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Astute Submarine Programme Under Review

leftBAE Systems has started a review of its troubled Astute nuclear submarine programme after discovering problems that could further delay the Royal Navy taking charge of the first vessel. The £3.8bn project to design and build the first three attack submarines has for years been overshadowed by rising costs and was the subject of a huge rift between BAE and the Ministry of Defence  But the two sides have presented a united front , saying that they had launched a review "to determine how best to minimise the impact on the programme. A formal announcement will be made at the appropriate time."

It is understood the difficulties relate to a series of issues, including electrical faults and delays getting components. But BAE, which is constructing the vessels at Barrow-in-Furness, has also faced severe workforce skill shortages.

The company, Europe's largest defence business, was "confident" that the first Astute would meet its timetable of 2009, but admitted there was no certainty of this until the review was complete.

A fourth Astute has been ordered and another three may be purchased. But any further rise in the cost of the first submarine will have a knock-on effect with the MoD already under pressure from the Treasury to cut its budget.

The submarine was originally due to enter service in June 2005, but fell behind schedule because of poor project management and spiralling costs. The Royal Navy wanted up to eight Astute's to replace Trafalgar and Swiftsure submarines when the MoD agreed a deal in 1997 to buy the first three for �2bn.

In 2003, BAE and the MoD began renegotiating, sparking hostilities over sharing increased costs and future financial risks. Disagreements over the Nimrod surveillance aircraft and the cost of new aircraft carriers compounded the tensions.