Cheap Does Not Mean Affordable - Why The Royal Navy Sold the PEACOCK Class

 

The Royal Navy PEACOCK class patrol vessels were an unusual class of ship, built for a unique role. Built in the 1980s and intended to serve in Hong Kong to provide maritime security and support to the local government, they have found themselves serving in a more varied range of waters, from the balmy waters of the Philippines to the cold waters of the Irish Sea. Now entering their fourth decade of service, these ships were only in Royal Navy for use for less than 15 years, but had events transpired differently, could potentially have served for a lot longer under the White Ensign.  

Files held in the National Archives have revealed that in the early 1990s, the leadership of the Royal Navy was, at the very highest levels, incredibly keen to keep the ships in use after the handover of Hong Kong, but politics in the Naval Staff and financial challenges meant that this was not to be. This short blog is about the forgotten 1990s battle between the Naval Staff to save the PEACOCK class for the Royal Navy. It is a fascinating insight into the costs of naval operations, and opens a window on the often forgotten and unglamorous world of small ship operations during the 1990s, which in turn remains relevant to this day.

PEACOCK Class - Crown Copyright

Hong Kong had long been a major base for the Royal Navy, with the dockyard and support facilities at HMS TAMAR acting as the last major outpost of the fleet ‘East of Suez’ after the withdrawal of the fleet from Singapore in the early 1970s. During most of the Cold War the 6^th Patrol Squadron was based there, comprising five modified TON class MCMVs intended to provide a local patrol capability. Their role was to assure sovereignty, support law enforcement and customs operations and provide a limited level of defence to this tiny outpost. They were not intended to mount a genuine defence against invasion, but they could provide some littoral capability to support, train and mount a capable maritime constabulary presence in the region. In many ways they were the RIVER class OPV’s of their day – lightly armed and perfect for the role.

By the early 1980s though these ships were getting long in the tooth and needed replacement, to provide future maritime protection to Hong Kong. The decision was taken to build five replacement hulls from Hall Russell in Aberdeen, builders of the ISLAND and CASTLE class OPVs, which would then sail to Hong Kong and be permanently based there. Uniquely unlike other vessels built for the Royal Navy, these ships were mostly funded by the Hong Kong Government, with HMG only paying around 25% of the ship’s costs. This was to become an issue in years to come.

A total of five ships were ordered to provide one-for one replacements for the TON class. The design was unique in the Royal Navy for several reasons. At some 62m long and displacing 750 tonnes, they were slightly longer than, but barely half the displacement of the ISLAND class OPV used to conduct fishery protection around UK waters. Fully air conditioned inside to cope with the tropical climate, they were able to carry RIBS and boarding parties drawn from the Royal Marines, as well as diving decompression chambers to support diving and recovery operations. Most uniquely, they were tonne for tonne probably the most heavily armed warships in the Royal Navy, carry a 76mm Otto Melara gun mount, plus machine guns. This marked the only time that the RN has ever used this design of 76mm gun, despite it being ubiquitous in global use throughout the 1970s and 80s on a range of corvettes and OPVs. Traditionally the UK has tried to maintain a clear split between lightly armed patrol vessels and bigger warships, using a 30mm or 40mm gun, so the 76mm represented both a significant increase in firepower, and introduced a range of complex logistical support challenges too.

By 1984 the class had sailed and arrived in Hong Kong where they quickly settled into life in the colony, conducting a range of patrols, ‘flying the flag’ and providing a platform from where a generation of young officers would carry out fleet time training. The author has met many naval officers who look back very fondly to their time in Hong Kong as YO’s on the Squadron, which provided a unique way to begin their naval career. But it was a time that was rapidly ending…  

Northern Ireland Squadron hull Crown Copyright

The decision taken to hand Hong Kong back to China in 1984 meant that UK rule would end in 1997. By 1988 the decision was taken to pay off two of them (SWALLOW and SWIFT), selling them to Ireland after barely 3 years’ service in the Royal Navy.  The remaining three hulls were to continue in RN service until 1997, when they would be between 12-13 years old, but there was no plan to run them on past the handover of the colony. The reason for this was that the Hong Kong government, which had paid the lions share (75%) of the cost, and which to all intents ‘owned’ the vessels for operational purposes, would make the decision on their disposal. Instead, it was assumed that they would be decommissioned and disposed of as part of the general run down of the garrison.

This assumption held true throughout both the 1991 ‘Options for Change’ and ‘Front Line First’ defence cuts of the early 1990s as the Royal Navy was gutted in size after the end of the Cold War. With a glut of former vessels available, often very young, now surplus to requirements, there was simply no need or requirement to retain the PEACOCK class in service. In early 1995 though that assumption was questioned by the MOD which led to work to assess their value to the Service as a whole.

