A £9 billion contract between the Ministry of Defence and Rolls-Royce Submarines Ltd has been announced, securing the future of the Royal Navy’s nuclear submarine fleet while delivering economic benefits across the UK.
The deal, known as “Unity,” is designed to enhance national security and sustain more than 5,000 jobs, including 1,000 new roles.
Defence Secretary John Healey revealed the agreement during a visit to Rolls-Royce’s nuclear reactor facility in Derby. Speaking on the contract, Healey said it would “deliver a long-term boost to British business, jobs and national security,” framing the investment as a cornerstone of the government’s broader defence and economic strategy. The contract focuses on supporting nuclear reactors for submarines, including the new Dreadnought-class, which are essential to maintaining the UK’s continuous at-sea deterrent.
Streamlining for Savings and Security
The Unity contract aims to streamline previous agreements, improving efficiency while saving taxpayers over £400 million during its eight-year span. It consolidates decision-making and strengthens collaboration between the government and industry, enabling Rolls-Royce to invest in skills and facilities crucial for the Defence Nuclear Enterprise.
Steve Carlier, President of Rolls-Royce Submarines, emphasised the long-term benefits, stating the contract allows the company to “invest in the right skills, equipment, and facilities to protect UK interests.” Meanwhile, Sir Chris Gardner, CEO of the Submarine Delivery Agency, described the deal as a significant step in ensuring the resilience and capability of the UK’s submarine fleet.
The announcement comes as the UK seeks to align its defence and economic goals. Healey also underscored the importance of the “triple-lock” on the nuclear deterrent, which includes the construction of four Dreadnought-class submarines in Barrow-in-Furness and continuous patrols to protect UK and NATO interests. The agreement marks a pivotal moment for British defence strategy, securing vital infrastructure and reinforcing the UK’s commitment to its nuclear deterrence.
An example of why conventional force levels have collapsed the last 3 decades.
The DNE is eating defence alive, and AUKUS and the 12 billion needed JUST TO DEVELOP GCAP are behind it.
Before anyone asks, I Support CASD and the UK being a nuclear power.
But NOT at conventional deterrence expense.
The money being spent in Devonport and Faslane after two decades of neglect is largely hidden from view is huge and there is a lot of money being spent on accommodation and base facilities across the estate that also largely goes unreported. That plus another £3Bn for Ukraine and you can see why we are getting so little bang for our buck. If you strip out the CASD costs from the budget we are still considerably under 2% spend on our conventional forces. Hence why the target spending of 2.5% is nowhere near enough to maintain even our current force levels longer term.
If Europe really wants to be independent of the US purely for self defence then the number needs to be north of 3% across the continent. Like him or loathe him but Mr Trump is right on this issue.
The cost of the nuclear deterent has always been part of our nato 2.5% calculation. Moving it into the mod core budget had no effect on that.
Nuclear is priority ringfenced, which means if any other capability needs to be increased, and we are sure to get several reprioritisations from the SDR, the money has to come out of current conventional spend. Equipment plans in 2023 gave nearly 40% to nuclear over the following 10 years, and it might well be higher now. We don’t know as MOD decided not to publish the figures this year.
I agree with Daniele: increasing nuclear spend while holding the total spend roughly constant is why nuclear is eating conventional Defence alive.
Jon, you are dead right. The squeeze on conventional forces currently is directly attributable to the bulk of the expenditure for CASD replacement programme coming through over the next decade. If you pretend that the expenditure on the CASD is a flat line percentage year on year of the MOD budget it doesn’t look quite so bad but that is obviously not reality. The level of expenditure could have been smoothed out to an extent if infrastructure work at Devonport and Faslane were not also deferred. The results of this car crash of an approach can be seen with brand new SSN’s laid up because of no docking facilities.
The MOD do not want to publish figure’s because there would be an outcry.
That’s not quite right. Operational costs of the deterrent were always in core, but the procurement cost was paid for centrally, not by the MOD. It’s that change that had a fundamental impact on the Defence Budget.
The cost of building was part of the 2.5% nato target though. So easier to just focus on that figure and how it’s reduced over the years.
This is my understanding.
I have no issue with operating costs, that is only right and fair considering the RN operate the systems at the sharp end.
I take another view. For the UK we probably need to be at 2.5% to maintain CASD and decent conventional forces.
