MoD to spend £2.5bn on satellite system

A "state of the art" satellite communications system – which will cost the UK taxpayer the princely sum of £2.5bn - has been given the green light today.

The satellite system, known as Skynet 5, was approved by defence procurement minister Lord Bach and is destined for the use of the British Armed Forces.

The lucky winner of the bumper contract is the Paradigm consortium, who will build and run the system under a Private Finance Initiative – the biggest ever handed out by the Ministry of Defence. It is hoped that the new system will secure around 1,900 jobs across the UK.

Lord Bach said in a statement: "Satellite communications are crucially important on the battlefield. They give our troops, their commanders and UK headquarters access to information across robust links."

He added that the system should be operation by 2005 and using an outside company to run the system would free up resources within the Armed Forces.

The use of military systems for commercial services, such as those based on GPS locations, has been common in the past. However, the wider implications of the Skynet 5 roll out are not yet known.