This article is more than 2 years old

This article is more than 2 years old

Britain’s nuclear defence programme is projected to cost nearly £51bn over the next decade and there is a significant risk that the figure could increase further, according to Whitehall’s spending watchdog.

The National Audit Office found that the Ministry of Defence faces a £2.9bn black hole in its finances as it seeks to produce and maintain the submarines that carry Trident missiles and their warheads.

Auditors said the fragility of the programme could destabilise the entire MoD equipment plan unless the “affordability gap” was addressed.

The findings will intensify the debate over the UK’s nuclear deterrent and whether it is worth the money. This year alone it will cost the government £5.2bn – 14% of the MoD’s budget.

The NAO report says the programme could face skills shortages and problems with contractors and sub-contractors.

Meg Hillier, the chair of the public accounts committee, said budget pressures on the MoD’s nuclear programme were now “critical”.

“In the next 10 years, the MoD must find £2.9bn to plug the gap in funding, despite already requiring £3bn of savings,” she said. “The department will need to make some critical decisions to get the programme on track financially.”

Four submarines designed to carry nuclear warheads are currently in service. They are maintained by a network of programmes, equipment and staff referred to as the nuclear enterprise.



Auditors examined projected spending over the next 10 years across the programme and concluded it would total £50.9bn.

The MoD has committed to finding £3bn in efficiency savings over the next 10 years in order to afford a £31bn Trident renewal programme, the report says. This will replace ageing Vanguard submarines with four new Dreadnought-class boats.

Even if the MoD finds these savings, the government will still have to bridge a £2.9bn affordability gap before 2028, the report says.

The department has had to obtain permission from the Treasury to draw £600m from a £10bn contingency fund for the programme and has delayed work on a replacement for Astute-class attack submarines by two years.

Auditors say the MoD may have to seek further money from the contingency fund.

“Problems with the affordability of the enterprise could destabilise the department’s overall equipment plan given that around a quarter of its planned spend on equipment relates to nuclear programmes,” the report says.

Auditors express concern at the way that just four contractors – AWE Management, BAE Systems, Rolls Royce and Babcock International – hold 97% of all current nuclear enterprise contracts.



“Dependence on a small number of specialist contractors brings challenges. We noted in our 2008 report [on the nuclear programme] the difficulties the department has in giving monopoly contractors incentives to deliver work to time and cost.”

Further scrutiny by auditors found an estimated 1,500 sub-contractors, which the report says bring their own risks to the programme. “Many are small and specialist businesses providing bespoke products, and the intermittent and long-term nature of many nuclear programmes creates risks for them.”

Auditors say the MoD has introduced new ways of working with BAE Systems and Rolls-Royce, its main contractors on the Dreadnought programme, in an attempt to address its past record of “poor performance”.

The government now faces skills shortages, lacking 337 skilled personnel across seven military nuclear specialisms, including nuclear marine engineers and weapons engineers.

“[The MoD] assessed five of these shortages as having at least a high impact on operations, meaning they regularly placed demands on staff – such as cancelling leave and training – to maintain operations,” the report says.

The department will need another 7,000 equivalent staff a year up to 2021, a quarter of whom will need to be highly skilled, the auditors say.

An MoD spokesman said the nuclear deterrent was “our ultimate defence from the world’s most extreme threats” and supported thousands of British jobs.



“The Dreadnought programme is one of the most complex engineering programmes ever undertaken by the UK, and the NAO’s report highlights our position that it is on track to be delivered on schedule and within the original estimated cost,” the spokesman said.