They have signalled that, if a solution can't be found, the yard will be closed, with the potential loss of some 3000 jobs and the downgrading of Portsmouth to a sole maintenance and support hub, where RN ships would be refitted. Indeed, there have been open calls to make it the sole maintenance center, and base there all of the future Type 26 frigates, effectively a punch in the face for Devonport and the city of Plymouth.
The first question i feel i must ask is: does this "gap period" actually exist?
If the Type 26 is not delayed again, the first new frigate should hit service in 2021, and this means starting the build process two or three years earlier, almost certainly, at least for the first in the class. Portsmouth is not suited for building the vessel, as the yard is constrained by the size of slipways and by the depth of water available, but if the Type 26 is built in modules like the Type 45 and CVF, Portsmouth could certainly build one or more blocks of it. And indeed this seems to be the idea, but BAE is worried that the work on Type 26 won't start in time for saving the yard.
This is worrisome for many reasons, since up to late last year we've been told that work could and would start even earlier than 2018. DefenseNews reported in October last year:
The schedule envisions the MoD's approval of the business case for manufacture of the Type 26, known as Main Gate, in late 2013 [or possibly in 2014, i will add, but this is the expected period], formal go-ahead the following year with the first steel cut in 2016 and launch in 2018 or 2019, Johnson said. [Brian Johnson, who directs business development at BAE Surface Ships]
The first vessel, an ASW variant, should be commissioned around 2021, about 20 years after the Royal Navy received its last new frigate, the Type 23 HMS St Albans.
Main Gate is still expected around 2014, and if the rest of the schedule outlined above is maintained, Portsmouth might well be busy in a constant succession of work contracts.
The suspect is that Type 26 got silently but effectively delayed and we do not yet know it. I'm sadly starting to wonder if we haven't already moved from a 2021 desidered in-service date to a first steel cut not earlier than 2020. That seems to be what BAE fears, and if theirs is not strategic scaremongering, something bad has happened to the programme in Planning Round 2012.
But we might not know until the 10-years budget plan is released.
If the Type 26 is not the answer, for whatever reason (delays, building strategy not on Blocks but in dock at Govan or something) there should still be yet another possibility, the MCM, Hydrographic and Patrol Capability. This cheap, 3000-ton globally deployable vessel, heir of the C3 concept of the Future Surface Combatant tribulation, is supposed to replace the current minesweeper fleet and survey ships such as Echo and Enterprise. In 2011, a minimum number of 8 hulls was envisaged and a 1.4 billion pounds budget was the expected allocation. In the SDSR document, the MHPC was specifically mentioned:
The Sandown and Hunt-class mine countermeasures vessels will remain in service [in number of 15 at least for now, 8 Hunt and 7 Sandown, reducing to 14 later] and start the transition to a future capability from 2018 as part of the Mine countermeasures, Hydrographic, Patrol Craft (MHPC) project.
Now, assuming that the 2018 date is maintained, if it means "entry into service of the first vessel", work will start well before CVF work is completed, and if Portsmouth is involved, the issue is easily solved.
Even if it only means "cutting the steel for the first vessel", it is still good.
But let's assume that Type 26 and MHPC, for whatever reason, can't work as saviors. Philip Hammond reportedly commissioned former Chief of Defence procurement Admiral Sir Robert Walmsley to provide his opinion on what the MOD should do.
According to the press, the report says that Portsmouth should be closed down, and the cost of closure should be met by delaying the building schedule of HMS Prince of Wales by 2 years, delivering her in 2028 instead of 2016, keeping the other yards busy and closing the gap.
Same cost, no additional capability (indeed, less of it), jobs lost and yard closed. I mean, seriously...?
This is shaped by the obligations contained in the TOBA (Terms Of Business Agreement) agreement signed in July 2009 by the MOD and BAE, as a way to ensure the survival of shipbuilding in the UK. According to the MOD's own explanation, the TOBA
provides MOD guarantees to BAE Systems of a minimum level of ship build and support activity of around £230 million/year. This level of work was independently verified as the minimum level of work possible to sustain a credible warship building industry in the UK. The TOBA has been designed to incentivise major reductions in the size of the industrial base on a managed basis to minimise the rationalisation cost for which MOD was already liable under historical Yellow Book rules.
The TOBA can be cancelled at anytime. Cancellation crystallises the extant rationalisation costs, leaving MOD liable for remaining industry closure costs and compensation to BAE Systems for their lost investment. During the SDSR, cancellation of the TOBA would have been expected to cost in the order of £630 million. A key element of the TOBA is that it ensures that this figure reduces year on year against an agreed formula and bounds MOD's liabilities.
According to the Agreement Terms, there is no way to come out of it without paying the cost. If shipbuilding capacity was sacrificed and no longer considered a strategic sector to protect, the MOD could opt out of the TOBA, but would incurr significant short term expenditure.
