The Royal Navy's HMS Astute is part of the current generation of submarines
5:51am UK, Sunday June 17, 2012
Defence Secretary Philip Hammond has agreed the deal as part of Government plans to replace the Vanguard fleet that carries the Trident nuclear deterrent.
According to the Sunday Telegraph, the money will be used to build two reactor cores.
One will be used for the seventh Astute Class attack submarine and one for the first of the next generation nuclear deterrent submarines.
It will also be used to fund an 11-year refit of the Rolls-Royce five-year-old plant at Raynesway, Derby, which will carry out the highly-specialised work.
The deal will directly create 300 jobs.
Philip Hammond pictured earlier this year
Replacing Britain's nuclear deterrent has proved divisive for the Coalition with Liberal Democrats opposed to "like-for-like" replacement and Conservatives committed to a full renewal of the UK's fleet of four Vanguard-class submarines by 2028.
Lib Dem defence minister Nick Harvey has been conducting a review of possible cheaper alternatives.
The first of the four Vanguards had been due to leave service in 2022, but the Government extended the vessels' lives as part of the 2010 Strategic Defence and Security Review.
Final decisions about ordering replacements do not have to be taken until 2016, after the next general election.
Last month Mr Hammond awarded contracts worth £350m to UK companies to design the next generation submarines.
A senior defence source said: "This is good news for the Royal Navy and a great boost for jobs. Having balanced the MoD's books we can now get on with ordering major pieces of equipment for the Armed Forces to protect us against future threats."
An MoD spokesman said: "This Government is committed to maintaining a continuous submarine-based nuclear deterrent and announced last May that design work would begin to replace our existing submarines.
"Following a Trident value for money study carried out as part of the Strategic Defence and Security Review, we are proceeding with initial work to renew the nuclear deterrent, but a final decision will be taken in 2016.
"As part of the Coalition Government agreement a review is also being carried out into alternative systems for maintaining a credible nuclear deterrent."
