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UK CARRIER STRIKE – SUPPLEMENTARY REPORT

29 Nov 11. The NAO has today issued a supplementary report on the Carrier Strike project, having been given access to briefing papers held by the National Security Secretariat in the Cabinet Office.

As a result of its examination of this documentation, the NAO has revised the relevant part of its original value for money conclusion on the project, concluding now that the strategic policy decision to refocus investment in both the carriers and the linked combat aircraft was well-informed.

Today’s report notes that it will become apparent whether the Ministry of Defence can secure value for money in implementing the strategic policy decision only when the Department fully develops and costs detailed delivery plans to support robust investment decisions, probably in late 2012.

The NAO had been denied access to the briefing papers when preparing its first report on the project (published in July 2011). Following concerns raised by the Committee of Public Accounts and in Parliament more generally, the Secretary to the Cabinet wrote to the NAO in September agreeing that it should have access to four key National Security papers relating to the Strategic Defence and Security Review decisions on Carrier Strike. The papers examined the implications for affordability, military capability and interoperability with allies of each option and were supported by detailed analyses of the industrial implications and the choice between retaining Harrier or Tornado aircraft.

The FT reported that Britain’s commitment to buy the US-led Joint Strike Fighter combat aircraft and the diplomatic and commercial sensitivities surrounding the project were the prime factors that saved the Royal Navy’s new aircraft carriers last year, according to information released by the government on Monday.

A report by the National Audit Office, the government’s accountancy watchdog, shows that the Ministry of Defence’s determination to procure the Joint Strike Fighters was the biggest driver behind the decision to retain the carriers in the Strategic Defence and Security Review of 2010.

“The single biggest influence, particularly on affordability, was the commitment to procure the JSF,” the NAO said in a report released on Monday after receiving Cabinet Office papers relating to the decision.

The documents do not detail the information given to ministers at a critical meeting of the UK National Security Council on October 7 2010, days before the SDSR was published.

However, it says ministers discussed “a range of issues that remain
diplomatically and commercially sensitive,” noting the security council “was made aware of the implications of changing order numbers and timing”.

Britain is the US’s only major partner in JSF and during the discussions surrounding the security review the US made clear it opposed deep UK defence cuts. Commercial considerations would have played a particularly important role. Britain’s industrial stake in the JSF venture isestimated to be worth £100bn over the next 45 years, and the programme is forecast to create 25,000 jobs. The final decision taken by the National Security Council was to build two carriers, making one operational with JSF and holding the other carrier “in extended readiness”.

Britain and the F-35
£100bn Estimated worth to UK of F-35 project over 45 years
25,000 Number of jobs programme is forecast to create
£10bn Estimated tax revenues project could generate
2018 Year the Queen Elizabeth aircraft carrier – to replace HMS Ark Royal – is due to be completed

However, of four options discussed by the NSC, the two that included suspending the acquisition would have saved more over the long term. The two would have saved more than twice as much as the option closest to that eventually taken. But since the UK’s strategic review, the future commitment of the US to the JSF programme has become more uncertain, given Washington’s need to cut its own defence budget. This has caused increasing

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