Corporate report

The United Kingdom's future nuclear deterrent: the 2020 update to Parliament

Published 17 December 2020

This was published under the 2019 to 2022 Johnson Conservative government

Introduction

The United Kingdom’s (UK) nuclear deterrent protects against the most extreme threats to our nation’s way of life, both now and in the future, providing the ultimate guarantee to our national security. The nuclear deterrent, currently carried by the Royal Navy’s Vanguard Class submarines, forms the cornerstone of this and previous Governments’ responsibility to maintain the safety and security of its citizens.

In 2007 the Government, endorsed by a Parliamentary vote, started the programme to maintain the UK’s nuclear deterrent beyond the early 2030s. The 2015 Strategic Defence and Security Review confirmed that commitment to an independent minimum credible deterrent. This intent was endorsed in 2016 when Parliament voted overwhelmingly to maintain the Continuous At Sea Deterrence (CASD) posture to ensure the UK maintains a credible, independent and capable nuclear deterrent out to the 2060s and beyond.

This ninth annual update sets out the progress over the last twelve months of the programme delivering the UK’s Future Nuclear Deterrent.

Covid-19

Inevitably the strategic shock felt nationally and internationally during the on-going Covid-19 pandemic has impacted the future nuclear deterrent programme, although the full impact has yet to be fully quantified. However, through prioritisation, a collaborative response, flexibility and continued dedication from both the Industry and Ministry of Defence (MOD) teams, the programme has achieved a return-to-scale equivalent to around 95% of pre-Covid-19 output. This has been achieved through a combination of recovering onsite activity in both industrial facilities and offices, as well as implementing long-term alternative working practices.

Progress on the Dreadnought Programme

Despite the effects of Covid-19, the Dreadnought ballistic missile submarine programme continues to remain within overall budget and on track for the First of Class, HMS Dreadnought, to enter service in the early 2030s. Recognising the high-levels of uncertainty caused by the pandemic, and the short to medium term uncertainty in Industrial Partners and Supply Chains, Delivery Phase 2 will continue until March 2022.

In February 2020 BAE Systems announced the award of a contract worth around £330-million to Thales UK for the manufacture of the sonar system for all four Dreadnought Class submarines. The Dreadnought sonar system will be developed at Thales sites in Templecombe and Stockport. The periscope, known as the ‘Combat System Mast’, will be developed and manufactured in Govan with technical input from the workforce in Crawley, securing and creating over 500 highly-skilled jobs across the UK.

As previously reported^{[footnote 1]}, production and delivery of the Missile Tubes (MT) that will form part of the Common Missile Compartment have been subject to quality shortfalls across the supply chain resulting in their delayed delivery. In April 2020, the first four MT for HMS Dreadnought were delivered to the submarine building facility at Barrow-in-Furness, and welding of the UK Quad Pack, a unit comprised of four MT, is complete. Its integration into the Pressure Hull is progressing well. A further two MT were received on site in July 2020. This means half of the MT for HMS Dreadnought have been delivered. We are working closely with our US counterparts to ensure future MT deliveries continue in a timely manner to support the Dreadnought submarine programme.

Dreadnought costs

The 2015 Strategic Defence and Security Review estimated that the programme is likely to cost a total of £31-billion (including inflation over the lifetime of the programme) and set a contingency of £10-billion. As at 31 March 2020, £8.5-billion had been spent in total on concept, assessment and delivery phases, of which £1.6-billion was spent in financial year 2019-20. We will not compromise on our high standards on safety and quality but will continue to assess the cost impact to the UK and remain committed to delivering the Dreadnought submarine programme on time and within the allocated budget.

Warhead and missile

As previously reported, transition of the warhead to Mark 4A is ongoing, addressing obsolescence within the Mark 4 to ensure the UK continues to have a safe, secure and available stockpile.

On 25 February 2020, the Secretary of State for Defence, the Right Honourable Ben Wallace MP, notified Parliament of the Government’s intention to replace the nuclear warhead, to respond to future threats and the security environment, ensuring the government maintains an effective deterrent throughout the commission of the Dreadnought Class submarines.

The Defence Nuclear Organisation (DNO) is working with the Atomic Weapons Establishment (AWE), to build the highly skilled teams and put in place the facilities and capabilities needed to deliver the replacement warhead, while also sustaining the current warhead until it is withdrawn from service.

Delivery of the replacement warhead will be subject to the Government’s major programme approvals and oversight, while continuing to work closely with the United States (US) to ensure our warhead remains compatible with the Trident Strategic Weapon System.    

The UK also continues to participate with US partners to extend the life of the Trident II D5 missiles. These life extension programmes will address obsolescence and continue to provide sufficient missile packages, including spares, to support the UK’s current stock entitlement.

Submarine dismantling and disposal

Progress continues with the dismantling plans for our decommissioned submarines, supporting key engineering skills and nuclear expertise. The first stage of dismantling, the removal of small component low level radioactive waste, has been successfully completed on two submarines within scheduled time and cost. This is being conducted in parallel with development of the necessary facilities, processes and technical solutions to demonstrate steady state disposal of our laid-up submarines as soon as practicable.

