BAE Systems has been awarded a contract to build Australia’s nuclear-powered submarines as part a of joint military programme.

The deal, which will see the British firm partner with Australian government-owned company ASC, forms part of the Aukus partnership between the UK, Australia and the US.

Speaking on a visit to the Osborne Naval Shipyard in Adelaide, Defence Secretary Grant Shapps said the deal showed the “huge confidence” Australia has in UK’s defence industry.

Mr Shapps, who was joined by his Australian counterpart Richard Marles and US ambassador to Australia Caroline Kennedy, said: “Through these collaborations, British industry will grow, and thousands of jobs will be created across the country, delivering security and prosperity to our two nations.”

Australia UK Submarines
Defence Secretary Grant Shapps speaks to the media as Premier of South Australia Peter Malinauskas, third left, Australian Minister for Foreign Affairs Penny Wong, left, Deputy Prime Minister of Australia Richard Marles, right, Foreign Secretary David Cameron and United States Ambassador to Australia Caroline Kennedy, second right, listen during a visit to the Osborne Naval Shipyard in Adelaide (Matt Turner/AAP/AP)

The Ministry of Defence (MoD) said the Australian investment – believed to be around £2.4 billion over the next 10 years – and funding from the MoD would allow Rolls-Royce, which will deliver the nuclear propulsion plants, to double the size of its Derby sit and create 1,170 skilled jobs.

BAE said it has increased its UK submarines workforce to 13,500 with plans to grow to around 17,000

The submarine programme is expected to create 7,000 UK jobs with more than 21,000 people working on the SSN-Aukus submarine programme at its peak, concentrated in Barrow-in-Furness and Derby.

The first UK submarines built to this design will be delivered in the late 2030s to replace the current Astute Class vessels and the first Australian submarines will follow in the early 2040s.

The appointment of a builder by Australia comes a year after Prime Minister Rishi Sunak, Australian prime minister Anthony Albanese and US President Joe Biden announced the first generation of Aukus submarines would be based on the UK’s world-leading design.

BAE Systems chief executive Charles Woodburn said: “We’re already making good progress on the design and development of the next generation submarine in the UK where we have more than 1,000 people working on the SSN-Aukus programme and major infrastructure investment underway.

“This latest step will ensure an integral connection between the UK design and the build strategy development in Australia as we work together to deliver next generation military capability as well as considerable social and economic value to all three nations.”

The announcement follows the signing of a new Defence and Security Co-Operation Agreement between the UK and Australia.

Foreign Secretary Lord David Cameron and Mr Shapps were meeting their opposite numbers Mr Marles and foreign minister Penny Wong on Thursday as part of the annual Australia-UK meetings.