Having been brought up with "D" Notices and The Official Secrets Act, it is quite something to be able to read a letter like this so soon after it was written!
George Osborne and David Cameron have ridiculed the previous Government for signing this Contract with BAe. The letter highlights the intention of the previous Government was, as well as buying two ships, to use this to force the consolidation of remaining capacity as part of a strategy to maintain a core surface warship building capability in the UK.
In return for consolidation and Private Sector investment, Government promised continuity of work to lead on from the Type 45 Destroyers (all of which have now been launched) through the building of two carriers to the as yet to be designed Type 26 in the longer term. The strategic alternative was to give up this capacity and in future, order warships from abroad.
The issue of the penalty clause is therefore a Red Herring. It was our new Government, anxious to save money who, via a rushed SDR, tried to change an agreed plan with Industry by re-thinking the need for carriers or at least one of them. However, was there anything to prevent a follow on order for say more Type 45's to keep the Yards active long enough to work off the penalty clause if this was indeed a real change of strategy? The fact they did not suggest the cost was the real issue and using the contract terms as a stick to beat Labour looks more like gesture politics to rank with "building carriers with no aircraft" after having chopped the aircraft to make this true in the first place.