Following a visit to Hong Kong by 1^st Sea Lord, the Commander British Forces Hong Kong (Maj General Dutton) wrote to DCDS Commitments (Lt Gen Harley) and noted:

“During his recent visit to Hong Kong, the First Sea Lord mentioned that the MOD are reconsidering the future of the Hong Kong patrol craft and that their retention in service with the Royal Navy is now being run as an alternative assumption. As a result I closely examined the cost implications such a decision would have. I believe I should now place on record the apparent overall benefits for the MOD as a whole”.

The letter goes on note that there was significant complexity around the disposal of the ships, due to the funding arrangements of the design. Much as the Hong Kong government had paid 75% of the costs, it would be entitled to 75% of the revenue of any disposal receipts should the ships be sold on to another buyer. It was estimated that the ships had an agreed final value of £9.52m and that after the disposal of the ships, whatever the amount raised, the MOD would pay the Hong Kong Government £7.14m to reflect its agreed share of the receipts. The letter noted: “If the craft are sold to a foreign buyer, the MOD will gain a net receipt of £2.38m”.

It was noted that the PEACOCK class were excellent craft and extremely useful for a range of defence tasks. The letter noted:

“As I am sure you are aware these vessels have proved their worth on countless occasions in Hong Kong in both routine patrolling of Territory waters and also in the interception of smugglers and illegal immigrants. A similar role can readily be envisaged for them in enforcing fisheries policy in UK waters and in relieving the pressure on the Fleet elsewhere where sophisticated frigates are not required. They also provide excellent training platforms for Young Officers who can be entrusted far greater training responsibilities onboard than may be the case on larger vessels”.

The letter also warned that disposal was not an automatically easy option. Were they only to be sold at the last minute, then the stores for the ships would have been returned to the UK, with some 65 ISO container loads of equipment required for them. The author noted that the cost of sending the supply chain back out to the new buyer would likely cost more than the receipts of the sale in the first place.

Finally, the key point was made – due to the nature of the funding arrangement, there was an opportunity here to acquire ships for the Royal Navy long term at an extremely cheap value. If the UK government chose to ‘buy’ the ships, essentially by paying the Hong Kong Government the £7m it was entitled to as a receipt, and forgoing the planned budget receipt of £2.3m, it would effectively acquire three highly capable ships for very little money. On paper this was the deal of the century, providing three ships at seemingly practically no cost and bringing them on to the Royal Navy’s books, enabling it to use them as it wished. Why wouldn’t you do this?

OCEAN WAVE Handover - their last hurrah in RN Service. Crown Copyright

With this idea now in circulation, in early 1995 the Naval Staff began running the costs of the ships and trying to work out what to do with them. In March 1995, the Director Naval Plans (Cdre Meyer RN) provided a loose minute to the Assistant Chief of the Naval Staff (ACNS) setting out the opportunities, and costs of bringing these ships into wider Royal Navy use. This memo was supported by a deeper analytical paper that had done a ‘deep dive’ on the military roles and operations that the craft could fill, and in turn their potential utility.

The memo began by making clear that there was no such thing as a ‘free lunch’. Previously the ships had been heavily funded by the Hong Kong Government, but once in RN use, the Service would be on the hook to pay for them.  It noted that several different options had been considered for the ships use out during the 10 year ‘Long Term Costings’ period when the MOD was doing financial planning. This began in 1995 and ended in 2005, and was done on the assumption that the ships would come onto MOD budgets from 1997 onwards.

The specific options considered for employment, in both the detailed paper and the memo sent were as follows:

Replace HUNT class on fishery protection duties: This option was considered to enable removing the HUNT class from this role, increasing the operational capability of the MCMV force. But it was noted that there were no specific needs for this, and that compensating savings would need to be found to fund the cost of bringing the ships onto the books.

BRNC Navigation: BRNC used to have a navigation training platform, and at the time this was being done by HMS ORWELL. The challenge was that this role had only recently been handed over to ORWELL by HMS WILTON and there would be no real operational advantages of a further change by putting a singleton hull in on the role instead.

In addition, the papers noted that ORWELL had a better bridge and was more suited to conducting navigation training than a Peacock would be. When added to the fact that ORWELL could be used as a stand in for the Northern Ireland Squadron, it became clear that using a PEACOCK in this role would not represent value for money.

