This was mentioned on the Brexit thread but I think it deserves it’s own thread because describing it as the deal of the century seems crazy to me:

https://www.bbc.com/news/business-44649959

As far as I can tell, the UK taxpayer spent a lot of cash helping develop the design but won’t see any profits from the sale, all of which goes to BAE Systems.

There is absolutely no benefit for the shipyard in Scotsoun.

Any benefits for the UK depend on small to medium size companies getting contracts to supply weapons systems (which is in no way guaranteed).

It seems that the big winners are BAE Systems’ shareholders and Australian shipyards.  Any benefits for the UK will be for some smaller companies.

Am I missing something or is this just the Deal of the Century because, so far, it’s the only deal of this century?

Dunno, but Shirley there will be tech trickle down and development that we will be able to keep?

Taking issue with some bits there

“And had the UK government and BAE invested in the promised frigate factory at Scotstoun, those frigates could easily be built here.

“Instead, there is a rubble pile where that factory should be, while 4,000 jobs and significant prosperity will be enjoyed in Australia and not the UK.”

Australia wants jobs in Australia, they are heavily investing in local shipyards and there was. Zero chance of these not being built there.

It is a big think for bae who spend a huge amount in the UK every year with something like 1bn in R&D funding and high value jobs so them being able to sell on the design and prove it as a ship they can offer benifits the UK tax take.

If they can sell this design on to a country without the shipbuilding skills needed stuff could be made in the UK.

“Could be made in the UK” but not as cheaply as South Korea for the hull.

Both the UK and Australia are building the hulls to retain the ability to do so without depending on other countries. I’m not sure whether that’s sensible or not.

I’ll just leave this here…

UK Prime Minister Theresa May said the deal was also an “enormous boost” for the UK economy and reflected the government’s strategy to “build on our close relationships with allies like Australia” as the UK prepares to leave the EU.

Does that mean we don’t already have close relations with these countries? If not why not?!

We could follow the US model of building ships we don’t need forever to keep ship builders in business.

Or the Norwegian model of building ships that can actually defend our waters.

Don’t underestimate the madness of the yanks, they’re building a 355 ship navy because they genuinely think they’re going to go toe to toe with China in the Pacific.

Don’t underestimate the madness of the yanks, they’re building a 355 ship navy because they

Knoe how screwed they are if they don’t keep all those people in jobs? Like a good old communist state keep them in the army and building weapons and keep them out of trouble.

Nobody is crazy enough on either side to start a direct war, enough proxies to keep running through for a bit longer now.

Dunno what they’re doing with their ships but they have thousands of mothballed tanks in the desert.

Nobody is crazy enough on either side to start a direct war, enough proxies to keep running through for a bit longer now.

Never, ever underestimate the depth of human stupidity and nationalism.

IMO the Americans would definitely be up for a shooting match if they thought their interests the Pacific – Japan, Taiwan were going to be irreparably destroyed.

The thing with Naval wars, is that they can be resolved quicker than entering protracted land battles eg with say Notth Korea. I am deeply suspicious that the Americans see a spat in the pacific as less dangerous and less of a quagmire than fighting in the hills of NK.

As its being bult by an Australian BAE subsidiary in Australia, does that mean we wont see any taxbenefits on the profits either?

Wont this help reduce the unit cost of the Type 26 then?

We cant even afford to outfit our Type 45s properly

(Ive stood in the cruise missile bay of a type 45, we cant afford the launchers, so the crew have quite a spacious gym)

can we even afford to build the Type 26s?

Bae contribution to uk

As its being bult by an Australian BAE subsidiary in Australia, does that mean we wont see any taxbenefits on the profits either?

More than profits to pay tax with. They are a big contributor to the UK economy in some areas not feeling the love of the banking or se boost.

(Ive stood in the cruise missile bay of a type 45, we cant afford the launchers, so the crew have quite a spacious gym)

We do our bitch slapping of developing countries with sub launched missiles, reasoning being that they are more survivable I believe.

£45 million in corporation tax, then.  Given this won’t generate much employment in the UK then almost all the benefit is going to be a percentage of the corporation tax, I would assume.

No idea how much this deal is going to increase the corporation tax but I assume it would be a fairly small percentage of the £45 million.

No idea how much this deal is going to increase the corporation tax but I assume it would be a fairly small percentage of the £45 million.

It’s a bit simplistic to see this in isolation, maybe it’s been overplayed but keeping them at the top and on the list of people who can deliver this stuff is good for the UK in general. The r and d budgets alone are bigger than a lot of companies and employ a hell of a lot of people

Not as simplistic as claiming it’s a £19.6 billion contract.

Also, what does a hell of a lot of people actually mean.  I would say that 5000 is a hell of a lot and I’m sure R&D is a lot less than that.

Well I saw some decent numbers in a presentation yesterday, investing heavily in really innovative and cutting edge manufacturing technology that will have a very positive impact on the UK.deals like this help them keep doing that.it means when the UK needs a new warship we can deliver one rather than buying it from abroad.

Is the 5000 the people whom will build the ship’s? As said those jobs never had a chance of being anywhere other than South or west Australia it would have been written into the contract. The guy in the BBC like is an idiot to think anything else

Missing the amount of tories and their kin who stand to make millions in shares. BAE has a great track record.