Staying in the TOBA, on the other hand, comports costs and responsibilities of its own, which already in other occasions have been met in not very intelligent ways. The main example being the Astute class SSN: as the NAO notes in its 2011 report:
As a result of the delay to Successor and to further save costs in the short-term, the Astute build programme was slowed to avoid a production gap in the submarine construction industry. The Review therefore extended the build time for the seven-boat Astute Class submarine programme by a further 96 months, including the 13-month deferral to boat four noted in paragraph 4. This has resulted in an average deferral to the Astute Class over the past three years of 28 months per boat. By extending the Astute build programme, the Department will have to use older boats beyond their out-of-service dates, work the smaller fleet of Astute submarines harder, or reduce scheduled activity for submarines. Therefore, the Department is currently reporting that the Astute Class submarines will not meet the Royal Navy’s requirement for sufficient numbers of submarines to be available for operations over part of the next decade.
Extending construction time of the Astute Class submarines also added a further £200 million in-year to the forecast cost to complete the Astute programme for approved boats (boats one to four). In total, these decisions have added nearly £1 billion to forecast costs to complete all seven boats in the last three years. The cost increase rises to over £1.9 billion when technical difficulties and capability changes made since the original approval for boats one to three was taken in 1997. In procurement terms, this equates to substantially more than the cost of acquiring a further boat.
The regrettable short-termism in management of the MOD programmes has cost the country and the Royal Navy dear. In absence of a reserve of money for facing in-year needs, the MOD has, in the last decade, constantly chosen to delay its programmes for saving (normally relatively small amounts of) money in-year, only to pay several times as much in the long term.
That's the case of the aircraft carriers as well, for example, which saw 405 million pounds of expenditure delayed in 2008 by the Labour Government, which have become a 1.56 billion net increase in the cost of the programme, entirely caused by political stupidity.
Had the MOD had a reserve of money to draw from, at least part of this disaster could have been avoided. Money could have been committed in-year, and effectively recovered later by costs staying stable and more capability being delivered.
Short-termism has cost the MOD money and capability: had money been committed when it was supposed to be, the carriers would cost 1.5 billion less, would be significantly closer to delivery, and there would be an 8th Astute (for which the First Sea Lord in 2007 and 2008 fought as hard as he could, knowing full well that 7 boats won't really be enough to meet the missions he's assigned by the government) on order. For less money expended.
And while it is fair to point out that more boats means sustaining more running costs, we should be under no illusion of this being in any way less desirable and/or more expensive than delaying, delaying, delaying. The Iraq and Afghanistan wars (funded from the core defence budget, pretty much entirely the first and for a significant part the second) caused the MOD budget to run hot from the early 2000s, and made it impossible to deliver the modernization and equipment promised by the SDR 1998, because the money went away from procurement and into the budget for operations, but the delays to the equipment programmes that were used as "solution" to the problem have contributed even more to the formation of the infamous budget black hole.
Now that we are told that the next ten years of MOD budget include 4 billion pounds of reserve and 8 billion pounds yet to be committed, every effort must be made NOT TO repeat the same stupidity all over again. With all due respect for Admiral Robert, his suggestion, if the press is right, is exactly more of the same damaging, abused, god-damned delaying. Shifting chairs on the sinking Titanic's deck, once more.
If Hammond is not lying and there is uncommitted money, there are much better solutions to the problem.
There are at least two more programmes that could help bridge the gap in work in Porsmouth shipyard between 2017/18, thus potentially ensuring to the yard many more years of life, if they were launched in the right timeframe.
I'm talking specifically of the Future Force Protection Craft and of the Fast Landing Craft. The first has lead to the well known loan of CB90 combat boats from Sweden, with the Royal Marines trialing the vessel for informing the final list of requirements for the FPC, of which the Royal Navy said last year:
A total of twelve craft are planned with the first anticipated to enter service in 2016.
The Fast Landing Craft was confirmed in the SDSR, and for it the Royal Marines extensively trialed the PACSCAT prototype during last year, demonstrating a record 19 knots speed with a Challenger 2 on board, and nearly 40 knots when empty. An In-Service Date for this capability has so far not been indicated.
While i do realize that none of these two programmes qualify as "complex warships" and certainly do not go close to working on blocks for carries, destroyers and frigates, I'd very much have Portsmouth building these small boats in the "gap period", instead of adopting our good Admiral's plan, that shreds 3000 jobs in a moment of economic downturn while making the CVF programme even more expensive by delaying it, just for BAE to get the money it is bound to get under the TOBA agreement.
Since that money is bound to be spent in a way or another, no escaping this truth, for once we could expend it on actual capability, at least, eventually delaying the go-ahead order for the Force Protection Craft (if it has not been done already, wouldn't surprise me...) and then getting something useful and substantial, instead of nothing but scorn for the "expensive" carriers being made artificially even more expensive.
If rationalization is invitable and effectively desirable, perhaps the two small programmes can bless Portsmouth with a "gentle" death, gradual and less traumatic for the town, the economy and the workforce. While delivering to the Navy what it needs, for one last time in its so-long history. Still a gain.
If, instead, these two programmes can bridge the gap and give Portsmouth a chance to be involved in the bigger items planned for later (MHPC, Type 26), there might easily be at least a decade more of life for the shipyard, gained for the same price it would cost to close it (plus the additional cost of operating the LCU MK11 Fast Landing Craft and the FCP, but since the first would essentially replace the current LCU MK10 and the second would replace part of the LCVP MK5s i don't think it would be anything substantial).
So, please, let's look at all options with honesty. The short-termism of delaying, delaying delaying needs to end. If it ended right now as i write this, it would still be late.