Admiral says Royal Navy’s new budget Type 31e frigate plan needs an extra £800m, as insiders warn of price hike

ALMOST £1bn more will need to be spent to build Britain’s new fleet of ‘budget frigates’ a former Royal Navy boss has insisted, as industry insiders today warned the project’s costs will spiral.

Thursday, 9th May 2019, 12:47 pm

It comes as industry insiders warned that costs to construct the £1.25bn fleet of eight Type 31e warships could rocket to more than £250m budget set per ship,

Admiral Lord Alan West said the project could cost closer to £2bn, warning a more realistic cost per ship would be anything from £350m to £400m.

The retired First Sea Lord told The News: ‘I’m not the least bit surprised that they can’t build the frigates for £250m – it would have been amazing if they could.

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The Type 31e frigate
The Type 31e frigate

‘I would have thought the frigates would cost anything between £350m and £400m. You only have to look at how much the navy’s OPVs (offshore patrol vessels) have cost.

‘So I’m hardly surprised there are troubles with the costs.’

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The frigates are designed to replace the ageing Type 23. Less complex than their more advanced counterparts, the Type 26, the warships’ main roles will include maritime security, interdiction and other tasks.

Admiral Lord Alan West said it could cost an extra £800m to build Britain's new fleet of Type 31e frigates.

Portsmouth has been earmarked as the frontrunner to base-port the Type 31e fleet. However, sources have claimed the MoD is now resigned to the fact its current plan to build the eight frigates is unachievable.

The effort to build them is a key part of the UK’s national shipbuilding strategy and is being seen as a critical boom for Britain’s dockyards.

However, the programme has been blighted by setbacks with the original procurement process having to be abandoned last year after the MoD said it had not received enough ‘compliant’ bids.

Stephen Morgan, Portsmouth South MP, was ‘deeply concerned’ by the rumours ‘circulating around Whitehall’.

He said: ‘The government’s inability to manage this project has been unprecedented. We have already seen the project stall after defence chiefs failed to come up with the initial plans under the reduced budget of £250m and now rumours are circulating that question the future of the project.

‘This issue will be the first test for the new defence secretary, Penny Mordaunt, and as this is a matter of national security, I sincerely hope that the MoD delivers.’

The competition was restarted at the end of August but the MoD has come under pressure over the cut-price budget of £250m per ship allotted to the programme.

Industry executives have warned privately it would be difficult to produce the vessels for that cost.

Sources are understood to have told the Financial Times that while the average price tag of £250m per ship still stands, it is likely that equipment for the ships, which was originally part of the costs, would no longer be included, and therefore the cost will have to go up.

Speaking to the FT in March, Francis Tusa, editor of Defence Analysts, said: ‘If you want a ship that can be deployed in areas where people shoot at you, you cannot get one for that price.’

Lord West now fears the cash crisis could cause a delay to the ships coming to the fleet.

‘My worry is that they won’t be able to deliver ships before we run out of frigates,’ he added.

Responding, the MoD said it still intended to ‘purchase five ships at an average production cost of £250m per ship’.

However, the department concluded it had to make some prudent adjustments to the costs of the Type 31e programme to ensure ‘consistency with standard defence procurement practice’.

The vessels will be built by one of three groups, led by defence firms BAE Systems, Babcock International and Atlas Elektronik UK.

The preferred bidder will be announced by the end of 2019. The MoD wants the first of the five frigates delivered in 2023.

The government has yet to make any formal decisions on where the frigates will be based.

However, insiders at the Ministry of Defence have previously told The News that Portsmouth is one of the main contenders.

The city is campaigning to have the frigates based in Portsmouth. A rival campaign is also underway in Plymouth.

It’s hoped that once the ships are built, they will free up the Royal Navy’s more advanced vessels - the £1bn-a-piece Type 45 destroyers and the state-of-the-art Type 26 frigates - to help protect Britain’s two £3.1bn aircraft carriers, HMS Queen Elizabeth and HMS Prince of Wales.