BAE oh no!

Britain’s biggest defence contractor tonight claimed it was effectively subsidising the Government for massive military programmes.

BAE Systems said it had lost £1 billion because of problems with huge projects.

And it claimed its shareholders would be “delighted” if it stopped bidding for Ministry of Defence contracts.

BAE’s chief executive Mike Turner made the comments in evidence to the House of Commons’ influential public accounts committee.

The committee is investigating the £3.1 billion overspend on Ministry of Defence equipment last year.

BAE was to blame for the bulk of the massive overspend on heavy equipment such as submarines, warplanes and missiles.

Four projects, all involving BAE, were responsible for almost 90% of the overspend.

They also accounted for 79% of the total “slippage” in delivery times.

The projects were:

The Eurofighter Typhoon warplane: 54 months late, £2.3 billion over budget.

Nimrod reconnaissance planes: 71 months late, £400 million over budget.

Astute submarines: 43 months late, £1 billion over budget.

Brimstone air-launched anti-tank missiles: £139 million over budget.

Mr Turner said BAE should never have taken on the Nimrod contract.

“We were persuaded this was a profitable project,” he told MPs.

“We were wrong.”

He said BAE would not make any profit on the Nimrod or Astute projects. He said BAE’s shareholders had lost £1 billion on the projects.

“If I said tomorrow to my shareholders ‘we are walking from MoD business’, I think they would be delighted. They have subsidised the UK defence budget by £1 billion.”

But MPs said it was the other way round and taxpayers were actually subsidising the firm.

Labour’s Gerry Steinberg said taxpayers had lost £1 billion and three aircraft at a total cost of £150 million because of mistakes at BAE.

Mr Turner also rejected claims by BAE’s former boss that the firm routinely quoted unrealistically low prices to the Government to ensure it won big contracts.

Sir Raymond Lygo, chief executive of BAE Systems in the 1990s, said his firm would deliberately price contracts at an attractive rate and then charge more later as costs rose to a more realistic level.

Mr Turner told MPs: “We have never followed that approach, never. That is absolutely wrong.”

MPs claimed the firm had the Government “over a barrel” because it had no domestic competitor.