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By Howard Wheeldon, Senior Strategist at BGC Partners

28 Apr 11. This morning the BBC chose to run a story suggesting that the cost of the two new Royal Navy Queen Elizabeth class aircraft carriers currently under construction at various Clyde yards by the Aircraft Carrier Alliance has risen by at least £1bn and maybe by as much as £2bn. This would, according to the article, take the likely total overall costs of the carrier program close to or in excess of £7bn up from an originally intended £3.9bn when the previous Labour government signed it off in July 2008.

The inference within the BBC article and the subsequent separate commentary goes on to suggest that the eventual programme cost could be as much as £10bn and that these ‘disclosures’ will re-open the debate over whether Britain needs new aircraft carriers at all. I very much doubt that it will alter a now visible need that Britain does need carrier force capability or that given events in North Africa and the Middle East of late in which both the Royal Navy and Royal Air Force have again shown the true value of respective British maritime and air power in terms of capability and achievements within the overall NATO role. Whilst it is quite likely that the SDSR related revisions demanded to the carrier programme will indeed push the actual cost of the carrier programme higher it is somewhat unfortunate that the article appears to have painted only part of the overall carrier cost picture by ignoring the substantial aircraft procurement and operating cost savings that are also inherent through changes demanded by SDSR.

I may reasonably sense a degree of mischief making here as in point of fact the process of change and decisions that appertain to cost on the carrier programme as demanded by the government following publication of the Strategic Defence and Security Review last October (a reference to the intended purchase of the less expensive CV version of the F-35 Joint Strike Fighter aircraft as opposed to the STOVL version but due to this change the corresponding need to fit cats and traps to one of the two new aircraft carriers under construction so that the planes can land and take-off) are subject to an ongoing review. The review is looking at the practicalities of which of the available arrestor and catapult systems (steam or electro magnet) would be sourced from the US, which of the two new aircraft carriers would eventually be equipped (if this was to be on the first ship, HMS Queen Elizabeth, due to the current status of the build this would need to be retrofitted post commissioning but if fitted to the second ship HMS Prince of Wales, this could be incorporated within the original build process following redesign) the costs, future capability requirement including decisions that will define the future role for the other non fitted ‘carrier’, solutions, ordering, timing and so forth.

My understanding is that the results of the current review are not due to be published until the late spring of 2012 meaning any suggestions of carrier cost programme rising can best be described as speculative or mischievous. Clearly the fitting or retrofitting a full ‘cats’ and ‘traps’ system to one of the two ships on order will increase the programme cost. My own view is that the government will more likely go for what common sense says will be the cheaper of the two options meaning that rather than retrofit HMS Queen Elizabeth and that as I reported following a private visit to BAE Systems Scotstoun yard in February having climbed through large sections of the vessel, is now very well advanced in terms of construction, that it will in the end go for a redesign process for the second ship, HMS Prince of Wales. This would appear to me to be the most sensible option.

But whilst accepting that the cost of one of the two ships will rise the BBC article this morning makes no mention that there will be a considerable

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