NI Squadron: All three ships were looked at with a view to becoming part of the Northern Ireland squadron, replacing three of the four RIVER class on this duty. It was rejected though as it would put mixed classes on duty, causing an increase in costs and losing a key benefit of consolidating the Squadron into the RIVER class in the first place.

The Royal Navy role in Northern Ireland is a fascinating and little understood part of the history of OP BANNER, and to this day remains little known. The deeper analysis paper provided a helpful summary of the Squadron and its role, noting that it:

“comprises Operations GRENADA and INTERKNIT, the former being an offshore interception and search task and the latter being an in-shore operation in Carlingford loch. GRENADA essentially needs a vessel with good seakeeping qualities with a turn of speed when required. INTERKNIT needs a shallower draught vessel to operate within the Lough and launch/recover RIBS and reasonable sea keeping qualities for the transit back to Belfast. Speed is less important but the ability to carry an RM detachment is essential. Both these tasks are carried out by 4 RIVER class patrol craft which have recently been modified to the same standard and replaced the BIRD class. Replacement of the RIVERS by the PEACOCK class in 97/98 would produce a faster craft with better seakeeping, a slightly larger complement and mounting a 76mm rather than a 40mm gun; the 76mm may need replacing as it is too large for the INTERKNIT task… The RIVER class is perfectly adequate for the task, if a little slow. In the current security situation, it is more likely that forces will be reduced rather than increased. There is also the aspect of having to pay off another class having just converted them (cf SIRIUS and ANDROMEDA).”

Falklands / WIGS: Deployment on these tasks was considered, but it was noted that “PEACOCKS have good seakeeping qualities for their size, but they are unsuitable for sustained operations in areas prone to extreme weather conditions. They cannot operate helicopters and lack military capability for anti-drugs tasks’.

The deeper analysis was equally damning on their suitability for this role as well. It noted that the work in the Falklands required vessels with long rang, good seakeeping and good accommodation, all of which the PEACKOCKs lacked. At half the displacement of a CASTLE, they would have found working in the region very difficult.

In the West Indies it was noted that although the ships were very effective in calm conditions, they lacked the ability to operate with helicopters, long range radars and most importantly the ability to operate away from a support base. It was also recognised that they would probably need two on station to avoid long transits across the Atlantic regularly, and also shore basing too, making any deployment costly. When added to the reduced capability during hurricane season, it becomes clear that these ships would not be of much value in these tasks and would cost a great deal to operate.

Gibraltar / URNU / Coastal Patrol. It was looked at whether these ships could replace the existing craft doing this local work, but it was assessed that “in comparison to the craft they could replace for this work, the Peacocks are over-elaborate and costly”.

The deeper dive paper examined the value of the ships in maritime counter terrorism support, although it was clear that this role was of decreasing importance: “Recent indications from the Security Services have cast some doubt on the efficacy of this operation and the DoE has discontinued payment for this policing operation, although it is likely to remain a dormant task which could change with the international terrorist situation. OPVs derive valuable experience from familiarisation with the offshore tapestry of energy platforms which in turn improves their readiness to act as FOBs for Counter Terrorist forces. The PEACOCK class would be marginally less suitable by virtue of size and seakeeping than an ISLAND vessel, and much less suitable than a CASTLE with its flight deck.”

Another task looked at was OP MUSKETRY, which was a task for vessels on the Clyde to conduct patrols against intelligence gathering vessels from hostile states. The paper noted that:

“This is a dormant Directed Task to conduct surveillance of intelligence gathering platforms in the Clyde Approaches… Although there has been no evidence of intelligence gathering for some time, the appearance of the Trident SSBNs could attract renewed attention from the Former Soviet Union as well as Peace Groups and environmentalists. RMAS ROYSTERER replaced HMS SENTINEL as Clyde Support Vessel from Apr 1992… There may be a requirement for a military vessel to resume responsibility for the role as part of a plan for military and civilian surveillance coordinated with the GOLIGHTLY shore surveillance facility and the MOD police. This would, however, be expensive in terms of Service Manpower and it would not be a full time task.”

In addition to these roles, analysis was undertaken of assigning the craft to the URNU task, recognising that with the closure of RNEC Manadon, there would be an increased need to take students to sea. It was recognised though that the ships were far too large for the needs of the URNU; “One could buy 7 new URNU patrol craft merely for the pay/back loss of receipts of 3 Hong Kong Patrol Craft”.  Having been in  the URNU at the time this would have been proposed though, the author would attest that going to sea in a PEACOCK class would have been a lot more fun, and stable than a very wobbly P2000!

Wider training was also considered too, with suggestions being made that the ships be used to form a training squadron. Again though, the lack of funds, sheer cost and existence of other vessels made this a nonstarter of an idea.

