Source · Select Committees · Public Accounts Committee
Recommendation 17
17
The Department told us that it was confident that the Dreadnought programme would not exceed...
Conclusion
The Department told us that it was confident that the Dreadnought programme would not exceed its lifetime budget of £31 billion plus £10 billion contingency.38 It did not agree that the contingency amounted to a blank cheque, and said that HM Treasury only gave out its funds based on the Department driving the schedule and proving value for money.39 The Department also claimed that there had been significant improvements in management of the nuclear projects in the last two years, primarily as a result of setting up the Submarine Delivery Agency and the Defence Nuclear Organisation, which act effectively as a contractor and client. In addition, the establishment of the ‘Alliance’ relationship with industry should ensure lessons are learned and a proper partnership is in place to aid delivery.40
Government Response
Not Addressed
HM Government
Not Addressed
The government agrees with the Committee’s recommendation. Target implementation date: Spring 2023 2.5 The purpose of the Dreadnought contingency is clearly defined. It was established in recognition of the difficulties in accurately forecasting the costs of such complex programmes. It allows for changes in the spending profile or total funding without resorting to spending cuts in the wider Defence programme, so that the Dreadnought programme, critical to the department’s continued national security, can be delivered on schedule. 2.6 The department’s access to Dreadnought contingency funding to date has been negotiated with HM Treasury and each request for contingency funding is subject to HM Treasury scrutiny and approval. 2.7 Discussions are already underway between the department and HM Treasury to agree the future governance of the Dreadnought contingency. As the holder of that contingency, HM Treasury will write to the Committee in due course. 2.8 Work is also underway between the department and HM Treasury on funding arrangements for the Replacement Warhead programme. Current assumption is that any contingency that may be agreed for that programme would be separate from the Dreadnought contingency.