Carrier fighter jet U-turn cost £74m, says audit office

Jonathan Beale sees the new carrier taking shape in Rosyth

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A government U-turn over fighter jets for the Royal Navy's new aircraft carriers cost taxpayers £74m, says the National Audit Office.

The decision to scrap an order for jump jets, which was later reversed, had been based on "immature data and flawed assumptions", it says in a report.

Labour says the report "lays bare this government's incompetence".

But Defence Secretary Philip Hammond says the U-turn will save money in the long run and is backed by the NAO.

"Not only did it save £1.2bn; it also means that by 2018, we will have fifth-generation stealth jets flying off the new Queen Elizabeth Class carrier," says Mr Hammond.

Analysis

It's easy to be impressed by the scale of the two new Royal Navy carriers under construction. But Friday's report shows large sums of money have been wasted and there's probably more pain ahead.

It warns: "The highest risk phases of carrier construction and integration are yet to come." In a project of this scale, each wrong turn has a knock-on effect that can spark further delays and rising costs.

The NAO acknowledges the MoD rectified one wrong decision but then quickly made another. In an effort to balance the books, the MoD delayed investing in the early warning radar needed to protect the carrier - the "Crowsnest" fitted to helicopters.

The NAO says that means the first carrier won't be "fully operational" until 2022. It also highlights uncertainty surrounding the F35 Lightning jet that will eventually fly off the carrier.

It's still being tested while going into production. The MoD is having to guess how much each plane will cost.

So it's little surprise that the NAO expects the costs of the carrier programme to increase from the £5.5bn set aside.

"The decision to act quickly, once more information was available, is evidence of the department's decisive efforts to keep our equipment budget in balance while delivering state-of-the-art capability for our Armed Forces."

The MoD expects to write off £74m as a result of the U-turn but this could have been ten times higher if the decision had been made after May 2012, according to the spending watchdog.

Amyas Morse, head of the National Audit Office, said: "It is good that the MoD acted promptly once it became clear that pursuing the option to buy the carrier variant aircraft would cost a lot more money and add another three years to the whole programme.

"But to achieve value for money in this project, the department will have to manage significant technical and affordability risks and be consistent in sticking to the present plan."

Two years late

The previous Labour government had placed orders for two new aircraft carriers to be equipped with the F-35B variant of the American-built joint strike fighter (JSF), which is capable of short take-off and vertical landing.

But the coalition announced in the 2010 Strategic Defence and Security Review that it favoured the F-35C version, which has a longer range and can carry more weapons.

By February last year, the estimated cost of converting the aircraft carriers for the F-35C, which needs catapults and arresting gear, had increased by 150%, from £800m to about £2bn, according to the NAO.

As a result, the MoD estimated that, over the next ten years, the Short Take-Off and Vertical Landing version originally ordered by Labour would be £1.2bn cheaper than the carrier variant.

The NAO report also casts doubt on the MoD's claim that the new carrier-based strike force will be fully operational by 2020, saying a decision to delay investment in Crowsnest, a helicopter-based early warning system, means it will be two years late.

Start Quote

The aircraft carrier programme is essential to national security as it provides a floating mobile sovereign presence anywhere in the world. It is now clear that this was put at risk by ministerial mistakes”

End Quote Jim Murphy Shadow defence secretary

Mr Hammond denied this, saying: "The department does not consider that the phased introduction of Crowsnest undermines the delivery of carrier-strike capability.

"Crowsnest will enter service in 2020, at the same time as HMS Queen Elizabeth and the helicopter-based radar system will be fully operational by 2022.

"Until then, its maritime surveillance capabilities will be augmented by other platforms and systems, including the state-of-the-art radar on the Type 45 destroyers, working together in a layered defence."

Shadow defence secretary Jim Murphy, for Labour, said the NAO report on the carrier strike force highlights the coalition's "incompetence".

He said: "Flawed ministerial decisions have wasted millions of pounds of taxpayers' money at a time of mass Service sackings and cuts to pensions and allowances.

"The aircraft carrier programme is essential to national security as it provides a floating mobile sovereign presence anywhere in the world. It is now clear that this was put at risk by ministerial mistakes.

"This report reveals that despite government claims to have balanced the equipment budget, part of the carrier capability remains unfunded and risk remains in the programme. There are real gaps in the government's budget and equipment plans.

"There must now be changes to risk assessment and decision-making processes within the department and real lessons learnt for future major project procurements."

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