RNR: There was an analysis that looked at whether the ships could take on an RNR training role, but there was no operational need or requirement for it, particularly as this came at a time when the RNR was being rapidly downsized and moved away from seagoing roles. It was also briefly looked at using the ships for an MCM Tasking Authority platform, which would have seen RNR staff embark, but again it was realised that this role was already done using spare capacity on the Hydrographic squadron, and no military need existed for it.

Wartime Roles & Extended Readiness: Putting the ships into extended readiness (e.g. Reserve)  for use in wartime was looked at as an option, but it was noted that: “In the event of a direct threat to the UK,  the peacocks could undertake a range of activity including MCMTA, NCS (Naval Control of Shipping) and Coastal Policing / Defence tasks (Comment – essentially what the RNR did in Cold War). Current plans in this eventuality are to take craft up from trade and redeploy existing units. This is a cost-effective approach which avoids incurring Extended Readiness costs.”

Considerable deeper analysis was paid to trying to work out what the contingency war role of the ships would be in the UK. In the early 1990s the RN was in a state of flux, having abandoned its Cold War era roles and quickly shed its wider infrastructure to protect ports and anchorages and control shipping. The paper identified that in the mid-1990s there were four specific tasks for the Royal Navy in home waters to be filled.

Firstly, there was the need for Defence of Ports & Anchorages during transition to war. It was seen as likely that there would be risks to the homeland, which could include “intelligence gathering, insertion of Special Forces, civil unrest, covert mining and scuttling”. The RN planned to meet the need to defend ports by using the Archer Class, patrol vessels, RMAS platforms and ships taken up from trade. It was seen that the PEACOCK class would be ideal platforms for this work.

Coastal operations would also be conducted with two Archer class conducting coastal patrols and the ISLANDS being used to carry out offshore work, including oil rig protection. The PEACOCKs were seen as being ideal for this sort of work.

Naval Control of Shipping was also crucial, and is an often-forgotten part of the Royal Navy’s Cold War planning. Carried out by the RNR for the most part, it was the process of during wartime forming shipping into convoys, coordinating its safe transit across the Atlantic and then into ports to discharge troops and cargo. After a nuclear strike, it would have been invaluable in finding safe ports for shipping to use. According to the analysis the ISLAND class would have been used as coastal convoy escorts in this role (although one does wonder the efficiency of these slow armed trawler designs in that role), and reckoned that the PEACOCKS would have been excellent too.

MCM Support was a final driver, with the ships being looked at to take on the work done by the CASTLE class to act as platforms to support MCMV operations in their war stations. It was noted that plans existed for the CASTLEs to “conduct very limited defensive and protective minelaying provided the capability is made available in war”. While noting that the PEACOCKS could not carry out this task, they could potentially be used as an MCMV command platform, although they lacked the spaces to embark a staff, making their credibility limited.

The result of this analysis then was to conclude that the PEACOCK class would have been brilliant in wartime roles to defend the UK. The problem though was that the enemy had gone away, there was no threat to defend against and putting them in extended readiness at a cost of some £18m would be a waste of money for ships that would potentially never be used in that role. Far easier in crisis times to take more ships up from trade than try to bring ships that had been languishing in reserve back into service. This was part of the problem – the PEACOCKS were ideal wartime platforms at a time when there were no wars to be fought.

RIVER class MCMV 

This summed up the reality of this case. The cost of spending money on ships that didn’t have a place in the constrained RN of the 1990s operational plans. Even though they would only have cost £9m to bring onto the MOD’s books, the annual running costs would have been considerable. The Plans team worked with CINCFLEET to assess the annual running costs of each hull as being £1.7m per year, based on £700k personnel costs, £150k stores, £450k maintenance, £90k fuel and £400k refitting. For all three ships this would have provided a £5.3m in year pressure, or over the course of the LTC, around £46m in running costs that had not been budgeted for.

This highlights the challenge with looking at trying to extend or run on ships (or other military equipment). The headline cost may indeed have been easy and a small cost to absorb or write off. But the long term costs are always a lot higher. In the context of 1995, when the RN was in a budgetary challenge, short of cash and under headcount pressure too, finding an unexpected nearly £50m in your planning budget across multiple lines, to run on ships for which there was no credible military role identified did not seem effective or sensible.

The memo ended with a salutary note:

“The Peacock class are capable and popular and at first sight the craft appear to have considerable. However as the list of possible options shows, there are no peacetime tasks for which the vessels have an inherent advantage over other types in current service. Use of the craft for Fishery Protection duties would enhance MCM OC but at significant additional cost to the Programme.

