Replacing the UK’s Nuclear Deterrent: Progress of the Dreadnought Class
(Source: House of Commons Library; issued June 19, 2020)
In a vote in July 2016 the House of Commons approved the decision to maintain the UK’s nuclear deterrent beyond the early 2030s. After almost a decade of work on the project, that vote subsequently enabled the programme to move forward into its manufacturing phase, which will see the construction of four new Dreadnought class ballistic missile submarines over the next 15-20 years.

What is the Dreadnought programme?

Although commonly referred to as “the renewal or replacement of Trident”, the Dreadnought programme is about the design, development and manufacture of four new Dreadnought class ballistic missile submarines (SSBN) that will maintain the UK’s nuclear posture of Continuous at Sea Deterrence (CASD).

A Common Missile Compartment (CMC) for the SSBN, which will house the existing Trident strategic weapons system, is being developed in conjunction with the United States.

Under changes introduced in the 2015 Strategic Defence and Security Review (SDSR), the first Dreadnought SSBN is now expected to enter service in the early 2030s and will have a service life of at least 30 years.

Replacement of the Trident II D5 missile itself is not part of the programme. The UK is, however, participating in the US’ current service-life extension programme for the Trident II D5 missile, which will extend the life of the Trident missile potentially to the early 2060s.

Replacement of the nuclear warhead is also not part of the Dreadnought programme. After having deferred a decision on replacement in the 2010 SDSDR, the Government recently confirmed that a replacement programme is underway. Transition to the new warhead, which will be compatible with the Trident missile system, is expected from the late 2030s onwards.

Delivery of the Programme

Recognising that the Dreadnought programme is one of the largest Government investment programmes going forward, the 2015 SDSR made a number of changes to the structure of the project, specifically with reference to governance and oversight of delivery. A new Submarine Delivery Agency has been established, which became an Executive Agency of the MOD on 23 April 2018. That agency will manage the procurement and in-service support of all current and future nuclear submarines, including Dreadnought. It will sit alongside the MOD’s Defence Equipment and Support (DE&S).

In tandem, the MOD and its two key industrial partners on the dreadnought programme, BAE Systems and Rolls Royce, have formed a new commercial alliance in order to jointly deliver the programme.

Where is the programme at?

In May 2018 the MOD signed contracts for the second phase of the build programme. Delivery Phase 2, which is expected to be a three-year phase of work under the management of the Dreadnought Alliance, will continue the design and build of the first Dreadnought submarine and commence the build of the second, including furthering the design and manufacture of the nuclear propulsion power plant.

Jobs and Industry

BAE Systems, Rolls Royce and Babcock International are the Tier One industrial partners in this project. Although the MOD has contracted directly with BAE Systems and Rolls Royce for production, hundreds of suppliers across the UK are working on the Dreadnought programme. As the programme moves forward BAE Systems has estimated that 85 percent of its supply chain will be based in the UK, potentially involving around 850 British companies.

It is unclear, however, how much of the actual value of the programme rests with the supply chain in the UK and how much will be spent overseas. To date, BAE Systems has contracted for the specialised high strength steel required for the first submarine from a French supplier. The use of foreign steel in the construction of the Dreadnought class has raised many questions over whether more can be done to promote the British steel industry within MOD programmes, and what the implications of Brexit will be for the programme in the longer term.

Costs

The cost of the programme has been estimated at £31 billion, including defence inflation over the life of the programme. A £10 billion contingency has also been set aside. Once the new nuclear deterrent comes into service the annual in-service costs are expected to continue at approximately 6 percent of the defence budget (£2.4 billion in 2020/21).

In its 2019 Update to Parliament the MOD confirmed that the programme remains within its cost estimate and that £7 billion had been spent so far on the concept, assessment and early delivery phases of the project, to date.

