AUKUS: BAE Systems Submarine Contract

Thursday 21st March 2024 Written Statements

[The Secretary of State for Defence (Grant Shapps)]

Just over two years ago, the United Kingdom, the United States and Australia launched the ground-breaking new strategic defence and security partnership, AUKUS. As we have seen through recent events the world has become more dangerous. Against an increasingly contested and volatile landscape, defence partnerships like AUKUS have become critically important in ensuring the UK and our allies maintain a strategic advantage.

For over a century, AUKUS nations have stood shoulder to shoulder, along with other allies and partners, to help sustain peace, stability, and prosperity around the world.

I am delighted to be in Australia with the Australian Deputy Prime Minister and Defence Minister, Richard Marles, and the United States Ambassador to Australia, Caroline Kennedy, to announce that BAE Systems, working with ASC Pty Ltd, formally known as the Australian Submarine Corporation, will build Australia’s conventionally armed, nuclear-powered submarine fleet.

This announcement will generate billions of pounds’ worth of potential export opportunities for the UK across the life of the submarine programme. This major collaboration will help secure the future of our British defence nuclear enterprise, adding weight to this Government’s commitment to levelling up by creating thousands of jobs across the UK and establishing export opportunities for UK businesses through the whole of the AUKUS supply chain.

Other parts of the UK’s world-leading submarine industrial base will also contribute to this momentous programme, including Rolls-Royce, which will build all of Australia’s nuclear reactors. To support the planned delivery of SSN-AUKUS, Australia has committed to significant investment in Rolls-Royce and Sheffield Forge- masters, which, alongside an injection of £3 billion into its defence nuclear enterprise by the UK Ministry of Defence, announced by the Prime Minister last year, will see Rolls-Royce Derby double in size, creating 1,170 highly skilled jobs to support the growth of a UK work- force that will help to deliver the SSN-AUKUS programme.

The announcement of BAE Systems and ASC, as Australia’s joint industry partners for building their SSN-AUKUS submarines, demonstrates the high esteem in which UK industry is held worldwide. Over 21,000 people will be working on the SSN-AUKUS programme in the UK at its peak, concentrated in Barrow-in-Furness and Derby, building on the world-class manufacturing and engineering capabilities the UK has developed over the last 60 years. It signals the exceptional level of trust that Australia has in our nuclear enterprise, as we in turn support Australia, through the Australian Submarine Agency, as they build their own fleet of nuclear-powered submarines.

This historic submarine builder deal follows months of negotiations and is a monumental success for British industry. This, along with Rolls-Royce building the nuclear reactors for both the Australian and UK SSN-AUKUS boats, puts UK industry at the heart of this crucial defence partnership. It demonstrates that the UK’s nuclear workforce, who will bring their experience and excellence to deliver this important submarine capability for Australia, is world-leading.

This comes a year after the Prime Minister, along with the President of the United States and Australian Prime Minister met in San Diego to announce that the first generation of AUKUS submarines would be based on the UK’s world-leading design, SSN-AUKUS.

Since then, we have made good progress delivering SSN-AUKUS, including through increased training opportunities for Australian sailors in the UK and US. AUKUS partners are investing significantly to ensure success of the Optimal Pathway and are working at pace to transform and integrate our trilateral industrial bases to support SSN cooperation. Last year, the UK placed £4 billion of contracts with UK industry for the next stage of design and to order long-lead items for SSN-AUKUS. Australia has agreed to a $1.5 billion (AUD) investment for early priority works at HMAS Stirling, to put in place the enablers for the safe and secure rotational presence of United Kingdom and United States SSNs through Submarine Rotational Force-West from 2027. Australia has also commenced enabling works at the future nuclear-powered submarine construction yard at Osborne Naval Shipyard in Adelaide. The United States has likewise announced significant investment in its submarine industrial base to increase the production rate of Virginia class submarines as quickly and effectively as possible, to meet its own fleet requirements and AUKUS commitments.

Taken together, these announcements signal the partnership’s continuing progress to deliver Australia a conventionally armed, nuclear-powered submarine capability, which includes an unshakeable commitment to set the highest standards for nuclear non-proliferation. That is why each phase of the AUKUS programme has included extensive engagement with the International Atomic Energy Agency, underscoring our commitment to developing an approach which protects classified information and strengthens the global non-proliferation regime.

The defence of UK values will continue to depend on the strength of our relationships with allies, evident through partnerships like AUKUS. The UK, US and Australia remain fully committed to this shared endeavour, which, through the announcement of this historic submarine deal, secures this ambition for the decades ahead.

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