 Frigates in service by 2023.

The MoD is hoping to reduce its reliance on BAE and cut the costs of procurement by spreading shipbuilding across civil and naval yards. To this end, the government are implementing the results of an independent report into the National Shipbuilding Strategy by Sir John Parker which recommended that the Type 31 Frigate build be spread across the UK, with blocks and components being constructed in yards in both Scotland and England.

The National Shipbuilding Strategy is intended to be a “radical, fundamental re-appraisal of how we undertake the shipbuilding enterprise in the UK, intending to place UK naval shipbuilding on a sustainable long term footing.”

BAE themselves signalled their own reluctance to bid for the Type 31 Frigate as prime contractor due to concerns of a “race to the bottom” on price. Speaking to The Herald here, BAE managing director Iain Stevenson said:

“We do want to be involved in Type 31. But we have questions. Does it have a budget? What are the timescales. We have not got solid facts. Type 31 could be a race to the bottom. If it is a front price contract people might bid for it to win and it and it might put them out of business. We would not, because we are BAE Systems.”

In a press release signalling a their intention not to bid to build the vessels BAE say:

“BAE Systems is focused on the manufacture and delivery of the two QE Class carriers, the five River Class Offshore Patrol Vessels (OPV) and the first three City class Type 26 warships, as well as continuing to develop and upgrade combat management systems on all Royal Navy ships. Taking account our current and future workload, including Type 26, our shipbuilding capacity on the Clyde will be full until the mid 2030s.”


  1. There are serious questions to be asked regarding financial mismanagement and the wasting of taxpayer pounds by the MoD. They are given vast sums of our money and must learn to budget properly as any householder has to. The military must learn to live within its means. I read with interest an article written by former defence chiefs Generals Brammall and Ramsbotham which suggests that the nuclear deterrent is a waste of public money. With the disaster of Brexit fast approaching, expenditure cuts will surely occur and rightly so.

    • The military must learn to live within its means.

      Actually the Military does, the vast amount of financial mismanagement is carried out by civil servants and politicians. Classic example, stationary, I would order through the official MOD catalogue , however the cheap pens they supplied, would break within seconds, sick of ordering such crap, I out of my own pocket bought Bic pens by the box load. Its the same with the eco photocopying paper, problem is as it is so cheap it jams.

      As for your comment regards getting rid of the Nuclear deterrent, lets say we do, what then, will CND and its like disband, or will they move onto getting rid of the British armed forces as promoted by the leader of the Labour party, the Greens and their ilk.

      Now if you want to talk about living within their means, how about looking at the NHS, which is abused on a daily basis, just look at how that stupid fat bint from Hull was arrested for taking 300 tablets acquired cheaply from the NHS for resale to Egypt. In fact it has been proved that it is only the tip of a huge iceberg
      Then there is people getting bread and such from the NHS, which costs £2 a load at most but with the NHS forking out £32 a loaf
      The problem we have nowadays is that a large number of civil servants aren’t fit for purpose and it is their penny shy , pound foolish mindset which must be addressed. I

      • “There are serious questions to be asked regarding financial mismanagement and the wasting of taxpayer pounds by the MoD” – Much evidence that is true considering the number of bungled defence programs….need I mention FRES?

        “They are given vast sums of our money and must learn to budget properly as any householder has to. The military must learn to live within its means.” – Sounds perfectly reasonable to me.

        “I read with interest an article written by former defence chiefs Generals Brammall and Ramsbotham which suggests that the nuclear deterrent is a waste of public money.” -There are ex defence chiefs that hold that view, so hardly trolling to point that out. Personally I don’t agree but that doesn’t mean we should ignore that some hold the view.

        “With the disaster of Brexit fast approaching, expenditure cuts will surely occur and rightly so.” – Spot on in respect of BREXIT, expenditure cuts are happening right now people need to face up to that reality.

