Rolls-Royce strikes £9bn nuclear submarine deal

A £9bn deal for nuclear submarine reactors has been agreed between the Ministry of Defence and Rolls-Royce – the biggest ever between the two.

Defence Secretary John Healey announced the eight-year contract, called Unity, on Friday during a visit to the firm’s nuclear reactor production facility in Derby.

It is hoped it will create more than 1,000 UK jobs and safeguard 4,000 other roles.

Healey said Derby had a crucial role to play in protecting the United Kingdom at a time when it is “facing rising threats and aggression”.

Unity is designed to make the design, manufacture and support services for reactors more efficient and environmentally friendly.

The government said the agreement would streamline previous contracts and incentives, and provide more efficient delivery, leading to savings of £400m.

As well as providing support to the current UK Royal Navy submarine fleet, Unity includes the build and commission of new Dreadnought Class submarines and the beginning of contracts for the new Aukus defence alliance.

In March 2023, it was announced Rolls-Royce would provide the reactors for the new fleet of nuclear submarines in a defence agreement between the UK, US and Australia.

The submarines will be built in Britain and Australia but use technology from all three countries.

The company opened a new Nuclear Skills Academy in Derby in 2022, designed to provide 200 apprenticeships each year for at least a decade.

Healey used the visit to highlight the government’s “triple lock” on the nuclear deterrent, which includes building four new nuclear submarines in Barrow-in-Furness in Cumbria, maintaining the UK’s continuous at sea nuclear deterrent and delivering all future upgrades needed.

He said: “This investment in Britain’s defence will deliver a long-term boost to British business, jobs and national security.

“In line with our Plan for Change, this deal with Rolls-Royce, a historic British success story, will support high-skilled UK jobs, who equip the thousands of submariners that keep us all safe.

“We are showing defence can be an engine for growth, while also driving better value for taxpayer money.”

When asked how significant Derby was to the UK’s defence following this deal, the minister responded the city “couldn’t be more important”, said the Local Democracy Reporting Service.

Healey said: “Rolls-Royce is a company that is a proud British brand. It made the engines that powered the Spitfires that kept our skies safe. It is now making the engines now that power our submarines and keeping our seas safe.

“We are standing in the nuclear skills centre – a centre of excellence, not just in the UK but almost anywhere in the world. Rolls-Royce and the people who work here do things that nobody else in the world can do.

“We are proud to have them at the heart of our defence plans for the future. I’m proud as defence secretary to make this long-term commitment to Derby.”

The announcement comes days after Healey issued a warning to Russia in Parliament after a Russian spy ship was spotted around UK waters.

The minister added: “Britain is safe, its people are safe and they are safe because of our Armed Forces and the extraordinary job they are prepared to do on behalf of us all.

“But I don’t want to mislead people either – we face rising threats and immediate aggression from Russia.”

Steve Carlier, president of Rolls-Royce Submarines, said: “We’re delighted to announce the Unity contract, which confirms our commitment to the Royal Navy and the Defence Nuclear Enterprise.

“This long-term contract enables us to invest in the right skills, equipment and facilities to play our part in protecting UK interests at home and overseas.”

Rolls-Royce Submarines is already doubling the size of its Raynesway site and has recently started moving into specially-built warehouses in Pride Park.

General secretary of the Unite union, Sharon Graham, said: “This announcement is good news for British jobs, good news for Derby and good news for our economy.

“Rolls-Royce has a world class workforce and the government is right to invest in it.”

Derby South MP Baggy Shanker said it was a great day for the city, and was “a landmark deal between the Government and Rolls-Royce”.

He added: “It’s important in protecting jobs, creating jobs and it is a really good deal for the UK taxpayers with a significant partnership announced which will make the deal more efficient for everybody.”