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Friday, 6 December, 2002, 06:57 GMT
Taxpayers foot 200m MoD bill
Vanguard
HMS Vanguard arrived in Plymouth in February this year
Delays in the design and construction of the Royal Navy's new nuclear submarine re-fit centre will cost taxpayers at least 199m, it has been revealed.

The Ministry of Defence originally said the cost of work at the Devonport dockyard in Plymouth would be 576m but that has ballooned to 849m.

The MoD's original contract transferred the risks of any cost overruns to the private contractor building the facility, Devonport Management Limited (DML).

But the MoD needed the base to be ready by February for one of seven nuclear-powered submarines, HMS Vanguard, to undergo a two-year re-fit.


The MoD has partly funded poor performance by DML and its sub-contractors and met the cost increases resulting from nuclear regulation

National Audit Office
And it had to pay for the work to be completed on time to avoid a potentially lengthy and expensive legal battle.

The cost rose further after the Nuclear Installations Inspectorate imposed "exacting" safety standards.

And a report by Whitehall spending watchdog the National Audit Office (NAO) warns the final cost could be even higher as some construction work remains incomplete.

"The MoD has partly funded poor performance by DML and its sub-contractors, met the cost increases resulting from nuclear regulation, and borne the cost of all other risks that it had originally transferred to DML," it says.

In 1997 the MoD said the "most likely cost" would be 576m.

And the Treasury authorised a 650m spend.

But, according to the NAO, the latest estimate for the final cost has now risen to 933m, of which the MoD will have to pay 849m.


This is trademark Gordon Brown - creative accounting to hide the true cost of the project

Colin Breed
Liberal Democrat
Defence procurement minister Lord Bach said the MoD had had to ensure Britain's nuclear deterrent would not be compromised.

He said the "fundamental element of the overall value for money achieved on this project" was whether the safety regulations laid down by the inspectorate were "reasonable".

"I am disappointed the NAO has not examined this," he said.

But shadow defence secretary Bernard Jenkin described the cost overruns as "staggering".

And Liberal Democrat defence procurement spokesman Colin Breed blamed the chancellor.

"This is trademark Gordon Brown - creative accounting to hide the true cost of the project," he said.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Paul Hughes
"The biggest nuclear construction project in Europe"

Click here to go to BBC Cornwall

Click here to go to Devon
See also:

27 Nov 02 | England
20 Nov 02 | England
18 Nov 02 | England
18 Nov 02 | England
11 Feb 02 | England
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