Government U-turn secures Scottish defence jobs

• Plan could secure 9,000 defence jobs in Scotland

• Faslane future appears secure as nuclear submarine programme to go ahead

• Future of Clyde shipyards remains uncertain

But doubts about the viability of the programme, which includes the replacement of Trident and the new aircraft carriers, after senior Ministry of Defence (MoD) officials were unable to say where the extra money needed to fund it will come from following criticism of the department’s spending by the National Audit Office.

And Labour claimed that the announcement meant that the government had gone back on its word to balance the MoD’s books.

However, Prime Minister David Cameron has let it be known that he will keep his word on providing the MoD with real terms increases after 2015 after seeing its budget cut by eight per cent in the last year.

The announcement is particularly good news for shipyard workers on the Clyde and at Rosyth with the government recommitting to spending £17.4 billion on new ships, including the two Queen Elizabeth Class aircraft carriers, six new Type 45 destroyers and the development of the Type 26 frigates.

The announcement appears to safeguard around 9,000 jobs in Scotland, although doubts remain over whether BAE will close one of the two yards in Glasgow in favour of the one in Portsmouth.

Independence

There have been warnings too that work on the ship building programme could be transferred if Scotland votes for independence in 2014.

The decision to continue with the £34 billion submarine programme including building the eight new Astute class subs and replacing the Vanguard subs which carry the Trident nuclear defence system also appears to cement Faslane’s future as the submarine port after 2020.

And the £18.5 billion programme on new aircraft could include Typhoons destined for Lossiemouth in Moray.

However, Labour shadow defence secretary Jim Murphy warned that the list was less of a commitment and more “wishful thinking.”

Audit

His comments came after the National Audit Office (NAO) said there was “systemic over-optimism” built in to the MoD’s planning which ran the risk of leaving “capability gaps” in the years ahead. While the NAO acknowledged that the MoD had taken “significant positive steps” to address the affordability of the equipment programme, it expressed concern that the contingency allocation was insufficient.

It warned that if the MoD was forced to fall back on the unallocated funding to make-up the shortfall, it would be unable to deliver in full the plans set out in the 2010 Strategic Defence and Security Review - known as Future Force 2020.

“There is systemic over-optimism inherent in the department’s assumptions around the costing of risk and uncertainty at both project and portfolio levels, which may not be sufficiently mitigated by the contingency provision,” the NAO said.

“The £8 billion of unallocated budget does offer protection to the core programme. However, our review of departmental documents and interviews with departmental personnel suggest that the unallocated budget is essential to deliver the full intent behind Future Force 2020.

“Using this budget to protect the core programme would therefore result in capability gaps.”

Mr Murphy said: “After this the MoD ministers can no longer say that they have balanced the defence budget.

“The Government has not provided a full list of equipment that is accounted for. The financial baseline against which projections are made is unknown. This report covers less than half of defence expenditure. The Government’s claims don’t add up.

“There are now more questions than answers. We welcome any progress, but the NAO report sets future tests ministers must meet if the reality is ever to match their rhetoric.”

Forecast

Margaret Hodge, the chairman of the Commons Public Accounts Committee, said they would be taking evidence from MoD officials in order to assess the robustness of the plan.

“The Ministry’s track record in forecasting accurately the cost of its largest projects hardly inspires confidence,” she said.

“Between 2000 and 2012, the cost of its 69 largest projects ballooned by £11 billion. Independent analysis in 2009 found that final project costs were typically 40 per cent higher than the Ministry’s initial forecasts.”

Announcing his plans Defence Secretary Philip Hammond insisted that the equipment programme would provide the armed forces and industry with certainty.

He said: “It is essential that our forces are fully equipped to respond to the range of threats we face in this uncertain world. This £160 billion equipment plan will ensure the UK’s Armed Forces remain among the most capable and best equipped in the world, providing the military with the confidence that the equipment they need is fully funded.

“For the first time in a generation the Armed Forces will have a sustainable equipment plan.”

He went on: “Step by step, we are clearing up the culture of over-promising and under-delivering that created a multi-billion pound black hole in the Defence Budget. The NAO report confirms that we were right to take the difficult decisions to cut unaffordable expenditure and balance the books.”