A £9 billion deal for nuclear submarine reactors was announced this morning between the Ministry of Defence and Rolls-Royce, the biggest-ever agreement between the two. The eight-year contract, called Unity, is to design, make and provide support services to nuclear reactors that power the Royal Navy’s fleet of submarines. John Healey, the Defence Secretary, says the deal will make British reactors both greener and more efficient.
A difficult battle looms between John Healey and Chancellor Rachel Reeves
‘It’s a boost to British jobs, British business. It’s a boost to our nuclear deterrent,’ he told Sky on a visit to the Rolls-Royce plant in Derby. ‘It really shows the way that defence is part of the engine for economic growth in this country.’
The deal will also bolster the Aukus defence alliance and supports the building of the Dreadnought class of nuclear submarines. It is expected to create 1,000 jobs and safeguard 4,000 others. Labour might have ditched ‘levelling up’ as a theme – but there’s clearly an echo of it in Healey’s emphasis on how defence spending can help boost the regions.
Defence spending is set to be a running theme of British politics this year. With Donald Trump in the White House, Nato countries will be pushed to boost their defence spending to match the American contribution of 3.4 per cent of GDP. Labour has committed to raising UK defence spending to 2.5 per cent of GDP. But it is still unclear over what time period that increase will occur. The Tories have repeatedly tabled questions in parliament on this theme, to no avail.
A difficult battle looms between Healey and Chancellor Rachel Reeves over this ‘pathway’. The MoD and the Treasury have perhaps the most fraught institutional relationship of any Whitehall departments. It is one built on trust and understanding: squaddies don’t trust the bean-counters and the Treasury doesn’t understand defence. Healey is presenting today’s deal as a growth project. Reeves’s mandarins expect to hear that argument being made both publicly and privately in the coming months.
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