The arrival of HMS Queen Elizabeth in Portsmouth was a day for celebration and pride. Beyond the flag waving and excitement, there are many critical voices who question the whole carrier project. Here we address some of the issues about the financial impact of restoring the Royal Navy’s aircraft carrier capability.
There are some serious defence journalists such as Deborah Haynes at the Times and Jonathan Beale of the BBC who are broadly supportive of the navy but, as is rightly their job, are asking hard questions about the future and the funding shortfalls in the equipment plan. HMS Queen Elizabeth is arriving in the fleet just as the MoD lurches into yet another major funding crisis. The Commons Public Accounts Committee has identified a £10Bn shortfall in funding for the equipment plan on top of £10Bn of cuts and economies the MoD is already attempting to find. Analysts at PwC estimate the total “black hole” could even be as much as £30Bn over the next decade. To compound the financial problems, the post-Brexit devaluation of the Sterling potentially adds 30% to the cost of purchase of major items such as F-35 Lightning and P-8 Poseidon aircraft from the US. Inevitably in this climate, big ticket items such as aircraft carriers come in for greater scrutiny and unfair criticism.
Cost and context
A frequent complaint is that the cost of aircraft carriers has created an imbalance, draining the defence budget. RUSI Research Fellow, Dr Peter Roberts moans that “They have stripped out the rest of defence in order to get these two new behemoths.” It is certainly true that defence has been “stripped out” far beyond what could have been imagined when the decision to build the carriers was made in 1998. At that time there was an affordable plan to build a balanced fleet centred around the two carriers when the RN still had 32 escort ships. Unfortunately, Britain’s engagements in Iraq and Afghanistan had very negative implications for the RN. Much of the MoD equipment budget of the early 2000s was raided to finance these campaigns and we are still suffering the hangover. A good example are the planned 12 Type 45 destroyers which were cut to 6 ships, sacrificed to pay for these ill-fated counter-insurgencies. While this lost decade is being partially redressed now, critics, especially from the Army, vociferously complain the about expenditure on RN equipment.
While Blair and Brown embarked on a major public spending spree on health, education and welfare, during the economic ‘good times’ when in office, this did not extend to defence. In the wake of the 2008 financial crisis, when the Tory-Lib Dem coalition began to address the ballooning public debt, this was forgotten and defence was unfairly expected to shoulder a heavy burden of cuts. The RN was slashed in 2010 with the escort fleet cut down to 19 ships. The magic number of 19 ships is now all the RN is allowed to plan for. (Should the Type 31 programme produce more than 5 frigates, it offers the prospect of numbers on day rising above 19, but this is very vague aspiration for more ships is spun as evidence of a “growing Royal Navy”). It is therefore not the fault of the carriers that the RN has been cut to the bone, rather a reflection of misguided government priorities. Major navies recognise their aircraft carriers as the centrepiece of their fleet and removing them relegates you to a very limited force.
When you buy a house you do not complain it’s too expensive because has a roof.
Economy of scale and value for money
Putting an exact price of the full cost of every element of CEPP (Carrier Enabled Power Projection) is very difficult. We can be sure it runs into billions of pounds and will continue to demand a significant portion of the defence budget. However unlike Trident for example, which has a single and precisely defined purpose, CEPP is multifaceted and the people, ships, aircraft and weapons involve may be used to protect British interests in a myriad of different ways, either acting independently or as part of the carrier strike group. Even if we were crazy enough to abandon the carriers, we would still be funding much of the supporting cast, the frigates, the people and the RAF would probably be getting F-35.
The specific cost of constructing the 2 ships can be pinned down to around £6.2 billion. These are well-founded ships that should last for up to 50 years. Even allowing for the £1.5Bn added to the price tag by deliberate government-induced delays to the programme, they represent good value. Manpower is the biggest single overhead for the RN and the QEC are exceptionally lean-manned with a ship’s company of just 700. Embodying a highly innovative design, they have enormous potential to evolve over time to respond to both developments in aircraft technology, and new threats. Their upkeep and refitting costs will be significant but you cannot obtain such powerful strategic conventional effect on the cheap.