        • I didn’t actually follow FRES, but the thing is that to evolve future strategy, you will get projects like FRES and GCS that don’t end up themselves being entirely successful. But a lot is learnt from such projects, and hopefully that is incorporated into future strategies and designs.

          Big business does the same, it has million pound “wasted” projects from which much is learnt, but since as businesses they have an actual bottom line they tend to get criticised less for that, though of course shareholders do want a report, and an accounting of how the project contributed effectively to R&D.

  2. Disaster of BREXIT?

    Which of course you already know the outcome, so far the data suggests the exact opposite.

    This about the Military not current political viewpoints.

      • time for a single british defence force? with better ability to look ahead at defence need, merge the s.a.s and s.b.s ,merge fleet air arm and R.A.F mergers in the army have worked without diminishing the nations security. and title the next t 26 gibraltar, to give the finger to spain. remove the ski ramps on the carriers, fit emals instead and buy the navalised gripen or rafale, sparing the nation £millions against the cancelled order for the f 35. comission surveys for the 19 submarines in mothballs with the view of returning as many as possible to service.

        • I’m sorry, but very little you just said will save us money. In fact, it would cost us MORE.

          EMALS is stupidly expensive and currently unproven, and you want to make massive structural changes to two aircraft carriers that have just finished construction. Even if we went ahead with the millions of pounds worth of work that required, cancelling our F35 order at this stage is just impractical, especially because we’re buying the variant with the most British investment and a lot of the money is going to British businesses. Buying a completely foreign design like the Gripen or Rafale would both be embarrassing for us and stupid, given that neither of those has the capability of the F35.

          As for the submarines? Get real, none of those subs are seaworthy, and they were stripped of equipment years ago. Most of them are 40-50 years old at least, and 4 of them are ballistic missile subs, which we’d have absolutely no use for even if they were seaworthy.

          If the forces really want to save money, they need to look at the tasks they’ll be undertaking. Unfortunately for the army, there’s no real need for tens of thousands of infantry or hundreds of battle tanks. Practically, we can’t beat the Russians on land, and in any case we’ve got the whole of Europe and their land focused forces between us. We should be focusing on building up our fleets of aircraft, escorts, and submarines, where we can actually contend with the Russians, and have the army reconfigured as a big expeditionary force to reinforce the Northern flank (basically turn them into a smaller version of the USMC)

          • I think this is precisely the kind of discussion the UK should be having.

            We have a large budget – that is undeniable, but we are constrained by clean up activities from having a much larger military previously and the requirements of politicians to show off our mini US style capabilities.

            So here is my view:

            1. Politicians to rein in their requirements and align to a more sensible regional outlook.

            2. Provide separate funding for the MOD to drastically reduce its estate to 12 or so UK based super bases (review non UK bases separately).

            3. Provide separate funding for the decommissioning of the nuclear fleet and create a sustainable process that will enable us to do this safely in future (parking nuclear subs in a port is not the solution).

            4. Create a single force structure under a single command just like the USMC – and adopt the same fiscal accountabilities as that force.

            5. Improve governance of all contracts to ensure that vendors are penalised for not delivering to requirements.

            6. Simplify our requirements and concentrate on volumes, automation and communications (CEC being a prime example of increasing capability across platforms for relatively little cost in comparison to fitting everything out fully).

            We should actually seek to have a combat force size similar to that of the USMC, but incorporating all services into it.

        • The sas is the most elite fighting force in the world, and people have literally died trying to get in. Those honour and tradition mean nothing to people these days. A fighting force is only as good as its moral, and these planned mergers would only destroy what is left of British moral.

          • Totally agree. Historically and in practice the SAS and SBS have two totally different roles. The SBS are your sneaky scouts, who live by stealth. The SAS on the other hand are there to smash down doors and to take out the target the SBS has been observing. That’s not to say the SBS don’t go full out when required, but generally they don’t. And conversely the SAS are very adept at surveillance.
            The SAS and SBS share the same selection process, however to join the SBS you also have pass the additional swimmer selection, which apparently is horrendously difficult to pass!

