Taxpayers buy the Queen a new yacht

The Government yesterday committed pounds 60m of state money to replace the royal yacht Britannia in what appeared to be an attempt to wrong-foot Labour and win the backing of the majority of voters who support the monarchy.

Michael Portillo, the Secretary of State for Defence, told MPs that he rejected all suggestions of private-finance sponsors, arguing that "it is the duty of the state to support the monarchy" and saying that the vessel "would be a symbol of the Crown, the Kingdom and its maritime traditions". The annual running cost, estimated to be around pounds 4m, would come from the defence budget.

Labour, caught unawares by the surprise announcement, initially failed to indicate whether it would support the project, but later said public finance should be limited, suggesting it might favour some private-sector involvement. The decision was made on Tuesday by a Cabinet committee with the backing of the Prime Minister. Mr Portillo stressed the decision was the Government's and not that of the Queen who would contribute "to the furnishings and fittings of the state rooms and royal apartments".

Labour said the decision was made for electioneering reasons. A senior source said last night: "It is amazing that this pounds 60m has had to come out of contingencies. If this had been a serious debate about the need for a replacement, they would have consulted with the Opposition. Instead, they've tried to catch us out on public spending." However, the golden rule of the shadow Chancellor, Gordon Brown, would stand: "no commitment for any new spending, royal or not royal".

Mr Portillo made a play for support from jingoistic Euro-sceptics by promising the ship would be built in a British yard, knowing this commitment breached European competition rules, which specify that all major contracts must be open to bidders throughout the European Union. Mr Portillo justified this by saying vaguely it was a matter of security and "it was a royal ship" and promised that if the European Commission launched a legal challenge, he would oppose it.

The announcement met with jubilant support on the Government benches, but Labour was divided with several MPs, including Kate Hoey and Andrew Faulds, expressing full support while Dennis Skinner and Alan Williams opposed it. Mr Williams said he could not understand the sense of priorities which diverted pounds 60m from social services and called it "a symbol of extravagance and irrelevance".

The Liberal Democrats gave unqualified backing to the scheme while the Scottish National Party leader, Alex Salmond, described it as foolish.

Mr Portillo admitted the ship would be more of a mobile hotel than a form of transport, as the Royal Family "travel by air". It would have to be "prestigious" to impress foreign visitors, he said. He justified the cost "not in terms of pounds, shillings and pence, "but on how we feel about ourselves".

Unlike the Britannia, which had a notional role as a military hospital ship, the new ship would have no military purpose. The Government rejected the plan to make it double as a training ship. There had been opposition in the Ministry of Defence to continue paying for a ship which had no military purpose but this has been overridden.

The new yacht would enter service in 2002. Britannia is due to be scrapped after it finishes its tour of duty in Hong Kong later this year. While Mr Portillo said he would consider suitable offers for "a suitably prestigious use for Britannia in the public interest here in the UK", he would prefer to see it scrapped rather than allow it to deteriorate.

Nick Grainger, director of the Shipbuilding and Shiprepairers' Association, said there would be nine possible British yards where the ship could be built. The leading contenders are thought to be Harland and Wolff in Belfast, VSEL in Barrow and Yarrow Shipbuilders on the Clyde.

LOST AT SEA

WHAT pounds 60m COULD BUY:

ABOUT 20 to 30 new primary schools each housing 250 pupils or six 1,000- place secondary schools.

THE new children and women's hospital being planned for the site of St Thomas' opposite Parliament, plus pounds 10m to fit it out.

20 MILES of a two dual lane motorway or 60 miles of a single carriageway 'A' road.