Harrier Demise - Help!
Out of curiosity as to what was the 'nuts and bolts' of the decision to remove Harrier, I poked around online looking at parliamentary records and various reports and articles.
Using online public sources to get this kind of detail is like trying to play the piano wearing boxing gloves. You can generate some noise that will vaguely resemble the right tune, if you are lucky.
Given the choice to remove Harrier or Tornado, I think it likely that any air force would have acted to keep its larger fleet of aircraft, so I didn’t focus on that issue. I tried to get an idea about the prevailing circumstances that led to the need for this decision.
Having pieced together more details of the story it provoked several questions I was unable to answer. I made some FOI's but not all were able to be answered. I would like to ask for help from people here if they can shed some light on my questions. The MOD spending strategy is one question I have.
The desire to save money was the reason put forward for removing Harrier. According to parliament figures (Nov. 2010) Harrier cost £100 million per year (0.3% of defence budget of about £37 billion).
In 2008 the practice of delaying projects to reduce short term spending was used on some projects.
A decision to delay the QE carriers was taken that reduced the MOD spend by £450 million in the next four years but increased the MOD spend after that by about £1,124 million. Additional costs of £650 million were identified, making a total net cost increase due to the delay of £1,324 million.
Figures in the Main Project Reports 2009 and 2010 were used to estimate the costs due to delays and the saving of £450 million. I don’t know if these figures were later revised.
I did a very ‘rough and ready’ calculation comparing the cost of delay to the cost of borrowing (hopefully I got my sums right; my ‘noggin’ aint worth much these days).
Had the £450 million been borrowed instead of delaying the QE carriers, a ten year interest only loan (as an example) to 2018 would have cost interest in 2018 real terms of about £168 million, using historical figures for government interest payments and the Bank of England inflation data.
Borrowing costs of £168 million, compared to costs due to delay of £1,324 million (this figure is a conservative estimate and likely to be larger in real terms at 2018), gives a saving in the region of £1,156 million (£918 million in 2010 terms).
Even at a fixed rate of 5% interest it would have been cheaper to borrow rather than delay.
While these figures may not be precise they give an idea of magnitude. Borrowing would have been significantly cheaper and with no need to delay the carriers by several years.
The large saving could have paid to keep Harrier or carrier strike going for a further several years.
Does anyone know why in 2008 borrowing instead of delaying the QE carriers was not considered?