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Refuelling planes 'billions too expensive'
11 May 2012
The aircraft, purchased under a 27-year Private Finance Initiative (PFI) deal signed in 2008, are costing the UK some £152m each as part of a £10.5bn contract.
A Newsnight investigation claimed that the Airbus A330-200 aircraft which are being converted for use in the programme could be purchased for as little as £40m new and would require around £10m of modification to become in-air refuelling aircraft.
As well as the £2.1bn capital cost of the aircraft included in the contract, the MoD is also to pay some £8.4bn in leasing and financing arrangements by 2035. This effectively sees the MoD paying £750m per aircraft across the whole life of the contract, although the Air Tanker consortium will also be responsible for providing the crew, operating and maintaining the aircraft.
Defence Secretary Philip Hammond defended the contract, but said that details would be looked at again.
"The capital cost is the capital cost of the PFI project. That's not just the aircraft it's the training facilities, it's the maintenance facilities, the hangars," he told Newsnight.
"…I have checked the situation in the department and we are still clear that this project – although we might not have chosen to do it by PFI – this project still represents value for money for the taxpayer for purchasing a bespoke military plane. We can't compare it with buying an off-the-shelf copy of an A330.
"You can seek to renegotiate with the contractor," he said. "If you go to a PFI contractor and ask to renegotiate the contract you have to be able to offer something.
A Ministry of Defence spokesman said: "With the appointment of Bernard Gray as chief of defence materiel, close scrutiny is being applied to a wide range of MoD equipment projects and, as the Defence Secretary has said, this will include Voyager."
A spokeswoman for AirTanker said that conversion work had taken 127,000 man hours and had been followed by flight trials.
"The valuation given by Newsnight is incomparable to this product," she said.
HAVE YOUR SAY
11 May 2012
It was always an idiotic decision to use a PFI rather than own these aircraft and operate them.
PFI's is an accounting trick just to take the initial outlay off book as private investors put the money forward. The downside is like a mortgage you pay several times over the lifetime of the PFI. Now we are locked into this stupidity and will have to pay several times over the price if we had taken ownership.
PFI's should be outlawed!
Graham - High Wycombe
11 May 2012
Graham - High Wycombe
...and as things stand they're about to do it all again with the SAR contract!!
Hereman - Wirral, England
11 May 2012
Graham - High Wycombe
Totally agree with you, the right aircraft at the wrong price, thank you the Labour Party . . .
Rob - Telford
11 May 2012
Rob - Telford
Yes it was Labour in this case but it was the Tories that invented the PFI so they are both as bad as each other.
Graham - High Wycombe
11 May 2012
Surely with the current state of the UK finances everything is bought with borrowed money. why pick on PFI
Phill
11 May 2012
Graham - High Wycombe
Agreed, just pointing out that it because of massive overspends like this, is why the nations finances (the defence budget in particular) is in such a bad state. I cannot and will not argue that the current government are any better, I just have a long memory. Have a good weekend.
Rob - Telford
11 May 2012
You just have to look at the RAAF A330 Tankers. By comparison the RAF is stuck with half equipped aircraft at greater cost , thanks to PFI. The Australians bought outright & got better aircraft at less cost. The 1977 Unfair contracts act should be the precedent for tearing up PFI contracts that are a disaster for the taxpayer.
John Hartley - Woking/Surrey/UK
11 May 2012
Should we really be surprised. After all the Ministry of Disasters will get away with it yet again
Noel - Durham
11 May 2012
OH yet another reason to sack the MOD PUS.
She is meant to stop these things happening at all.
Tim Dainton - Romsey
12 May 2012
In a sane world the MoD would buy the A340s that China Eastern Airlines are trading in to Boeing (!) and get Marshalls of Cambridge to convert them to the RAAF specification. And walk away from the PFI.
Brian - Coventry
18 May 2012
This PFI should have been cancelled instead of the Nimrods; then you could buy off the shelf tankers(cheaper)that the US has developed. Plus you could end up with a more suitable and larger fleet. Remember the 9 to 14 PFI tankers are replacing a fleet that was 50 strong in the early 1990's and approx 30 strong up until recently. This PFI will stretch our forces further and has no strategic overview on what and where Britain may have to operate in the future.
T German - Durham
25 May 2012
T German - Durham
I think you might be getting slightly mixed up, we have not had a fleet of 50 tankers, during the Falklands we had a few ancient Victor K2 tankers being joined by VC-10's, since the retirement of the Victors in the late 80's (I think), we have relied on 13 VC-10 tankers, along with the occasional duel role Tristar and passenger carrying (converted) VC-10's when not being used for their primary tasks.
Rob - Telford
29 May 2012
Rob - telford
Sorry I get a little frustrated with our glorious leaders and their money wasting ways in providing less for more for the armed forces!
In all 24 Victors were converted to tankers and with the demise of 55 and 57 sqns in the late 1980's and early 1990's the Victors disappeared. 6 of the Tristar tankers were also in service as tankers.
T German - Durham