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15 July 2016

Full speed ahead for Successor

UK's nuclear deterrent looks assured with May as PM

On Wednesday evening, Theresa May was asked to write her orders for how the military should react in the event of nuclear war. Not exactly the easiest first few hours in a new job and probably cause for a sleepless night. However, the executives at the top of the UK defence industry will probably have slept a little more soundly as the future of Trident finally looks secure under her leadership.

Mrs May is a known supporter of a ‘Continuous at Sea Deterrence’ (CASD), saying previously it would be ‘sheer madness for Britain to give it up’. Michael Fallon, who has escaped the merry go-round that is the cabinet reshuffle and remained in post as Defence Secretary, supports her view. Earlier this year he laid out his case, saying, “Our nuclear deterrent has helped keep the peace between the major powers for decades. Abandoning it would undermine our security and that of our allies, it would not make us safer.” Therefore as we enter our next political chapter with a new Prime Minister leading us out of the European Union, it feels as though the debate about whether or not the UK should purchase the new Successor submarines to carry the Trident nuclear missiles is coming to an end.

A Successor submarine (BAE Systems)

Successor is the single biggest UK military procurement programme over the next decade at a total projected cost of £31bn, although it looks likely the £10bn of contingency will also be spent due to significant cost overruns. This will see it consume approximately 25% of the UK Defence Equipment budget over the next ten years, as per the chart below. The programme is also a long-term component of earnings for not only the main industrial partners ; BAE Systems, Babcock and Rolls-Royce, but also for the supply chain including Ultra electronics, Cohort and TP Group.

UK Defence Equipment Budget by type 2015 - 2025 (MOD)

The 2015 Strategic Defence and Security Review (SDSR) took away the requirement for Successor to go through a ‘main gate’ decision. This was to have been the point of no return and there was to have been a parliamentary vote to approve the main gate decision, although this was not a legal requirement. The SDSR did however promise a debate on the principle of a CASD and plans for Successor. This is scheduled for next Monday (18th July) and the House of Commons will no doubt be the scene of heated discussions. Labour is split over the purchase of the new submarines; many of its MPs support it but Jeremy Corbyn does not. The SNP and Liberal Democrats are staunchly opposed to all nuclear weapons and the SNP want the submarines, which are based at HM Naval Base Clyde (commonly known as Faslane), to be moved from Scotland. However, given that the programme now operates on ‘staged investment’ system, much of which has already been approved, and with a Prime Minister and Defence Secretary in support, Successor looks inevitable.

The UK’s Defence Nuclear programme supports over 30,000 jobs, making it a significant contributor to the UK economy, and particularly that of Scotland. HM Naval Base Clyde is one of the largest employment sites in Scotland, with around 6,800 military and civilian jobs, which is set to increase to 8,200 by 2022. Therefore perhaps the debate will shift to what will happen to the Successor submarines if there is a second referendum in which Scotland votes for independence.


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