      • Brexit is looking bad Alan, but as an economist said, put 5 economists in a room together and you’ll get 6 different views. Scotland is adapatable being small, one of the points us Indy supporters make, but as long as the UK can be adaptable, it can do well out of Brexit (I voted Remain and still would to give my standpoint).

    • Steve – I thought the same thing. The poor dears are so embittered because people didn’t do as they were told they just can’t let it go. Self righteous egos so bruised they seek to create ‘disaster’ at every news item even if it has nothing to do with the discussion and wish to have us ignore the democratic wish of the British electorate. Best of three?

      I have a quiet smile every time the good news keeps coming despite their pathetic ‘Project Fear’. I waited 40+ years for my 2nd referendum (having voted to Remain in the EEC in ’75 aged 28) so they can wait another 20+ years for the third….

  3. Just who manages MoDs budget? It’s been going on for years. Heads should roll. Publicly. Instead all we will get is excuses and whitewash.
    TH is correct on financial mismanagement but leave the other stuff out. Brexit has nothing to do with it.

  4. “while the cost of nuclear-related projects continues to grow”

    This is the sheer stupidity of the cost having been transferred to the defence budget.

    To have or not to have a nuclear deterrent is rightly the decision of Government and Parliament, therefore the cost shold be borne directly by the Government as previously, via the Treasury.

    The decision as to whether to have 5 T31e and 138 F35-B is rightly part of the MOD’s domain, and that should be out of their own budget, without having it cut by increasing costs of nukes.

    In this respect the UK is stark staring bonkers.

  5. Agree.. The nuclear ballistic missile subs should be run separately by the treasury.. Think currently it’s taking about 6% of the defence budget each year! That money is so very much needed for the conventional armed forces. Even though i’m a huge supporter of the UK keeping it’s nuclear deterrent it should never of been included in the in the MOD budget.

  6. They should scrap the type 31 project and go back to a more simple patrol version of type 26 that could be upgraded to full fat asw type 26 in the future if needed.
    Save on developmental costs and give the RN 13 full sized powerful surface combatants.
    As for Brexit and TH etc points of view, what a load of hot air. If you live in a democracy you have to accept the majority vote. If Brexit ends badly then so be it. It was the voted for will of the people. No one knows what the ultimate outcome will be.
    What is certain though is that with £400 billion per year trade on the line the EU and UK will come to a deal. Anything other than a bespoke comprehensive trade deal will be sheer stupidity on both sides of the channel.
    We just need Mrs May Andheri government my to sell the UK down the river. The UK is in a strong position if no deal offered by the EU then simply walk away and let the EU go into recession.
    30% of all German exports come to the UK
    27% of all Frances agricultural produce and over 50% of all champagne sales.
    No deal is an option but the EU needs reminding that no deal would also mean I support for them militarily or otherwise in the event that they need us.
    We should as Churchill said look to the sea for our salvation. Trade with China, India, USA, Canada, Australia etc is the answer.

    • Join NAFTA for a start.

      Trade more with the Commonwealth.

      Agree the EU will come running soon enough.

      All this talk of tariffs always ignores that it works both ways.

    • The big ‘failure’ of the EU is that joining it failed to improve oir balance of trade. The UK cannot feed herself. The idea was that we would a) substitute French agriculture for Commonwealth food and that b) the EU would buy our exports instead of the Commonwealth buying our exports. Part a) happened but part b) has been a disaster. The EU have bought our financial services but despite valiant efforts to resurrect our manufacturing industry we have a huge deficit in manufactures with the rest of the EU. So we continue to need to borrow to finance this amd hence the premium on economic growth which in turn drives demand for cheap labour and instant taxpayers aka immigrants; we don’t time to grow our own…
      My fear is that Brexit will male things worse of we cannot get a deal which includes financial services. Tariffs on German cars will not stop the well off buying BMWs. But our exports of Nissans and Toyotas to the EU will likely fall. Our national tendency to mortage the future will mean the poorest will suffer most as we attempt to balance the books with less income earned.