But Europe? If they all hit 2% and do so consistently for a long period (i.e. the foreseeable given the revanchist Russian Government and potential US disinterest) that would be perfectly sufficient. Particularly with Eastern Europe going further…
Truth is right now, and particularly after recent investments in defence production across the board, Europe can handle Russia on its own. The difference in size and quality of forces is large and growing…there are gaps like long range strike that are looking to be closed as well.
Think of it logically….
Russian Navy – Laughable….Europe’s naval forces outclass it to a ridiculous degree….Russia can also no longer make large surface vessels, has lost its amphibious capability and ability to project power…they’re going to be coastal forces only in the near future with a sub arm…they also have near zero ASW capability now (have a look at their fixed wing and rotary ASW…40 years old, and it wasn’t great then,…and there is nothing new on the horizon either…).
Russian Air Force – Again the difference in scale and quality is a gulf. The Russian Air Force has shown in Ukraine that it neither has the equipment, weapons, training or doctrine to fight a modern war. They’re down to around c440 ‘modern’ aircraft (MiG-29SMT, MiG-35, SU-27SM, SU-30, SU-34, SU-35 and MiG-31BM) some of which have very dubious combat value (see MiG-29SMT and 35, plus to a degree SU-34), to cover the entirety of Russia, and with their current production rate and finances they have no way to increase that…as their legacy aircraft run out of airframe hours over the next couple of years thats all they have, and the ‘modern’ aircraft are increasingly deep into their service life, particularly their engines, following near 3 years of ops…They have near zero AAR and other enablers like reconaissance aircraft, EW and AWACS (they’re effectively at zero AWACS now). The only advantage they have at present is their long range air wing, but that has been decreasing in size for some time, with its weapons stocks run down to the minimum. Ability to project forces with transport is also slowly, but increasingly ossifying.
Russian AD – Putting this seperate, even though it comes under Air Force and Army. No one is under any illusions now….Russian AD can be beaten. They’ve suffered severe attrition over the course of the war, with a shortage of modern systems and huge expenditure of missile stocks built up over decades…the Russian’s are not going to be confident of protection from aerial attack as a result…they simply cannot cover all the areas they need to…
Russian Army – Qualitatively they’ve fallen like a stone over the last 1066 days of combat. Their equipment and munition reserves, which were the majority of their real threat, have almost disappeared and are on their last legs. Logistically they cannot operate effectively >50km from a rail hub, they can’t capture a town that is 5km from their border (Vovchansk), they no longer have any formed formations whatsover with the ability to conduct large scale manoeuvre warfare…and they certainly don’t have the commanders, training, equipment and doctrine necessary to do so. Once the war ends and they have to demobilise troops called up, and volunteers drift away following the end of the higher payments their force drops massively….and they don’t have the production capacity to replace older ex Soviet kit. The situation with kit in fact has got even worse than in 2022 when large parts of their force was reaching block obsolescence en masse, they’ve managed through war losses to achieve that position years early…what production they do have is producing old gear that in no way approaches modern western gear as a result of the total failure of their ‘modern’ gear to enter mass production (no Armata, T-14, Kurganets, Bumerang or Koalitsya are entering service any time soon). Their armoured force is effectively reliant now on shagged out T-62, T-72 and T-80. Production of T-90M is stuck at around 40 per year, with the remaining T-90A fleet having been used up and no longer available for conversion. IFV’s in production are BMP-3, BTR-82A and BMD-4M all of which have not performed well at all in Ukraine…but they have no other choice. Artillery production is also minor…Ukraine, for example, is massively outproducing them in new artillery pieces.
And all this is dependent on them running the military budget at its current levels….which they cannot do for much longer….
I know why Military figures are talking up the threat, and we do need to be on our guard, particularly with a Trump White House….and a United States increasingly looking at the Pacific….but any objective look at things, without even getting into industrial potential, population, technology and economy makes it clear that Russia is just not a realistic threat right now. If Europe’s re-armament continues apace then it effectively disappears into the distance even further…
If you think current U.K. conventional forces will be adequate at 2.5% when currently they are still being cut at 2.3% you are sadly mistaken. The gaps in capabilities are growing larger and too long to list.
