Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Defence company Babcock International has secured a £750mn UK government contract for a major infrastructure upgrade at the Devonport naval base to support the maintenance of Britain’s nuclear submarine fleet.
The company, Britain’s second-biggest defence contractor, said the four-year contract included building a new dock and the provision of logistics and support facilities. The work will create 1,000 jobs during the construction phase.
Britain, like most western nations, is increasing defence spending following Russia’s invasion of Ukraine. It is also moving ahead with the trilateral Aukus security pact with the US and Australia to provide Australia with nuclear-powered attack submarines from the early 2030s.
“Maintaining the infrastructure that supports our world-leading submarine fleet is crucial,” said defence secretary Grant Shapps.
Babcock builds warships such as the Type 31 frigate for the Royal Navy but it generates the bulk of its revenues from support activities, including maintaining equipment and providing training for the British army and other customers.
It maintains and repairs all of the UK’s nuclear submarines at the Devonport shipyard in Plymouth.
The contract award is part of a 10-year infrastructure programme between the company, the Royal Navy and the Ministry of Defence’s Submarine Delivery Agency to enhance the maintenance provision of the country’s submarine fleet.
There have been concerns about capacity at Britain’s yards after it emerged that HMS Audacious, one of the UK’s attack submarines, has been waiting for a dry dock space at Devonport since the spring.
Babcock said that work in the relevant dock was progressing to schedule in support of the wider submarine maintenance programme, adding that planned work on HMS Audacious was “already under way”.
David Lockwood, chief executive, said the new contract would ensure that the company was “able to continue to deliver the complex maintenance and life-extension programmes we undertake”.
The company, which has been through an extensive restructuring under Lockwood who took charge in late 2020, reports results for the full year on Tuesday.
It told shareholders in September that trading had been “encouraging” since the start of the financial year, with good organic revenue growth and higher cash flow.
Its shares are up 38 per cent this year and were trading at 401p on Friday afternoon in London.