John Reid (Secretary of State, Ministry of Defence; Airdrie & Shotts, Labour)

The Ministry of Defence has today taken a major step forward in its plans to acquire two new Future Aircraft Carriers (CVF) for the Royal Navy. These carriers will provide mobile, flexible, independent bases from which to deploy the Joint Combat Aircraft (JCA) and other capabilities. They will provide a step change in capability—enabling us to deliver significant strategic effect and influence around the world at the time and place of our choosing.

I am pleased to announce agreement on an innovative shipbuild strategy for these vessels, bringing together a number of shipyards in a type of partnering arrangement that will be central to the forthcoming Defence Industrial Strategy.

Key to this ground-breaking approach will be the innovative Aircraft Carrier Alliance: a single integrated team formed from MOD and industry. I am pleased to announce that today also marks a major stage in the development of the Alliance with the shipyards VT and Babcock now joining BAE Systems, KBR, Thales UK and MOD as full members. To mark the commitment to the Alliance approach, these five companies and MOD have signed an Alliance Charter committing to this arrangement. The Alliance has also agreed the best allocation of roles and responsibilities between them to achieve overall success for the project. In doing so all the Alliance members will share in the risks and rewards of delivering this challenging project to time and cost.

Having completed detailed assessment work, we have now decided to commit to the Demonstration phase, amounting to some £300 million of further work: an essential step before we commit to and contract for manufacture of these two ships. This is the first of a two-stage incremental approach to "Main Gate". The second stage of the "Main Gate" approval will set the time, cost and performance envelope for the manufacture phase. Shifting the point at which we make the main investment decision has no effect on the "In Service Date". We are undertaking work now that we had originally intended to undertake during the demonstration phase after full commitment to manufacture.

We will now refine the detail of the adaptable CVF Delta design for these new carriers, including the ship systems, ahead of rather than after the signature of manufacture contracts. By this innovative approach we will ensure the commitment of the maritime industry to supporting this vital project. This further approval also includes commitment to long lead materials, where this is necessary to maintain the momentum of the build programme.

In addition, we are now able to maintain momentum and give the industry a greater degree of planning stability. I can announce that subject to satisfactory contract and demonstration of value for money—that we have already allocated some 60 per cent. of the carriers to be built in separate "super blocks" at BAE Systems yards at Govan and Barrow; at VT in Portsmouth and Babcock in Rosyth, with final assembly of both carriers at Rosyth. The structure above the hangar deck will be open to competition and will allow an opportunity for the many shipyards and suppliers with the ability to undertake this work, but not currently involved, to compete and win work. These blocks will then be joined to the base structure at Rosyth. We will also aim to maximise the level of subcontract competition within the "super blocks". Early indications suggest that CVF associated work could sustain and create some 10,000 jobs in the UK across its design and manufacture period.

The expansion of the Alliance partnership provides an important launch pad for further innovation on this project. We have agreed that we will jointly consider, subject to negotiation, how the build contract can be extended to encompass not only the carriers' initial support but also the support for the Invincible class carriers until their out of service dates. This approach will ensure coherency in maintaining continuity in our carrier capability, with the same companies responsible for ensuring the continuation in service of the Invincible carriers also managing the introduction into service of their replacements.

In parallel with this approach, we are continuing our discussions with France, with whom we are jointly examining areas of mutual benefit and opportunities to deliver economies in our respective carrier programmes. For any co-operation to work, however, it must deliver cost savings and must do so without delaying UK or French programmes and we look forward to receiving industry's proposals.

Taken together, therefore, our approach provides a key stepping stone towards the developing maritime industrial strategy which we intend to outline in our forthcoming Defence Industrial Strategy. It is already clear that the CVF programme, as part of the wider Carrier Strike capability with the Joint Strike Fighter, will offer the enhanced power projection capability required by our armed forces in the future. This announcement reinforces our commitment to this flagship project for the Royal Navy and represents a significant step on the route to re-shaping our maritime industry and providing this vital expeditionary capability.