07 November 2008
By David Meilton
The cost of replacing Britain's nuclear submarines could rise from current estimates if the Ministry of Defence fails to manage the main risks, the National Audit Office has warned.
In a report published on November 5, the NAO said that when Parliament voted to replace the ageing Trident system in March 2007, the projected cost was between £15bn and £20bn at 2006/07 prices.
But, the report warned: 'There are major areas of uncertainty in the budget, including the provision for contingency and VAT, which need to be resolved.' It added that the tight timetable for replacing the present Vanguard class of submarine was 'challenging', and difficult decisions needed to be taken by September 2009.
The costs were vulnerable to inflation, fluctuating exchange rates — missiles will be bought from the US — and changes in design.
Auditor general Tim Burr said: 'Critical decisions about the design of the future submarine class and the commercial strategy required to incentivise monopoly suppliers now need to be taken, so that the Ministry of Defence can stick to its demanding schedule.'
PFnov2008
