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Latest Navy carrier madness: 'Sell 'em to India'

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Analysis Yet another scheme by the MoD for cutting costs on the Royal Navy's new aircraft carriers has surfaced in the media, with claims now being aired that one of the two ships might be sold to India.

The Guardian reports that India "has recently lodged a firm expression of interest to buy one of the two state-of-the-art 65,000 tonne carriers" and that an unnamed "defence source" has told the paper's Tim Webb that "selling a carrier is one very serious option".

As Webb is the Graun's industrial editor, and glovepuppeting of biz correspondents by big companies is the most common way for such stories to appear, we can probably take it that the tale emanates from someone in the industrial consortium building the ships, led by BAE Systems. This is the more so as the article repeatedly states that contract penalties would make it impossibly expensive for the government to cancel one or both of the ships, which is probably the main message that Webb's industry informant was trying to push.

As contract details on big defence bids are kept secret ("commercially sensitive"), it's always easy for the companies involved to make such claims, usually without any great fear of the MoD actually mounting any counter-argument. BAE claimed for many years that the government was firmly locked in to buying 232 of its horrifyingly expensive Eurofighter jets, a claim which has now been exposed as hollow following involvement by Treasury lawyers.

The Graun claims that BAE is "currently drawing up a formal estimate of the cost the government would incur from cancelling the order", and one can be sure, as BAE are building the carriers, that the company's own estimate will indeed state that it would cost even more to cancel than it would to build the ships.

But that's not to say that the Treasury, having read the same contracts, would take the same view. So in fact it may well be financially feasible to cancel one or both of the ships - especially once their running costs into the future are taken into account.

If the government were to sell one to India, of course, it would avoid those running costs - and brilliantly from BAE's viewpoint, it would still pay to build the ship. Hence the firm is naturally keen to push the idea and at the same time spread the notion that cancellation would be desperately pricey. It's to be hoped that the Guardian's Webb at least got a good lunch out of it.

The only people who would get nothing in this scenario would be the Royal Navy, who would miss out on the year-round carrier capability they have already accepted massive cuts to get. The other people who might come out worse off are the taxpayers - it would be very unusual in a deal of this type for India to pay full price, so the taxpayers would lose money in addition to losing the national clout that a carrier always on patrol confers.

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