Whilst Russia is certainly not a super power and its performance in Ukraine has not been good let’s not pretend it is not US muscle and money that has largely stopped them over running Ukraine. Europe has been a smaller player by comparison and has a huge way to go to improve its conventional deterrent forces.
How would Europe respond without US support if Russia tried to grab one of the Baltic states? Do you think Germany, Netherlands, Spain and Italy would do anything? I have severe doubts they would.
I both agree and disagree, because I think there needs to be some context setting
if Russia gets the Ukraine war settled, it now has the industrial capacity to regenerate its army relatively quickly because:
1) Its been protecting its core manpower and sending out older men who have essentially already raised families to die. When the war started going badly and casualties mounted it essentially shifted the remaining core of its professional army out of ukriane, protected its younger population and mass mobilised a load of middle aged men to fight and die in Ukraine..the average age of the Russian combat soldiers in ukriane is now close to 50… Russia has a very large population..it’s culling out its older men.
2) Its manufacturing base is at a war footing so will be able to resupply the army very quickly when the fighting in Ukraine stops.
Political warfare
1) Putin is both very good and and willing to go to any lengths in the political warfare arena and he’s beating the west in this hands down
2) NATO lack of unity..for all its perceived unity, NATO is not unified..Germany does not want to confront Russia and wants to be friends above all else, the US is not likely to want to go all in to defend the Baltic states, Turkey is completely off doing its own thing and at least one NATO state is actually a support of Putin.
3) Some NATO states can be subverted from within especially the Baltic states..what will NATO do if Putin uses political warfare to ferment a civil war in one or more of the Baltic states…it could do nothing as its charter does not cover civil war in a member state.
China and the wider Geostrategic picture
All indicators are that china is going to invade Taiwan some time after 2027..it’s essentially inevitable
1) If the U.S. defended Taiwan the U.S. and china will be at war..that war will go on for years as it will take years to strategically exhaust a super power. In that war china will attack the continent US at that point china and NATO will be at war.
2) China will use its influence to bring in other powers into the war and those other powers will see US and NATO overstretched in a life or death conflict and they will take their opportunity because they know if NATO beats china that’s…..
So the question is not can NATO beat Russia as it is now but
1) Can NATO stay homogeneous against constant political warfare attacks trying to subvert both wider NATO and some of its components nations.
2) Can NATO and it’s allies then fight and win a world war engaging across the globe over multiple years with multiple enemies including..china, Iran and its proxies, Russia and its coalition of nations and North Korea..
That’s the test.. not can it beat Russia…
Conventional force levels have collapsed as governments have cut back on everything and under invested for decades thinking we have peace dividend. Also due to boom and bust policies.
Instead we have massively increased the welfare state and seem to be keen on borrowing to the give that money to people abroad for supposed historical injustices.
It’s got nothing to do with welfare state, as ours are some of the worst of the advanced economies. It’s to do with terrible decisions around projects. For example billions wasted on FRES or warrior upgrade the whole mess with the chinook uk components, etc etc. Systemic incompetence and polictical interference. That combined with the fantasy that we are still a global power and trying to equip our armed forces like it was a shrunk down US rather than focusing on core capabilities and doing them well.
The reality is the defence budget is too small and CASD shouldn’t have been lumped in with conventional forces. Problem isn’t just nuclear deterance as this deal will run over years but incremental cuts like the NI raid on the defence budget and additional spend like salary rises, accommodation improvements tmore money for FSS erc hat mean we must be raising defence spend now. Yes they can blame the previous government for needing to do these things but they can’t blame them for not funding them now, ither departments have received additional funds but defence has had additional costs lumped on them with no increase in % of GDP
Often forgotten is there are rules on what can and can’t be included in the 2.5%. The cost of the deference has always been included. A lot of the changes are just accounting ones and have no impact on the %.
There used to be far tighter rules prior to 2012 and the shift to “NATO rules” ensures the headline figure no longer means what it used to. We need to know what is being spent on UK conventional Defence capability. That’s the number which when unpublished allows the services to be hollowed out.
The DNE was on the brink of ceasing to be viable a few years ago, because we weren’t sustaining enough work to maintain the required critical mass of skilled workers and facilities. It is absolutely not ‘eating defence alive’, it is merely one of the many aspects of national security spending that have been- and remain- chronically underfunded.