  7. Let me get my head around this…no budget for Type 31? So I interpret this to mean the 13 ship Type 26 budget was completely spent up by 8 ships. Words fail me.

      • Dunno, but until now I was naively assuming that the budget for 13×5,400 ton Merlin capable flight deck Type 26 = the budget for 8×6,900 ton Chinook flight deck capable Type 26 PLUS 5 x 4000 ton Wildcat capable Type 31. I simply cannot comprehend how it comes to pass that a potential shortfall of 5 RN frigates was not foreseen as the project specification matured. There must have been a complete lack of project governance.

        • Lets hope there is an answer and all is in hand otherwise yet again it shows parts of the MoD are totally incompetent and should be publicly named and tried for failing to control and keep track of the finances given them.

          • I believe the RN do understand the significance of technology trends and budget constraints. Note this ( now withdrawn) publication.
            This is not to say the idea of a ‘sloop of war’ is the answer but it does at least demonstrate that someone is thinking stratefically about how to turn the problems of complex warship costs into opportunities for new technologies. Seems to me we have an education issue. Neither the civil servants nor the MPs who sit on the parliamentary commitees who oversee defence spending were well enough equipped to do their job.

      • Since the often quoted cost of. Type 26 is £1billion per ship I assume the total project budget was £8billion to cover 13 ships.

  8. Why do people keep stating reducing our forces to that of the USMC? You do realise we would have to DOUBLE our army size to get anywhere close to the 182,000 they have?
    There are no obvious gaps in forces that could be reduced.
    I do wonder what is in a type 26 that makes it a billion pounds, and a bear same size type 31 that makes it £250 million? Clearly it’s not steel cost? Could cheaper type 26 be an option as someone suggested? What would it lack to reduce 750 million?
    Type 31s will launch with likely a 5″ gun, some missile defence, a helicopter and Rhibs. Is it purely engine type and ASW capability that bumps the price up?

    • Infantry Battalions could be reduced, and some of the manpower used instead to form the all important enablers, Combat Service Support Regiments that have been cut by the “cap badge mafia” leaving the army with 6 Infantry Brigades that are brigades in name only without a single RS, RE, REME, RA or RLC formation supporting them.

      They do not want the bad press of cutting Infantry Regiment historical names so cut the supports instead leaving the British Army ridiculously unbalanced.

  9. I think the BREXIT thing is not relevant in terms of cliff edge. Some good reports by Minogue, Ian Milne and Batten stated the actual direct cost of eu to the UK is around 60 billion a year, this was a few years ago too. The direct and indirect cost could be as much as 10% of our GDP, eu regs only benefit a tiny amount while UK regs would benefit far more to the UK economy. Out total business with eu is 8% in which we run a huge deficit, 11% with non eu Countries in which we have a surplus and the rest of the UKs business, is done within the UK herself, but all those businesses that have nothing to do with eu are affected eu rules.

    Regarding the type 31s. The cost of British warships is usually given as a whole including weapons etc, I believe. I may be wrong but as an example, US ship prices/cost are given without missile fit? The first instance of cost break down in terms of pure or main shipbuild bit has been with the MARS tankers in which by omitting the 160 million plus UK content, it makes these tankers look cheaper just giving the 452 million cost.

    Could it be that the types 31s cost is for the whole ship without missile fit? But bear in mind, Sir John Parkers report does state that the consortium virtual shipyard method can reduce shipbuilding time and cost by a very large margin. Same being case for the Fleet Solid Support Ships.

  10. Ah politics got to love them. Take a budget turn it end for end and blame it on something that has not happened yet. The bottom line is what dose the UK need. Food, Trade, Defence. and make it work for you .


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