Delay, defer, repeat: UK shipbuilding plans at risk as MoD scrambles to close £16.9 billion funding gap

The Times has reported that ministers plan to defer major UK shipbuilding programmes to find £10 billion in MoD  savings. The department called it “pure speculation.” But  with the Defence Investment Plan months overdue, the  escort fleet at its smallest since the Napoleonic era, and the largest equipment plan deficit on record, the denial is doing  a lot of heavy lifting. 

By The Other Chris, find him on X here: https://x.com/TotherChris, published on March 25, 2026. 

The Times report on shipbuilding: What was said, and what was denied  

On the evening of 19 March 2026, The Times reported that ministers were planning to push back major UK shipbuilding programmes and other defence projects to achieve £10 billion in  savings from the MoD budget. The report, citing unnamed sources, was picked up by Reuters and widely syndicated. The only  programme explicitly named was the Type 83 destroyer, the  replacement for the Type 45 and centrepiece of the Royal Navy’s Future Air Dominance System (FADS), which the paper stated would be “deferred by years” under one option being examined.  The MoD called the report “pure speculation” and stated it was working to finalise the Defence Investment Plan (DIP), to be  published “as soon as possible.”  

The political backdrop is what gives the reporting weight. The DIP  was due in autumn 2025. It has been serially delayed. National  Armaments Director Rupert Pearce told the Defence Select  Committee the reset had “just taken a lot, lot longer than I thought  it would” to agree across government. 

The joint chairs of the Public  Accounts Committee and Defence Committee warned in February 2026 that the delay “risks sending damaging signals to adversaries.” Baroness Goldie told the Lords it was “taking longer  than an elephant’s pregnancy.” Defence Secretary John Healey told  the Commons on 16 March that his team was “working flat out” but  declined to confirm a publication date. Trade press now reports a  target of May 2026.  

The current state of UK shipbuilding

The surface fleet programmes tell a story of ambition meeting  friction at every turn. BAE Systems is building eight Type 26 City class anti-submarine frigates at Glasgow under contracts worth £7.9 billion. HMS Glasgow, first of class, was originally due for  delivery in 2024. She is now expected to achieve Initial Operating  Capability in October 2028, a confirmed 12-month slip. Maria Eagle  confirmed cost growth of £233 million in a February 2025  parliamentary answer. BAE’s naval ships managing director Simon Lister acknowledged that labour shortages in steel trades mean milestones are unlikely to be met until Ship 4.  

The Type 26’s biggest recent development, however, was a success  story. Norway’s August 2025 government-to-government agreement for at least five frigates, worth approximately £10 billion, is the UK’s largest warship export by value. 

Combined with Canadian and Australian orders, over 30 Type 26 hulls are now ordered  internationally. But those Norwegian deliveries, starting from 2029/2030, will compete with Royal Navy hulls for build slots at Govan. Furthermore, earlier reporting indicated that the Navy might even give one of its Type 26s to Norway in order to meet the delivery timeline. 

It’s not all bad, though, as a retired Commodore told Forces News the delay actually “solves a problem” because the RN would struggle to crew the  ships within the original timeframe. That is a candid  acknowledgement of just how stretched the service is.  

• Type 26; the right choice for Norway’s ASW – Calibre Defence 
• Babcock reaches dual milestone for Type 31 programme – Calibre Defence 
• Type 31: Thales completes mission system FAT – Calibre Defence 

At Rosyth, Babcock is building five Type 31 Inspiration-class general purpose frigates under a £1.25 billion fixed-price contract.  HMS Venturer rolled out in May 2025 and HMS Active followed in February 2026, but the programme has been rated Red by the National Infrastructure and Service Transformation Authority,  meaning it requires re-scoping to deliver. Babcock has reported a  £90 million loss. 

The Fleet Solid Support programme, meanwhile,  had to be rescued entirely after Harland & Wolff entered administration in September 2024. Navantia UK purchased the  yards in January 2025, and first steel for RFA Resurgent was cut at  Appledore in December, but the majority of Ship 1 will be built at Cádiz because Belfast’s facilities are not yet ready. First delivery is expected by 2031.  

How are the UK’s submarine programmes faring? 

Beneath the waterline, the picture is no less strained. All four  Dreadnought-class ballistic missile submarines are under  construction at Barrow-in-Furness against a baseline cost of £31  billion with a £10 billion contingency. The Infrastructure and  Projects Authority has rated the Rolls-Royce Core Production Capability project as Red for three consecutive years. If Dreadnought  slips significantly, it could add friction and difficult decisions to the Continuous At Sea Deterrent (CASD) as the Vanguard class reaches the limits of its 37-year service life. For reference, the first of class – HMS Vanguard – was commissioned in 1993. This indicates it will need to be replaced from 2030. 

The Vanguard class, which has four submarines, has made headlines this year, with its crews conducting 203 and 204 day patrols. Only two of the vessels, HMS Vigilant and Vengeance have been able to conduct their deterrence patrols in 2025. The other two have been alongside for maintenance and repair work. 