This is the problem if taking a structure that was built around 5% GDP and cutting it to 2% [or less] nothing was funded properly and everything was on the back burner for decades.
Eventually big expensive thing wear out or are obsolete and need to be regenerated by that point nobody much is left who understands that area fully.
This.
Having been involved in the design of a replacement explosives process facility I can tell you that the overriding driver was cost. “When did you last use that capability?” “Cut it”
The end result, a white elephant. Hugely expensive wrt unnecessary safety features (PUWER is a catastrophe) but lacking the features and flexibility to meet future needs.
We’re not alone either. USAF is really having to look again at NGAD and what it really wants and apparently that is being driven by the requirement to also relace their ICBMs.
I suspect the relook at the USAF element of NGAD is because they are going down the same road the did with F22 a profoundly expensive limited numbers platform that cannot be exported..while the USN NGAD programme is still going ahead..a pragmatic F18 six gen replacement that’s for mass production and export.
I think what may happen is that the USAF get told they are having the USN NGAD offering. As the US can probably only really afford a single six generation programme….
Perfect sense as always Daniele!
There is a factor on this that nobody seems to take into account. Under the agreement for the supply of missiles from the US are some specific caveats. They cover big and small details. For instance on security. If a boat with missles loaded was alongside a Marine with a shotgun had to be stood ready on the casing. We raised it as being not the best weapon of choice. That was shut down quite bluntly. A small point I know but the agreement is far reaching.
The big point for me is here and may come to the fore with Trump. The missiles are not to be seen as a first strike weapon. We are obligated to keep conventional forces at a level that this will never be the case.
I know after the first Gulf War Senior US officers were alarmed at how we had to strip the UK and BAOR to provide what we did. The commitment to conventional forces and the then Polaris missiles and upcoming Trident were in discussion.
Hi Exroyal,
Good point about the caveats. I read recently that during discussions around the replacement of Polaris the UK was proposing cuts to the RN, carriers if I remember rightly, that the USN were less than pleased about that idea. In the end we committed to building the Invincible Class as replacements for the older ships and keeping Hermes going until they arrived. In the end the RN lost escorts instead…
I wonder whether we have breached the original agreements now and if so how the Trump Administration might react when they get around to looking at Europe’s defence contributions or lack thereof.
Cheers CR
Morning Daniele,
I agree with what you say but conventional defence has always paid for the deterrent even when the deterrent was supposedly paid for out of the national contingency fund. I read a book about the Vulcan bomber raids during the Falklands War and there was a chapter that looked at the UK defence posture and capabilities, and the political goings on at the time. It quoted Cabinet Papers published under the thirty year rule which indicated that the Treasury insisted that the rising costs of the Polaris system be paid for with cuts to the MoD’s budget. Their argument was that there was one cake that was divided up between the spending departments and why should Transport, for example, pay for a Defence asset… Hence the RN took a number of cuts including Endurance (and the Vulcans were on their way out) and we know how that turned out.
Given the strategic lessons that the Falklands War put before us as a nation you would have hoped that things would have changed but the Treasury reportedly views Defence as a waste of money and ‘resent’ giving money to the MoD! Deterrence starts with conventional forces, it has to be creditable at all levels of conflict if you are to effectively deter an enemy, especially a rogue nation with a significant nuclear arsenal and a demostrable taste for grey area warfare. Unfortunately, HMT seem incapable of accepting, or are deliberately ignoring, the lessons put before them which to me boarders on treason, and I rarely use such strong words, but…
Cheers CR
Morning my friend.
Hi M8, Simple fact is the overall Defence budget just isn’t big enough, we do have CASD and that has to be protected. there is no cheap way of doing that and Conventional gets what’s left. Although Nuclear Powered an SSN is a conventionally armed weapon system, in fact I’d argue they are the ultimate definition of a conventional deterrent (just think TLAM going through a dictators Bathroom window any without warning).
This isn’t an announcement of more money for RR in fact there is no mention of any extra funding, the £9 billion mentioned is what is already being spent in all the investments across the entire DNE.
My understanding is that the SDA is driving this and it’s actually a long overdue plan to bring efficiencies and overall long term savings into the entire end to end process. It’s designed to avoid the situation we are right now which is renewing the CASD and having to renew the industry at the same time which as we all know is due to Political and Treasury incompetence.
