New £9bn deal to build reactors for nuclear submarines ‘will create 1,000 jobs’

Ministers have announced a new multi-billion pound deal for nuclear submarines they say will create 1,000 jobs and support 4,000 more, as Rachel Reeves scrambles to boost economic growth.

The agreement with Rolls-Royce to support the Royal Navy fleet, dubbed “Unity”, will also aid national security, the government said, days after the UK warned Russia ‘we see you’ as the Royal Navy tracked a Russian spy ship in the English Channel.

Defence secretary John Healey said the investment would “deliver a long-term boost” to British business and jobs.

The government suffered a blow on Thursday with an announcement by Sainsbury’s that it is cutting 3,000 jobs as it braces for a looming surge in costs, including higher taxes and wage bills, following Ms Reeves’s Budget.

Ms Reeves is facing a growing backlash to her plans, including to a hike in employers national insurance. She has also come under increasing pressure after recent figures showed a sluggish economy.

Last week the chancellor warned the rising cost of borrowing and falling value of the pound underlined the need for ministers to go “further and faster” in search of economic growth.

She is expected to use a speech next week to back a controversial third runway at Heathrow, despite deep division within her party over the environmental impact.

Asked about the airport decision while on the trip to the Swiss ski resort, she said that growth, as the government’s primary mission, trumped net zero considerations and was “obviously the most important thing”.

According to the government the new deal for submarines “streamlines previous contracts”, saving taxpayers more than £400 million over eight years.

Steve Carlier, the president of Rolls-Royce Submarines, said the long-term contract “enables us to invest in the right skills, equipment, and facilities to play our part in protecting UK interests at home and overseas.”

Mr Healy said the deal was also a “clear demonstration of our commitment to the UK’s nuclear deterrent, which is our ultimate insurance policy in a more dangerous world.” 

The Ministry of Defence said the contract would deliver design, manufacture and support services to nuclear reactors to power the UK’s submarines.

Mr Healey will announce the agreement, worth approximately £9 billion, on a visit to the company’s nuclear production facility in Derby on Friday.