Royal Navy's £800m to rule the waves

Moored in the Firth of Clyde, out of sight of the little port town of Largs on the west coast of Scotland is a sinister and strange looking ship.

Its sheer grey sides are topped with numerous whirling radars and bristling antenna. Rising high above the deck is an 80 ton steel obelisk on top of which is a spinning ball with spikes sticking out.

The ball looks a little like Sputnik, the first artificial satellite launched by the Soviet Union in the 1950s. Only this ball is a thousand times more sophisticated than that bleeping radio transmitter. It is the most advanced radar in the world, which can monitor everything in the air for a 200 mile radius, and is the centre piece of this £800m T45 destroyer which will be delivered to the Royal Navy in December.

The British arms group BAe Systems, which built HMS Daring in the nearby Scotstoun shipyard in Glasgow, was showing off its new piece of kit this week. Daring, it says, is the most advanced warship in the world and five years ahead of anything anywhere else.

It is full of top-secret software and systems and runs off an advanced hybrid electric engine that can go from 0 to 30 knots in 70 seconds, which is fast for a ship, has no gears and can turn in four- ship lengths, leaning at 14 degrees as it does so.

It is being put through its paces among the exquisite scenery of the Scottish coast, between the Isles of Arran and Bute.

Daring may be designed to blow aircraft out of the sky, but it is also environmentally friendly. The destroyer uses 30 per cent less fuel than a similar sized ship (the electricity is generated by two fuel-efficient Rolls Royce gas turbines, backed by diesel engines, which drive huge electric motors which turn the props) and can do 7,000 miles – to America and back – on a single tank. It is the first front-line warship to be electrically powered – it generates 47 megawatts of power, enough, apparently, to light Dundee. Its quietness adds to the radar-repelling stealth of its shape in avoiding enemy attention.

Another five are on order for the Navy, making the total cost for research, development and building, a process that has taken around 10 years, almost £5bn. For this, the Ministry of Defence hopes to provide air defence to the entire fleet for the next 25 years at least.

Much of the cost has gone into its advance weapons systems. Beneath the bridge is the war room where 22 consoles crunch data, dots representing aircraft scurry across maps and camera images in infrared and normal view reveal the outside world. In today's hi-tech conflict, a double click can turn a plane from friend to foe and a foot pedal can fire a gun at a target.

Daring's main weapons, however, are surface to air missiles guided to their target by the ship's systems. There is also room for two Merlin or a Lynx helicopter. The Principle anti-missile system, or PRAAMS, is again the most advanced in the world. The software has taken up a chunk of the £800m, says Combat Systems manager Stuart Justice, and "is classified at the highest level". Despite this, it runs off Windows and is not above crashing. There is a "core functionality" in place for emergencies, as well as systems to prevent accidental firings and misidentification of aircraft.

The big question, however, is whether the T45 remains exclusively in British hands, or whether it will be sold to other countries. BAe, after a string of acquisitions (it moved into ship building when it brought Marconi in 1999) is now one of the biggest arms dealers in the world, with a turnover of £16bn last year. The company is cagey when asked about the sales potential of the T45. The official line is that it is so advanced there are not many navies in the world which could operate it, and those that can could probably build their own.

Vic Emery, who runs the company's ship building arm, or Surface Fleet Solutions, to give it its official title, is more bullish.

"We will offer it to the international market," he said. "We would need an export licence and any sale would have to be approved by the British Government. It is designed to last for 30 years and to have the latest technology on board. It has a state-of-the-art radar system, state-of-the-art combat system and state-of-the-art propulsion system. Where could we sell them? The Far East."

Despite the controversy over the £40bn Al Yamamah arms deal with Saudi Arabia (The Serious Fraud Office appealed last week against a judge's decision that a corruption investigation should not have been stopped) it is the rich nations in the volatile Middle East who would be able to afford such a ship and not be able to build it themselves.

Originally, plans called for 12 T45s, but successive rounds of defence cuts have reduced the order by half. The MoD, having to spend more than anticipated on Iraq and Afghanistan, is finding itself strapped for longer-term projects to the tune of around £2bn. Plans for UK defence spending for the next year will not be signed off until the end of this month, Jane's Defence Weekly reported this week.

Initially, this budget wasn't going to be cut, but "reviewed" and officially BAe says it is "working with the MoD to help it find ways in which we can help it address its business problems".

However, sources claim that commitment to long-term defence projects is beginning to waver. It is thought the Government is looking for politically acceptable ways to make cuts, which could involve cancelling the final tranche of the Eurofighter project, which risks upsetting European partners such as France and Germany, closing one of three RAF bases in Scotland or even stopping the beleaguered project to upgrade Britain's ageing fleet of Nimrod reconnaissance aircraft which is seven years behind schedule and millions of pounds over budget.

"The order for two new aircraft carriers are safe, even though they are not confirmed, because they will be built in Scotland," the source said. "The Nimrod is at risk, although perhaps only by 90 per cent. It is not unknown for governments to pour money into troubled projects and once they are about to be delivered cancel them. The most likely to go is the third tranche of the Eurofighter."

An MoD spokesman responded: "There has been a lot of speculation about the planning round. Decisions are still being made and announcements will follow in due course. It is important we prioritise our resources to ensure that we are able to meet our current commitments."

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