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By Danny Fortson, Business Correspondent
Wednesday, 14 May 2008

VT Group expects the Ministry of Defence to end years of delays to the building of two Royal Navy aircraft carriers by giving the go-ahead to the £3.8bn programme "within weeks".

The company was forced to extend the timeframe to consummate a shipbuilding venture with BAE Systems, announced last year, to July on the expectation of an imminent decision from the MoD. Doubts about the programme have grown in recent months as budget constraints have led the ministry to review several large projects. Cutbacks are expected, though Paul Lester, chief executive of the former Vosper Thorneycroft, was confident that the contract would escape the axe.

"I believe we'll be able to get under way in a matter of weeks," he said. "It should be up and running by July."

The joint venture, which would combine the two companies' shipbuilding businesses into a separately managed company, is predicated on the carrier order.

The programme for two new 65,000-tonne carriers would safeguard 10,000 jobs in the UK and could create a further 1,000 posts, he added. It is already at least two years behind schedule.

Mr Lester made his prediction after unveiling better-than-expected annual results that bear out the company's strategy of diversifying away from a heavy reliance on such lumpy and delay-prone defence contracts.

VT earned £89.1m in profits last year, up 20 per cent on the same period last year. Its order book swelled by nearly a third, to a record £4.9bn.

Less than a fifth of the company's profits came from shipbuilding last year. VT is instead moving increasingly into private finance initiatives, or PFI, through which local and national government outsources an array of services to private companies. Earlier this year, VT was part of the group that won the £13bn contract to supply mid-air tanker aircraft to the Royal Air Force.

It also won a £325m contract to build and refurbish schools from Lewisham council in east London under the Government's highly ambitious Building Schools for the Future (BSF) programme.

The £45bn scheme to rebuild all of the country's secondary schools has run into delays and been criticised by industry for the glacial and expensive bidding process. Tim Byles, chief executive of Partnerships for Schools, the organisation that oversees the BSF programme, has instituted a reform programme that has reduced the average bidding time from around two and a half years to 18 months. Mr Lester said that more could be done. "A lot of effort has been put it, but it could still be speeded up," he said.

http://www.independent.co.uk/news/business/news/vt-expects-end-to-delays-over-
16338bn-aircraft-carrier-project-827718.html