In order to keep the programme on track, reduce risk and achieve cost efficiencies, however, additional investment for the early years of the programme was also announced as part of the Autumn 2018 budget statement and the 2019 Spending Round. This is not extra funding for the programme, but oney that has been re-profiled. The Treasury also granted access to £600 million from the Dreadnought contingency fund in 2018/19 and has made provision for further contingency funding over the next two years, should it be required.

In line with convention, the Dreadnought programme will be funded from the MOD’s core equipment budget. The National Audit Office has, however, raised concerns over the impact of the MOD’s nuclear programmes, including Dreadnought, on the affordability of the Department’s overall equipment plan.


Click here for the full report (22 PDF pages), on the UK Parliament website.

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Replacing the UK’s Nuclear Deterrent: The Long-Awaited Warhead Decision
(Source: House of Commons Library; issued June 19, 2020)
In February 2020 the Government confirmed the existence of a replacement warhead programme for its nuclear deterrent. A decision on replacement has been long-awaited, with work on possible options underway since 2006.

Since 2006 work has been underway on several programmes that will maintain the UK’s nuclear deterrent beyond the life of the current system. Much of the focus in that time has been on the delivery of the new Dreadnought class submarines, which are expected to enter service in the early 2030s.

However, a decision on replacing the UK’s Mk4/A nuclear warhead has also been long-awaited and work on possible options has been ongoing. After an initial deferral in 2010, a decision was widely expected to be taken as part of the Government’s forthcoming Integrated Defence and Security Review.

In February 2020, however, a US official disclosed the existence of a UK replacement warhead programme, which the Government subsequently confirmed in a Statement to the House.

That revelation prompted widespread criticism that a decision appeared to have been taken without an official Government announcement or appropriate parliamentary scrutiny. Questions over the independence of the UK’s nuclear deterrent have once again risen to the fore.


Click here for the full report (7 PDF pages), on the UK Parliaent website.

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The Cost of the UK’s Strategic Nuclear Deterrent
(Source: House of Commons Library; issued June 19, 2020)
Since the acquisition of the UK's first strategic nuclear deterrent in the 1950s, the cost of procuring and maintaining it, and which Government department should finance it, has always been a matter of much debate.

Ascertaining historical costs for the nuclear deterrent is difficult and complex, as this information is not easily available from public sources. Many records no longer exist, while others were classified. In the past the Government has also often not discussed costs on the grounds of operational security.

Information is also presented in many different ways (i.e. current prices, constant prices, as a percentage of the defence budget) therefore making it difficult to provide an annual breakdown that is calculated in a consistent manner. A cost set out in the early 1960s, for example, could not be directly compared to costs set out in the 1980s or the present day unless they were uprated to take into account inflation.

Historical costs

-- V-bomber force:
The UK’s strategic nuclear deterrent was initially provided by the RAF’s V-force. In In 1957 the Secretary of State for Air sought to reassure those who felt that too much of the defence expenditure was being devoted to the deterrent, saying the V-bomber force “will absorb only about one-tenth” of the defence budget.

In 1958 the Government said that altogether, including the cost of the defence by conventional forces of deterrent bases, about one-fifth of the defence budget was allocated to the deterrent. The nuclear role of the V-force was withdrawn in 1969.

-- Polaris:
The UK purchased the submarine-based Polaris system from the United States in 1962 under the Polaris Sales Agreement. In 1968 Polaris entered service and became the UK’s main nuclear force.

In March 1981 the MOD put the cost of the Polaris procurement at £330 million, over a period of nine years (1963-1972). This was roughly equivalent to £2 billion in 1980 prices, when the Trident programme began (see below). This figure did not, however, include the Chevaline modification to Polaris, which was estimated at a further £1 billion.

Discussing how Polaris would be paid for, the Civil Lord of the Admiralty, John Hay, stated on 2 March 1964: “It has always been the Government’s view that the Polaris submarine programme Polaris being the carrier of the nuclear deterrent, should be taken on the defence budget as a whole; that is to say, it should not fall entirely on the Navy. For that reason, the defence budget includes a Polaris element. The extra money that we receive for Polaris is made up partly from additional cash from the Treasury and partly from a contribution from each of the Services.”
The Polaris fleet began to leave service in 1994.

