The price tag for the Royal Navy’s new aircraft carriers is set to top more than £6 billion as the Government prepares to announce further cost overruns, according to reports.
Defence Secretary Philip Hammond is expected to announce the projected cost of the two carriers – which will not enter service until the end of the decade – has risen by another £800 million to £6.2 billion, the Financial Times reported.
The latest increase means the bill for the 65,000-tonne ships will be almost double the £3.5 billion estimated when the program was agreed by the last Labor government in 2007.
Mr Hammond is expected to attempt to deflect concerns about the rising costs by announcing that he has re-negotiated the project to build the carriers on terms more favorable to the taxpayer.
The Financial Times said he is expected to say that further cost overruns beyond the new £6.2 billion baseline will be split 50-50 between the Ministry of Defence and the contractors – whereas previously they had fallen mainly on the Government.
An MoD spokesman said: “Negotiations between the MoD and the Aircraft Carrier Alliance regarding the re-baselining of the Queen Elizabeth Carrier Program are at an advanced stage.
“No final decisions have been taken and the department will make an announcement in due course.”
The cost increase is the latest setback for the troubled carrier program. The coalition announced in the 2010 Strategic Defence and Security Review that it intended to switch from the jump-jet version of the US-built Joint Strike Fighter planned under Labor to the more capable carrier variant.
However it was forced to carry out an embarrassing U-turn after it emerged the cost of fitting the necessary catapults and arrestor gear – the so-called cats and traps – would be prohibitively expensive.
For Labor, shadow defence secretary Vernon Coaker said the Government needed to explain the cost increase.
“This is the latest in a series of financial fiascoes in the MoD under David Cameron,” he said.
“Last year, the Government wasted £100 million by changing its mind about the type of fighter planes it was ordering for the aircraft carrier and reverting to Labor’s plans which it said were more cost effective.
“The Defence Secretary’s claim that he has balanced the MoD books looks increasingly nonsensical. Britain deserves better than this shambolic approach to our nation’s defence.”
The Prime Minister’s official spokesman told a regular Westminster media briefing: “The Ministry of Defence will very soon be setting out the outcome of its process of renegotiation of the contract, which pre-dated 2010.
“The objective of that renegotiation is to address the concerns that, amongst others, the Public Accounts Committee raised about the initial contract and to put the contract on a sustainable basis.
“I think that is what you will see when the MoD makes its announcement very soon.”
Asked whether Mr Cameron continued to believe that it was right to press ahead with the project which it inherited from Labor, the spokesman said: “The decision to go ahead in the way that we have done remains the right one. What there needed to be was a renegotiation of the contract.”
