Defence

I am today laying a departmental minute to advise that the Ministry of Defence (MOD) has received approval from His Majesty’s Treasury to recognise new contingent liabilities associated with the detailed design and long lead items contract with BAE Systems for the ship submersible nuclear AUKUS (known as “SSN-A”).

The departmental minute describes the contingent liabilities that the MOD will hold as part of the SSN-A programme. Negotiations are ongoing and the contingent liabilities will come into force on signature of the contract.

Our key industry partner for submarine construction, BAE Systems (BAES), has requested indemnities in addition to those set out within pre-approved Defence contractual conditions to provide financial provision should the MOD decide to terminate the detailed design and long lead items contract or not award a follow-on contract with BAES. Both scenarios are highly remote as they would adversely impact support to the continuous at-sea deterrent, a top Defence strategic priority.

The attachment can be viewed online at: http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2023-06-28/HCWS887/.

[HCWS887]

I have today laid a departmental minute to advise that the Department has entered into an agreement with its subcontracted personal accident insurer to enable continuation of personal accident insurance cover for around 60,000 policyholders before the expiry of the existing arrangement on 31 May 2023. This has ensured that our armed forces and civil servants deployed on operations continue to be able to take out personal accident insurance at reasonable premiums under the personal accident and optional life and critical illness insurance scheme (PAL Protect).

There have been times when service personnel have experienced difficulty in obtaining commercial personal accident or life insurance cover similar to that available to the general public due to the nature of their employment and the war risks associated with conflict situations. In keeping with the armed forces covenant, the Ministry of Defence is committed to ensuring that service personnel are not disadvantaged in their ability to access privately arranged personal accident and life insurance due to their employment. That is why this contract is so important; to make sure that our people have that option available to them.

The contingent liability would be for those injuries resulting from war or terrorism which are beyond the scheme provider’s contractual responsibilities. The PAL Protect scheme will ensure that Government intervention is minimised to only addressing the specific gaps in market cover arising from the potential large-scale risks resulting from war or terrorism. The contingent liability will be required for the duration of the contract.