Nobody will ever know the ins and outs of the deal so I can’t say if there was any way the UK government could have enticed the Australians to let them be built at Scotstoun.  Scotstoun has already been screwed over this year with the number of frigates to be built going from 13 to 8.  I think it’s fair for the workers to suspect the government could have done something but didn’t.

All this doesn’t change the fact that this design was partially paid for by the UK taxpayer and it’s not clear if they will even break even on this deal.  Everything else may benefit the UK as a whole, but the biggest beneficiaries without a doubt will be the BAE Systems shareholders. And Australian shipbuilders, of course.

Without the numbers, which we will almost certainly never know, it’s impossible to say if the UK taxpayers are being screwed over or not.  However, given this government’s attitude to the people, I’m assuming the UK taxpayer is being badly screwed.

Nobody will ever know the ins and outs of the deal so I can’t say if there was any way the UK government could have enticed the Australians to let them be built at Scotstoun.

The tender will be on record in Australia. If I could be bothered I’d go and look but I was down there when their new sub tender was going through

https://thediplomat.com/2017/10/australias-government-under-attack-over-submarine-deal/

It would be political suicide to pass over building these anywhere other than in Australia. It wad never going to happen as they have the skills, resources and ability to Do it along with the space.

BAE Systems is Australia’s biggest defence contractor – anyone who thought that this would support ship-building jobs on the Clyde is plain-barking, but it will support hundreds of engineering jobs, necessary to maintain a UK complex warship design capability. Hundreds of Brits are also working in Aus to support the programme and any profits will go through BAES plc who pay corporation tax in the UK – why should MOD take any profit when they’re not actually doing any of the work, but will benefit in terms of corporation tax and income tax from all the UK-based employees.

The reason for the woeful state of UK warship building is the continued mis-management by MOD who conspire to salami-slice the business in the believe that competition drives value when there’s hardly enough business to go around to support one company. I’ve just spent the last 2 years in Portsmouth and the state of the ships is down to MOD’s chronic under-investment combined with a hollowing-out of the RN’s engineering capability – they continue to use unrealistic optimism in their maintenance programme with not enough money and blame the contractor for their piss-poor planning – if they had their way, they’d employ everyone in the dockyard on a zero-hours basis. The only way QEC was built because they hired labour from Poland and Slovakia as there aren’t the skills in the UK

MOD should take part of the profit because they heavily subsidised the design.  The UK taxpayer paid but BAE Systems shareholders are getting all the value.

Also, corporation tax paid by BAE Systems was £45 million last year.  This deal might increase that but not by much in the grand scheme of things.

  The UK taxpayer paid but BAE Systems shareholders are getting all the value.

What is the cost of maintaining a ship design and building capability in the UK?

Also, corporation tax paid by BAE Systems was £45 million last year.  This deal might increase that but not by much in the grand scheme of things.

How much income tax and ni did they collect, how much did they spend in the supply chain, how many research jobs did they fund. What tech developed by the research is now in use elsewhere?

It’s just about perspective- it’s not bad news of course, it’s just not as good as is being made out. And it has to be seen against the history of T26 ordering, where the clyde was promised 13 ships and told that voting yes in the referendum would threaten that, then the order was cut to 8 anyway- so people are understandably twitchy and bruised on the subject.

How does having ships built in Australia benefit the UK’s shipbuilding capability.  Also, income tax and NI isn’t really relevant if all the work is going to be done in Australia, is it.  The point is that the tangible financial benefit for the UK is corporation tax which will not increase much through this deal.

I can’t say how much income tax and NI will be generated due to R&D directly applicable to this project and I doubt anyone else can either.

I’m not convinced that the investment in this design by the taxpayer is going to be rewarded.  You seem to think it will be.  It’s going to be pretty much impossible for either one of us to produce figures to back up our assumptions maybe we should just agree to disagree?

But surely we can agree that claiming it’s a £19.6 billion contract and it’s the deal of the century is incredibly misleading?  The BBC is the only coverage I’ve read that goes into it in a bit more depth.  The Glasgow Herald basically printed the governments press release with so little actual journalism that you can’t help but wonder if it was just a unionist propaganda piece.

How does having ships built in Australia benefit the UK’s shipbuilding capability.

Because its the brains not the welding.

Also, income tax and NI isn’t really relevant if all the work is going to be done in Australia, is it.

You are confusing 2 points, your claim was bae paid 45m in Corp tax, that is not their contribution to the economy

I’m not convinced that the investment in this design by the taxpayer is going to be rewarded.  You seem to think it will be.

It’s the investment in the capability of the UK’s largest and 4th largest defense contractor who is doing nearly all the brains and research in the UK and will be there to build new UK ships and subs.

The deal has been hyped but its not a bad deal for bae or the UK in general. It will keep people employed in good jobs and strengthen the UK in the global market.

Just read it again to make sure I wasn’t besmirching The Herald’s good name but no, it is undeniably a Unionist propaganda piece:

http://www.heraldscotland.com/news/16321816.theresa-may-hails-20bn-frigate-deal-as-biggest-naval-defence-contract-for-decade/