Five questions answered on the BAE Systems and Oman contract

BAE wins a deal.

British aerospace company BAE Systems has won a substantial fighter-jet contract with the Sultanate of Oman. We answer five questions on BAE’s Oman contract.

What is the contract for?

Europe’s largest defence contractor BAE Systems has signed a contract with the Sultanate of Oman to supply 12 Typhoon fighter jets and eight Hawk Advanced Jet Trainer aircraft, as well as in-service support. Manufacturing will begin in 2014 with delivery expected in 2017.

How much is the contract worth?

The contract is worth a staggering £2.5 billion.

What does this contract mean in the long term for BAE Systems?

Earlier in the year BAE Systems seemed to be struggling after it failed to close a merger deal with European defence company EADS. Other blows to the company include the US defense budget, where it derives 40 per cent of its earnings, being cut by $600bn (£369bn) and this week the news that it’s contract with Saudi Arabia  for 72 Typhoon fighters has been delayed because of disagreements over the final contract price.

This latest deal will provide a much needed boost to the company and help safeguard 6,000 high-technology and engineering jobs across sites at Warton and Samlesbury in Lancashire, and at Brough in East Yorkshire.

What has BAE Systems said about the deal?

BAE said in statement: "This contract is further recognition that both Typhoon and Hawk are leading aircraft in their class."

What are other people saying about the contract?

According to the BBC Prime Minister David Cameron welcomed the deal, saying:

"It's testament to Britain's leading aerospace industry and the deal will safeguard thousands of jobs across the UK, not just at the BAE Systems factories in Lancashire and East Riding in Yorkshire, but at many more small businesses up and down the country that play a vital role in delivering these aircraft.”

BAE Systems has won a substantial fighter-jet contract with the Sultanate of Oman. Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.