Long term planning and spending is efficient; short term and piecemeal isn’t. The SDA looks at the entire process to design, build, operate, support and eventually decommission a Nuclear Submarine which is over 50 years and you can see why it’s a really a very big announcement.
In the past money has been allocated piecemeal and with very little oversight of the entire process or realisation of just how all the parts link together, and that is pretty well what’s wrong with Defence Procurement. Everyone “does their job”, in their own little niche and no one is in overall control of the entirety of the process.
I’ll give you an example of why it’s a really good move, when the RN decided to build Nuclear Submarines there was zero thinking regarding long term planning. It was build boats ASAP and within budget, get them into service and then repeat the process.
At no point did anyone give any thought what so ever to what we do with them afterwards ! My theory is that in 1960 they never thought we’d still be here so why worry about it.
If I were to be critical about this it would be why does the SDA need 2,500 CS to do what the DNC used to do with a 10th of that 🤔
Have a nice weekend 🤛
Morning mate.
A fine post, all makes sense. On the DNE side it is indeed a positive.
I also appreciate there are parts of DNE spend that are conventional, the SSNs, the infra improvements, the extra spending at Raynesway.
It is the SSBN, AWE side that I have issue with when our conventional sider suffers.
But the reality is that maintaining CASD and the SSN fleet will always be at the expense of conventional forces because,in peacetime, no party will take the decisions to free up enough money to fund both.
Deterrence based on SSBNs has always been the most expensive of the options though arguably the most effective. Alternatives were considered in 2010 in a review that seemed to have been written backwards from its conclusion.
With the AUKUS agreement supported by both the previous and current governments, there is no chance that the nuclear commitment will be abandoned. So to free up enough funds to enhance conventional forces, savings will have to be made elsewhere. It is hard to see how that could be achieved. On the plus side the latest reported shortfall in the 10 year equipment plan wasn’t real in the sense that it arose from bringing forward DNE costs plus the RN including costs of as yet unapproved projects that may never happen- T32, T83, MRSS, FAD. Without these RN future projects, the 10 year plan remains affordable- just.
Nuclear sure is an expensive business.
It is but that £9b is over is over 8 years, so a tiny fraction of the overall annual defence budget.
Agreed Steve 👍
I think the last estimate for HS2 was £74b. Just sayin’
The reality is the peacetime defence budget should have always been 2.5% and any wartime operational costs added to that. So during the years of the war on terror it should have been around 2.6-2.7% GDP. Effectively because for 25 years its has floated .2-.5% below what it should have been ( with the Cameron and May years being the worst) there is now a massive capital deficit ( because defence is capital heavy )….essentially the nation mortgaged its defence and now someone needs to pay it back…essentially the problem Labour face is returning the defence budget to the needed 2.5% will not remove the capital deficits…we still need to pay for recapitalisation and if you work out all the needs thats around 100billion extra needed over the decade.
Agreed. The irony is that underfunding and budgetary squeeze cause all sorts of inefficiencies in their own right. Things slow down and stop due to lack of funding including efficiency measures aimed at saving money. There are a number of sites across the MOD which were scheduled to close in previous reviews but there’s no money to do it. The MOD is in crisis to such a state that we don’t need a policy of meeting targets of percentages of GDP. What we need is a period of the Treasury just shuts up and writes the cheques until we can get the armed forces properly balanced again. Once that happens we can talk about what budget is required to sustain the required defence capabilities.
Indeed, most people don’t realise that in year savings does not actually mean improvements in efficiency..generally it just bakes in greater inefficiency and capital and staff development costs that need paying later…it’s the same with the NHS…we have around five times less diagnostics than other European systems and 10 times less than the US..making for a slow inefficient system..we have less acute hospital beds, that puts people in corridors or on the Wrong ward without the specialist knowledge all of which increases the length of the episode of care…so cost cutting in the end costs far more…or you do less and to dig you way out you have to spend on the capital and staff deficits.
It doesn’t sound like anything new has been announced but if moving the existing contracts into a single document saves £400m then great! That’s enough for an extra T31 frigate and a few extra sailors.
Sadly, it probably means slightly less in the way of cuts rather than some extra much needed capability. Infuriating…
Cheers CR