'Royal Navy sabotaged our budget'

CHANGING demands by the Royal Navy over the construction of two aircraft carriers are thought to be behind claims that BAE Systems is failing to build the ships to the original budget.

Britain's biggest defence contractor was awarded the £2.8bn contract to build the 60,000 tonne carriers - the biggest warships built in the UK - six months ago. Critics in the Navy have claimed that the carriers will cost £4bn.

But Financial Mail can reveal that the original order was for two large, cheap carriers each capable of flying 48 aircraft.

According to defence industry sources, the Navy insisted on changing the specifications, turning the carriers into state-of-the-art warships equipped with advanced satellite communications and computer systems capable of working with the US Navy. The Navy says that only large and highly sophisticated carriers would give Britain the capability of influencing conflicts thousands of miles away.

A source close to the design teams said: 'There are three main components to building a carrier - the actual metal for the ship, the propulsion system and the electronics.

'In this case, there are not many savings to be made from changing the size of the ships or the power systems. The money is in the sophisticated electronics that the Navy wants.

'In some cases, the command and control systems that they want - for controlling battles and communicating with soldiers on land hundreds of miles away, for example - have not even been developed.'

It is understood that for £2.8bn, the Navy could have slightly smaller carriers capable of carrying 30 planes. These 'cut price' vessels would have less sophisticated electronics systems and the defence systems would not be as effective as the Navy required.

BAE Systems and its partner, French defence contractor Thales, insist that the Ministry of Defence pays extra for anything over the specifications.

One senior executive at BAE Systems said: 'We will build them anything --gold taps if that is what they want - but they will have to pay for it.'