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17-06-2012 11:49:00

GBP1 Billion Deal for UK Nuclear Submarines to be Announced -BBC

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LONDON--A 1 billion pound contract for reactors for the next generation of the U.K.'s nuclear-armed submarines is set to be announced by Defence Secretary Philip Hammond, reports the BBC on its website Sunday.

The deal is part of plans to replace the Vanguard fleet, which carries the Trident nuclear deterrent.

The work will be carried out at the Rolls-Royce Holdings PLC (RR.LN) factory at Raynesway, Derby, creating 300 jobs.

The Tories are determined to press ahead with the project despite Lib Dem reservations, says a BBC correspondent.

The Ministry of Defence has already set aside GBP3 billion to begin work on the new submarines to replace the Royal Navy's four Vanguard class boats.

The additional money will go towards refurbishing the Rolls-Royce facility and developing the reactors.

It will fund two reactors, one for the seventh Astute Class attack submarine and one for the first of the new nuclear deterrent submarines.

The Conservatives want to replace the U.K.'s existing Trident submarines by 2028 but the Lib Dems are against a direct swap.

Nick Harvey, a Lib Dem defence minister in the coalition, has been looking at the possibility of cheaper alternatives.

BBC defence correspondent Jonathan Beale said it was a move that is likely to cause strains in the coalition.

The final decision on replacing Trident will not be taken until after the next general election, although billions of pounds will already have been spent on its successor by then.

An MoD spokesman said: "This government is committed to maintaining a continuous submarine-based nuclear deterrent and announced last May that design work would begin to replace our existing submarines.

"Following a Trident value for money study carried out as part of the Strategic Defence and Security Review, we are proceeding with initial work to renew the nuclear deterrent, but a final decision will be taken in 2016.

"As part of the coalition government agreement a review is also being carried out into alternative systems for maintaining a credible nuclear deterrent."

Last month, the MoD awarded GBP350 million of contracts for the next generation of submarines to BAE Systems, Babcock and Rolls-Royce.

Mr. Hammond said this was "an important step" towards renewing the UK's nuclear deterrent.

bbc website: www.bbc.co.uk

(END) Dow Jones Newswires

June 17, 2012 05:49 ET (09:49 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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