The first stage of dismantling was completed on SWIFTSURE in August 2018 and on RESOLUTION in early March 2020. In all, over 77 tonnes of low-level radioactive waste was removed from RESOLUTION, four months ahead of the approved schedule. This equates to approximately 50% more waste than was removed from SWIFTSURE in 25% less time.

In late March 2020 work started on a third boat, REVENGE, but the activity was temporarily paused to implement safety measures for personnel in accordance with the Government’s Covid-19 guidelines. The work on REVENGE recommenced in May 2020, with a more limited number of personnel involved and appropriate additional safety arrangements in place. Good progress is being made to recover the consequential delays while remaining compliant with all evolving safety measures. The resultant delays are currently assessed as unlikely to affect significantly the overall timescale for the safe, secure, cost-effective and environmentally sound completion of the first disposal, due by 2026.

Skills

The MOD has undertaken initial work to identify a variety of skills required by the Defence Nuclear Enterprise, including the requirement for Nuclear Suitably Qualified and Experienced Personnel. This work has developed into a Nuclear Enterprise Skills Strategy which will enable us to mature specific areas and address some of the critical skills shortages, ensuring we have in place the right initiatives to benefit from a diverse workforce of nuclear skills as well as the more generic boost to the next generation of nuclear specialists. Strengthening skills and controlling costs across the whole of the nuclear sector will have an important beneficial effect to the defence and security of the United Kingdom.

We are working with all stakeholders in the defence and civil nuclear sectors to optimise nuclear skills for the future and as a group lead on the ‘people’ strand of the Nuclear Sector Deal. This activity will develop the environment for collective coordination and integration across the wider nuclear sector, and by combining a larger cadre of nuclear-skilled people providing a more robust and efficient supply chain to help meet the skills challenges.

International collaboration

We will continue to work closely with the US to ensure our warhead remains compatible with the Trident Strategic Weapon System. Certain non-nuclear components of the existing UK nuclear warhead are procured from the US and this will remain the case for the UK replacement warhead, where we plan to procure the Mark 7 aeroshell and some other non-nuclear components. Both nations will continue to be fully compliant with our obligations under the Treaty on the Non-Proliferation of Nuclear Weapons.    

Collaboration with the US remains strong through our cooperation on Strategic Weapon System and reactor technologies under the terms of the 1958 Mutual Defence Agreement and 1963 Polaris Sales Agreement. This work includes research on warhead safety, security, and advanced manufacturing technologies taking place under the UK-US Joint Technology Demonstrator project.

2020 marks 10 years of UK-France military cooperation, including on nuclear matters, under the Lancaster House Treaties. Despite the challenges posed by Covid-19 restrictions, the UK and France held a successful nuclear dialogue this year during the first ever virtual Joint Nuclear Commission.

We continue to cooperate with France under the TEUTATES Treaty where we are working together on the technology associated with nuclear stockpile stewardship in support of our respective independent nuclear deterrent capabilities, in full compliance with our international obligations. Progress continues to be made with the delivery of the experimental hydrodynamic capability at Epure in France and associated capabilities at AWE in the UK which will allow both the UK and France to conduct independent experiments ensuring both nations nuclear weapons remain safe and effective.

Since 1962 the UK has declared our nuclear capability to the defence of NATO. Nuclear deterrence is a critical part of NATO’s overall strategy and the UK’s deterrent provides an important contribution to Euro-Atlantic security. This year we have continued to coordinate closely with NATO Allies to maintain an effective and balanced defence and deterrence posture.

More widely, we are working with international partners to reduce the threat from nuclear terrorism and on research to support arms control and verification.

Management and governance changes

The Department continues to deliver on its commitment to strengthen the management of all nuclear programmes under the leadership of Vanessa Nicholls, the Director General Nuclear of the DNO. The organisation sponsors the Defence Nuclear Enterprise which includes responsibility for the management of the defence nuclear portfolio, including providing the Senior Responsible Owners for the main nuclear equipment programmes, and for the delivery of the UK warhead.

On 2 November 2020, the Defence Secretary announced that AWE plc will change from the current Government owned Contractor operated arrangements, becoming an Arms-Length Body (ALB), wholly owned by the MOD. The current contract will be terminated on 30 June 2021 with no penalty cost being incurred by the UK Government. A clear benefit of AWE plc becoming an ALB is that there will be no fee or profit paid to the organisation. Under the revised model AWE plc will continue to draw on private sector specialist support to strengthen capability as well as playing a key role in managing capital projects and contracts. The new model will enhance the Department’s agility to manage the UK’s nuclear deterrent and improve the delivery of core defence objectives, including the replacement warhead. The change will also enable the MOD to invest in the development of the workforce, infrastructure and capabilities needed for the replacement warhead programme. On 19 November 2020 the MOD announced the appointment of Sir John Manzoni as Chair Designate to the ALB. The MOD will appoint a new Board for the AWE plc Non-Departmental Public Body that will be established on 1 July 2021.

