Canada refunded £2m for 'dead duck' subs

03 May 2012

The UK cut £2m off the sale price of its Upholder class submarines due to problems with the condition and performance of the boats, it has been announced.

The Upholder class was in service with the Royal Navy from 1990 until 1994, and the boats were scrapped when the 1994 defence review Front Line First called for an all-nuclear submarine force.

The Canadian government purchased the subs in 1998 for CAD$750m, designating them as the Royal Canadian Navy's Victoria class.

The submarines have suffered numerous setbacks since the sale, some of which have been related to technical problems with the boats, and Canada has twice asked to be compensated as a result.

None of the Victoria class are currently fully operational, however, and the closest to entering service, HMCS Victoria, only successfully fired its first test torpedo in March this year.

Asked by Portsmouth MP Mike Hancock about the sale of the boats, defence equipment minister Peter Luff said that the Canadian government asked for compensation in 2002 and 2004 "due to concerns about their condition and ability to meet the Canadian requirements".

"The Ministry of Defence did not pay any compensation; however, an amendment to the contract was agreed where the cost of the final submarine was reduced by £2m as an act of good faith and without liability.

"The MoD holds annual meetings with the Canadian Department of National Defence to discuss any issues of mutual interest arising from the operation of the Victoria Class submarines," said Luff.

"Outside these meetings, requests for information or assistance, in the form of technical advice on through life support, are occasionally received from either the Canadian government or Babcock International Ltd, the contractor that maintains the submarines. Both the annual meetings and individual requests are handled as routine business under a bilateral Memorandum of Understanding for the exchange of technical information."

After receiving the response, Hancock told Canada's CBC News the incident showed "how badly Canada was shafted" by the sale.

"They flog you some dead ducks of submarines and won't give you compensation and then give you £2 million to go away and be quiet," he said.