-- Cost of procuring Trident:
A decision to replace the Polaris nuclear deterrent system with Trident was made in July 1980, under the terms of the Polaris sales agreement 1963, as amended for Trident (Treaty Series 086/1980) and (Treaty Series 008/1983).
The then Defence Secretary Francis Pym made a statement to the House on the replacement of the UK’s Polaris strategic nuclear deterrent system with Trident. In that statement he confirmed that the capital cost of procuring Trident would be taken out of the existing defence budget.
He added that the deterrent “is a weapons system, like any other weapons system” and will be accommodated within the defence budget “in the same way as Polaris was accommodated 10 to 20 years ago”. In terms of costs, he estimated at its peak Polaris will account for about 5% of the whole defence budget and 8% of the equipment part of the budget.

By the time of the 1998 Strategic Defence Review (SDR) the majority of costs associated with procuring Trident had been spent. The SDR subsequently put total acquisition expenditure on the Trident programme at £12.52 billion, which equates to approximately £18.7 billion in 2019-20 prices.

However, it should be noted that this did not represent a doubling of costs on the Trident programme. Once inflation over the period 1980-1998 is accounted for, according to the Treasury’s GDP deflator, £5 billion in 1980 was worth approximately £12 billion in 1998.

Cost of the Dreadnought programme

The 2015 SDSR confirmed that the costs of design and manufacture of a class of four submarines will be £31 billion. This cost estimate includes all costs associated with acquisition including feasibility studies, design, assessment, demonstration and manufacture (including the US-UK Common Missile Compartment project).

It also accounts for expected defence inflation over the life of the programme and investment in new facilities at BAE Systems in Barrow. Investment in HM Naval Base Clyde, the Trident II D5 missile Service Life Extension programme and work on options for replacing the nuclear warhead, are not part of the Dreadnought programme spend.

A contingency of £10 billion has also been set aside. This contingency represents approximately 35% of the submarine cost to completion and according to the MOD “is a prudent estimate based on past experience of large, complex projects, such as the 2012 Olympics”. However, there is no guarantee whether all of this money will be spent. If it were, then it would provide an upper-end estimate of acquisition of £41 billion. Spread over the 35-year life of the programme, this represents 0.2% of Government spending.

By the end of 2019 the MOD had spent £7 billion on the programme and accessed £600 million of the contingency fund. Access to contingency funding has also been granted for 209-20 and 2020-21, should it be required.

In line with convention, the Dreadnought programme will be funded from the MOD’s core equipment procurement budget.

The longstanding debate over budgetary responsibility

In 2007 a disagreement erupted between the MOD and the Treasury over the funding of the capital costs of the Successor programme. The MOD suggested that the capital costs of procuring the nuclear deterrent had, in the past, been borne by the Treasury, a position which the Treasury refuted. The argument centered round an increase to the defence budget which was announced as part of the 2007 Comprehensive Spending Review (CSR).

The CSR settlement suggested that the increase would allow the MOD “to make provision for the maintenance of the nuclear deterrent”, which some commentators considered to be a commitment to fund the capital costs of the project. However, the MOD confirmed in November 2007 that while additional funding had been provided to the MOD budget, spending on the Successor programme would come from within the core equipment budget.

The question of budgetary responsibility resurfaced as part of the Modernising Defence Programme review, with a number of MPs suggesting that the Dreadnought programme should be removed from the defence budget. It has also been raised within the context of additional MOD funding allocated in the Chancellor’s Autumn 2018 budget statement and again in the 2019 Spending Round. Part of both funding allocations was earmarked for the Dreadnought programme.


Click here for the full report (17 PDF pages), on the UK Parliament website.

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