BAE Closure 'Could Cost £600M'

Reports say taxpayers face a bill for up to £600 million if defence firm BAE Systems closes its historic Portsmouth shipyard.

BAE has put its UK operations under review in a move that reports have suggested may lead to the closure of its dockyard in Portsmouth, Hampshire, which would put 3,000 jobs in jeopardy.

BAE stressed it has yet to make any decisions, but an industry source told the Sunday Times that such a move could cost between £400 million and £600 million including redundancies and asset write-offs.

In a contract signed in 2009, the Ministry of Defence guaranteed BAE work for the next 15 years and is bound to shoulder the expense of any yard closures.

BAE employs 1,500 people at the Portsmouth yard, while a similar number of jobs are provided in support roles.

The Prospect union has said its closure would spell "economic disaster" for the local community at a time when highly skilled jobs were crucial for economic growth.

A source also told the newspaper that two other British dockyards - Cammell Laird on Merseyside and A&P Tyne at Jarrow - could also be vulnerable in the shake-up.

Both yards are subcontractors on the #6 billion deal to build the new carriers, Queen Elizabeth and Prince of Wales.

Work on the giant hull sections for Queen Elizabeth are nearly complete and are being sent to the Rosyth dockyard in Scotland to be assembled.

But the programme could be consolidated at BAE's yards on the Clyde in order to plug a hole in the shipbuilding workload between completion of the carrier and work on a new Type 26 frigate, the newspaper claimed.

The Cammell Laird site in Birkenhead was established in 1824 and has launched more than 1,350 ships. It produced almost 200 vessels during the Second World War, including the Ark Royal.

A&P's site on the River Tyne is the largest dock on the east coast of England.

A spokeswoman for BAE said: 

"As part of our business planning activity, we are reviewing how best to retain the capability to deliver and support complex warships in the UK in the future, in line with our commitments under the Terms of Business Agreement signed in 2009.

"This work is on-going and we will keep our employees and trade union representatives fully informed, as it progresses."