Some say we should have built cheaper “pocket carriers” similar to the Invincible class. Over the life of the vessels, this proves to be a false economy and reduces their capability. A carrier 50% the size of the QEC would be more than 50% of the cost and deliver less than 50% of the capability. As steel is relatively cheap it makes sense to build a larger, more efficient platform that can deliver a better aircraft sortie rate with lots of room to be modernised over its 50-year lifespan. With great improvisation, the RN achieved remarkable things with the Invincible class but they could not deliver strategic impact comparable to the QEC. They were cramped, lasted about 30 years and could not be significantly upgraded.
Many critics talk as if the billions of pounds spent on CEPP has vanished from our economy forever. The carrier project has employed thousands of people around the country, supporting skilled manufacturing jobs. It is maintaining sovereign industries that need continuity of work to keep supplying the RN in future. Britain has a 15% work share in every single F-35 built for the MoD and customers worldwide supporting 24,000 UK jobs. There is evidence the carrier project has also helped businesses invest and expand. The tender to build the Antarctic Research vessel, RRS Ernest Shackleton, was won in open competition by Cammel Laird. Carrier work has been a factor in helping CL and other yards begin a modest revival of commercial shipbuilding in the UK. This is good for the UK economy and strategically beneficial for the future needs of the RN. Large defence projects do not just maintain jobs and and support apprenticeships, but also return a large proportion of the money spent to the Treasury in VAT, corporate and income taxes.
The Admirals are fools, I read it on the internet
There exists a caricature of the RN as old fashioned, run by too many admirals, smug about their shiny new carriers and out of touch with evolving threats. This is far from the truth and some very sharp minds are focussed on the future. No doubt frustrated by inadequate funding, RN leaders are attempting to wring every penny of value from their resources. During Exercise Unmanned Warrior (October 2016) the RN partnered with industry to test the potential of a variety of autonomous systems. Exercise Information warrior (March 2017) explored cyber, AI and big data in a naval context. Although small steps, it demonstrates the RN mindset is not about “re-fighting the last war” but is alive to new possibilities. The MoD launched its own Defence Innovation Initiative in 2016. £800m has been allocated for research over the coming decade. 1.2% of the entire MoD budget is now spent on defence research, science and development of new technologies.
Lazy critics who blame the carriers for every woe of the navy should look at the bigger picture. Apparently, every problem, from the Type 45s propulsion to the Astute submarine delays, is the fault of these “2 big ships”. There is no doubt the RN is suffering, but it is a matter of systemic underfunding and chronic procurement mismanagement, rather than just cost of CEPP.
Critics who lambast the RN for buying large carriers at the expense of smaller, supposedly more ‘relevant’ ships have missed a point about the battle for the long-term survival of the RN constantly being fought out in Whitehall. If the carriers had been cancelled it would be much more likely the RN would have been run down into a very modest force of a few frigates and OPVs. Possessing the carriers, instead, the RN is now in a “pull” position better able to draw in the resource to see the project through, properly equipped and protected and able to make a strategic impact at the government’s bidding. Without the carriers, the RN would be in a weaker “push” position, somewhat sidelined and constantly having beg for scraps. This might be viewed as cynical empire-building, but if we had politicians and a Civil Service who really understood the benefits of maritime power and supported it accordingly, such considerations would not matter.
The very considerable investment being made in the ships and their aircraft is the sensible choice for a nation that has been a major maritime power for centuries. Aircraft carriers have served Britain since before the second world war and proved to be flexible, powerful and constantly in demand. When carrier capability was “gapped” in 2010 it was just a temporary financial expediency but the plan was always that carrier capability would be restored. Fortunately, BAE Systems was sensible enough to lock the MoD into a contract that made cancelling construction uneconomical, otherwise George Osbourne would have blithely axed them in 2010. Amazingly, within just four years, David Cameron had begun to recognise the value of carriers and reversed the decision to mothball or sell HMS Prince of Wales. The QEC is really just a modern iteration of a an enduring concept. The money being spent is not some sudden new excess on the part of the Navy, just part of an ongoing commitment to ensuring Britain’s security and natural place in the world as a naval power.
In the next article, we will address claims that aircraft carriers are too vulnerable and incompatible with modern threats.
- UK Defence: addressing a funding challenge bigger than twice the size of Wales (PWC Public Sector Matters Blog)