The government's £500m investment to transform the nation's core submariner base in Scotland into a "world-leading" facility offers further signs the tide could be turning for defence contractors. Fresh from promising to spend at least 2 per cent of gross domestic product annually on defence, chancellor George Osborne's latest pledge to secure the nuclear deterrent for the next 50 years suggests patient investors backing the troubled sector could finally be richly rewarded.
New ship lifts, sea walls and jetties will be constructed as part of the mooted revamp of the Scottish port, which is currently home to four Vanguard-class submarines carrying nuclear warheads and missiles. As a maker of missile-carrying Vanguard and Astute hunter submarines, BAE Systems (BA.) leads the list of names poised to benefit from the government’s latest vow. Babcock (BAB), which services the subs, will also be encouraged, as will numerous others, including Cohort (CHRT), Qinetiq (QQ.), Rolls-Royce (RR.) and Ultra Electronics (ULE).
It's not set in stone yet though, particularly if Scottish and Welsh nationalists have their way. The SNP reacted to the announcement by branding the chancellor "arrogant" for pre-empting a vote and final decision ahead of a decisive meeting scheduled by MPs next year. Scottish First Minister Nicola Sturgeon, who made unilateral nuclear disarmament central to her party's political platform, has long been for scrapping the system that takes up a large chunk of Britain’s overall defence budget. Labour leadership frontrunner Jeremy Corbyn holds a similar view.
But the Tory government remains confident its majority in the Commons, coupled with support from pro-nuclear Labour MPs, will seal the vote on the UK nuclear deterrent renewal. Faslane, west of Glasgow, is one of three large naval hubs in Britain, along with Portsmouth and Devonport. From 2020, the government wants the Scottish base to become the Royal Navy's "submarine centre of specialisation", suggesting all underwater capability will be based there.