Against the background of continued pressures on the Programme and noting that there are higher priorities in the Navy Grouping than MCMV enhancement, purchase and use of the Peacock class does not represent good value for money and is not recommended. Consequently, unless an affordable case can be made in LTC96, which, at the moment, seems unlikely, the current Programme assumption, disposal, should stand”.

There was some pushback within the Naval Staff against this proposal. There also followed a series of memos using evidence and experience to try to undermine the case of the Plans paper. It included suggestions that: “There are two points of fact that I would take issue with – firstly the statement that their seakeeping qualities are marginal for GRENADA (Clyde tasking). These vessels have proven very adequate in the often hostile environment around Hong Kong, and we would certainly not be considering the case for their introduction to the Fishery Protection environment, which is far more demanding than GRENADA, if their seakeeping was a concern. Secondly, we cannot claim that they are too large for OP MUSKETRY (small boat ops in NI), in the past we have used RFAs.”

The Naval Operations Directorate also pushed the case for the PEACOCKS, with a memo noting that they had seen the suggestion that the ships would be unsuitable for use in the Fishery Protection role due to the strong sea conditions. They in turn spoke to the Irish Navy who had noted that:

“The Staff Operations Officer (previous CO) of the Irish Navy reports that ORLA and CIARA ex-SWIFT and SWALLOW are employed in fishery protection and drug interdiction operations from 0-50 miles off the Irish coast. The ships operate in sea state 6-7 and launch RIBS in wind force 6, sea state 4-5… The Irish Navy have found the ships to be very suitable and capable of fishery protection and drug interdiction tasks and of operating in the Atlantic including on their West coast. The high speed of the vessels has also been very useful. They already knew of the sale of the vessels and the Defence Attache reported much interest in purchasing another one”.

A strong intervention was led by Cdre McNally, Director Naval Staff Duties writing back in response that “I regret I cannot support your recommendation to ACNS and 1SL that disposal is the best option for these vessels. I would need to see considerably more evidence that loss of small craft flexibility involved by the planned sale is worth any putative marginal financial benefit.”

But despite this valiant rearguard, the numbers spoke for themselves. The PEACOCKS found themselves in the position of being highly regarded platforms which did not have a role to go to. In a time of budget cuts and pressures, the Royal Navy felt that it could not afford the roughly £50m required to run the ships on for a further 10 years, as there was no specific role that they could go to that wasn’t already covered. The result was that the three ships were sold to the Philippines in 1997, and they remain in service to this day. Rearmed with a 40mm cannon in place of the 76mm and classed as light corvettes, the three remaining ships, now 40 years old are continuing to serve in a challenging operational environment.

If you look at the journey that the Royal Navy has taken since 1995 many of the tasks considered for the PEACOCKS then have either fallen by the wayside, with the Northern Ireland Squadron being disbanded, and BRNC navigation training ship scrapped. The RN now has permanent ships on station in the West Indies and Falklands far larger (roughly 4 times the displacement) of the PEACOCKS, and they contain flight decks which were seen as utterly vital. Ironically, the key role for which the ships could have been valuable, but was seen as not being necessary due to the lack of threat, namely providing a wartime contingency for coastal operations, is now back in vogue. That said,  it is impossible to see any scenario where the RN would have paid millions every year to leave the ships quietly floating in reserve against this contingency, and in reality they’d have been scrapped years ago had they been retained.

Ex SWALLOW/SWIFT under tow for scrap 2024

                                                                 - Copyright unknown

The saga of the PEACOCK class matters to this day because it highlights the pressures and decisions that the Royal Navy has to make which to outsiders may appear strange or illogical. There are plenty of ‘armchair admirals’ who love making fantasy fleet lists, or typing online arguments and roles for retaining ships and ship classes for all manner of roles. But these arguments do not consider finance and the reality of overstretched budgets and solving problems across many costing periods.

The RN today is facing similarly huge budgetary challenges, with reports indicating that due to a combination of reasons accrued over recent years, it now faces a massive in year financial challenge to balance the books, while it prepares too for another SDSR. The sorts of memos sent by different parts of the Naval Staff in 1995 are doubtless being written again, with the challenges of balancing off the need to deliver on operations being balanced off against the need to make the plan affordable and not bankrupt the Navy, or the nation in the process. It means that when you see decisions made to pay ships off early, or not run them on for different purposes, a similar type of analysis will have been conducted trying to work out what ships do, what their value is to the Royal Navy and what the best outcome is – and why cheap does not always mean affordable.