Infrastructure

On 10 January 2020, the National Audit Office (NAO) published a report on defence nuclear infrastructure, examining the MOD’s management of its large and complex infrastructure projects at nuclear-regulated sites. The NAO report focussed on the building and replacement of facilities at 3 sites^{[footnote 2]}, with a current value of £2.5-billion, and found that the projects examined had experienced problems in their earlier stages, with a cumulative £1.35-billion cost increase as well as delays of between 1.7 and 6.3 years.

The Public Accounts Committee (PAC) followed up this report in an oral evidence session on 11 March 2020 and subsequently published their own report on 13 May 2020. The MOD accepted the findings and has taken steps to ensure lessons are learned to mitigate against similar experiences in the future.

At AWE, apart from the planned change in governance and management, in order to ensure MENSA is delivered, a formal biannual meeting between executives from the Regulators, the AWE Licensee and MOD officials is now convened. This approach is in place to drive a collaborative approach, prioritising key work strands and remove barriers to safeguard the delivery of the Warhead programme, by managing regulatory interfaces, and at an early point identify risks, opportunities and strategic issues.

The PAC requested an update on how the MOD was taking full advantage of the Single Source Contract Regulations (SSCR), making full use of target cost or firm price contracts, and ensuring that it effectively shares risk with site owners when negotiating commercial arrangements.

Since the publication of the PAC report, an SSCR compliant contract has been let for part of the Core Production Capability (CPC) at Rolls-Royce, Raynesway. There have also been other commercial negotiations, which are still ongoing. The MOD have remained cognisant of the PAC’s recommendations throughout these negotiations and will continue to do so. However, commissioning the new factory and its equipment has been CPC’s main focus since the PAC. The factory now has its first major facility completed, commissioned and handed over to operations. This facility is essential to the production of reactor cores for Dreadnought Class submarines. The commissioning and handover process for the remainder of the factory continues. The second phase of the regeneration project, to provide a fuel manufacture facility, was due to commence this summer but has been delayed until the New Year as a result of the challenges of mobilising the workforce during the pandemic. Following lessons learned on previous planning approaches, the regeneration of CPC phase two will commence with a design of the new facility and only after this has reached an appropriate level of maturity will the construction phase be planned, and government approval be sought for the construction to start.

The Primary Build Facility (PBF) at BAE Systems’ Barrow shipyard which comprises of two main facilities (buildings D58 and D59), is a linked group of buildings within which the fabrication of the submarine reactor pipework and the assembly of the reactor is carried out, together with supporting office and welfare facilities. Since the PAC hearing, changes to the PBF project have been made to address the identified issues, to ensure the nuclear requirements are understood, and are embedded in design and safety cases, ensuring that where appropriate, the Regulators are involved in the process. The revised delivery framework, including the contract model, aligns and incentivises all parties to deliver to the required by dates. This is supported by revised management arrangements including the establishment of a Project Board, a delivery charter defining collaborative working, the co-location of teams and streamlined processes.

More broadly, we wish to avoid transferring programme risks to our industrial partners, as has been apparent in some historic MOD projects, before those risks are sufficiently understood and before industry is equipped to manage them. With the Dreadnought submarine build programme, we are beginning to transfer risk to industry incrementally, as the understanding of risks mature, and it is appropriate to do so. At the primary contract level, we set multiple decision points and provide schedule incentive rewards, recognising the importance of the build schedule to maintaining CASD, and the link between schedule overrun and cost increase. Part of that process has been the transfer of risk to industry partners, using Estimate Based Fee (a type of pricing partly based on an estimate of costs and partly based on actual costs), Target Cost Incentive Fee (TCIF) or Firm Priced contracts. In April 2019, a TCIF contract was placed with Rolls-Royce for delivery of reactor components to the programme. Opportunities have also been taken to place risk-priced contracts within the supply chain for material procurements and ‘batch buy’ to improve value for money and de-risk the build schedule. As the Submarine building programme proceeds, the intent is for all repeatable work to be risk-priced under TCIF arrangements for whole boat contracting in the future.

Overall the Department is building upon the principles of SSCR to effectively use contractual controls to drive performance, and sharing lessons learned prior to new contracts being placed. Work is also underway to compile a lessons bank from past and existing Enterprise infrastructure projects to build skills and knowledge for succession management across the Enterprise.

Next report

The Department plans to next report progress to Parliament in late 2021.

1. The United Kingdom’s future nuclear deterrent: the 2019 update to Parliament ↩

2. MENSA new nuclear warhead assembly and disassembly facility at the Atomic Weapons Establishment operated site in Burghfield; Core Production Capability (CPC) replacing facilities at the Rolls Royce-owned and operated site in Raynesway to produce the latest nuclear reactor core designs; Primary Build Facility at the BAE Systems-owned and operated shipyard in Barrow-in-Furness to allow a modular-build approach for the Dreadnought Class submarines. ↩