Guns and butter

Leaked documents and low politics kept the new ship building strategy off front pages today, but the Government’s newly published paper should get more attention for at least two reasons.

The first is (inevitably) Brexit-related, in that defence spending is one of the few areas where the Government can skip past EU state aid rules and ‘buy British’. At the same time, our contribution to defence and security (and the relatively large amount of cash we put into it) is a strong card in the EU negotiations, so flexing these procurement muscles does the UK no harm.

The second reason the paper is important is that it sets a precedent for how HMG buys very large projects. A maximum price of £250m per ship is set for the newly commissioned frigates, with yards asked to build the best ship they can for the money. As HMG looks around for new ways to avoid price overruns on other big spends, suppliers could soon find themselves on the receiving end of a similar approach.

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