• The Dreadnought Class, the nuclear successor – Calibre Defence 
• “The Answer is No”: Knighton Admits SDR and Current Programmes Don’t Mix – Calibre Defence 

On SSN-AUKUS, the SDR endorsed “up to 12” attack boats, which would replace the Astute class.  But the  first is not expected until the late 2030s. And, perhaps more importantly, if the government did order 12 additional SSN-AUKUS boats, it would add billions to the UK’s procurement budget in the very near future. The UK has the option to scale that procurement back from 12 if it so desires, which may be the only choice without a funding uplift. 

At the same time, the Royal Navy’s fleet of Astute class nuclear attack submarines (SSNs) is experiencing its own woes. In late 2025 none of the Royal Navy’s existing SSNs were at sea. This was partially resolved with HMS Anson’s visit to Australia in late February 2026, but even so, it meant there were no escorts for the CASD or other Royal Navy vessels. 

Why deferrals could cost UK shipbuilding more, not less  

The MoD’s reliance on in-year budget management, deferring expenditure from one financial year to the next, is a central driver of these delays. Work is slowed, contracts are delayed, milestones  are pushed to the right. The result is cyclical: slower builds increase per-unit costs, which worsens the funding  gap, which triggers further deferrals. 

The HM Treasury/Office for Value for Money study on mega-projects, published in June 2025,  put numbers to the problem. Examining Dreadnought alongside HS2, it found that “living within annual budgets is prioritised over delivery to schedule” and calculated that for every £1 of scope deferred, total cost increased by £1.25. In theory, this means that if the MoD was considering the deferral of £10 billion in shipbuilding, it would cost an additional £12.5 billion in funding to complete those projects. 

That is assuming that the Office for Value for Money’s calculations are correct. However, it is a frightening prospect considering that the NAO’s December 2023 Equipment Plan report identified a £16.9 billion deficit in equipment spending. This is the largest deficit on record, and the NAO identified a wider £42.5 billion gap out to 2032-33. No Equipment Plan has been published since and the MoD did not provide data to the NAO in 2024, the first time that has happened.  

The UK shipbuilding programme most directly threatened by the reported deferrals is the Type 83. It is the replacement for the Type 45, the centrepiece of FADS, and it is still in its concept phase. At CNE 2025, Commodore Michael Wood, the Senior Responsible  Owner for the programme, said the Spending Review would be “absolutely critical to determine the appetite of the UK to proceed.” If that concept funding slips by years, as The Times suggests, every downstream milestone moves with it.  

Calibre Comment: The fleet, the plan, and the gap between them 

The Royal Navy today fields seven frigates and six destroyers. One  frigate is typically in deep maintenance. Three destroyers are completing propulsion refits at any given time. That leaves roughly  nine ships routinely available. This is a fleet smaller than at any  point since the Napoleonic era. The Defence Committee’s  November 2025 report warned that “the UK’s lack of mass is  denuding its leadership in NATO” and noted that a US official “no longer considers the UK to be a Tier 1 military force.”

The SDR, published 2 June 2025, endorsed a “New Hybrid Navy” and a path to 2.5% of GDP on defence from April 2027. The  government accepted all 62 of Lord Robertson’s recommendations. RUSI’s assessment was blunt: the review “was overtaken by events in real time.” The Royal Aeronautical Society warned that “a  widening gap is emerging between intent and execution.” At the same time, the UK shipbuilding industrial base is seeing record investment alongside persistent fragility. BAE employs 3,750 at Glasgow. Barrow’s workforce is  projected to reach 16,500 by 2027. Yet the Type 31’s Red rating, Babcock’s £90 million loss, and the FSS programme’s near collapse all demonstrate how thin the margins are. Unite’s Sharon Graham warned that “thousands of UK jobs are at risk because of dither and delay on decisions around defence spending.”  

The Norway deal proves the Type 26 can sell. AUKUS proves that ambition exists. But plans are not orders for ships. A review is not  a plan. And a plan is not a budget. The single most consequential  decision ahead is whether Type 83/FADS concept and assessment  phase funding proceeds on schedule. Retaining the Type 45s  slightly longer, into the early 2040s, would not be a disaster. Delaying concept funding would be, because it closes the door to determining options that take a decade to mature. If that phase  slips by years, the Royal Navy will not field a replacement air defence destroyer until the late 2040s. By that point the youngest Type 45 will be over 30 years old and running on propulsion systems it was not designed with.  

HM Treasury’s own research confirms that every £1 deferred costs  £1.25 in the end. The government has committed £270 billion in  defence spending over this Parliament, including what the  Chancellor has called the “biggest uplift since the Cold War.” Whether that translates into ships, submarines and sailors, or into further deferrals that cost more in the long run, depends entirely on a document that remains, as of 22 March 2026, unpublished.

Related reading from Calibre Defence:  

• UK awards £1 billion New Medium Helicopter contract to Leonardo – Calibre Defence 
• DSEI UK 2025: Royal Navy clears Peregrine UAS for service – Calibre Defence 
• Royal Navy Wildcat achieves IOC with Sea Venom – Calibre Defence 

The lead image shows HMS Prince of Wales of the Royal Navy deployed on Operation HIGHMAST in 2025. Credit: LPhot Helayna Birkett/UK MOD © Crown copyright 2026.