Tens of thousands of British shipbuilding jobs have been secured and a further thousand created, after the two main Navy warship builders agreed to merge their businesses and create one single national shipbuilding firm.

BAE Systems and VT Group said today that after almost a year of negotiations they had finally signed terms to create a £1 billion turnover company, to be known as BVT Surface Fleet (BVT). BVT will combine warship building and naval support businesses at sites in Bristol, Glasgow and Portsmouth.

The new company will be Britain’s biggest shipbuilder and will have the lion’s share of a £3.9 billion contract to build two new Royal Navy aircraft carriers.

However, the formation of the new company could see VT Group, formerly Vosper Thorneycroft finally exit shipbuilding in three years’ time after more than a century in the industry. Thorneycroft built its first ship in 1862.

BAE has a call option on its share of VT's business. The Southampton-based company has fixed a minimum exit price of £380 million on its stake.

A spokesman for VT Group said the company would take a view at the time on whether it wanted to exit the shipbuilding industry, depending on the future outlook for orders from the MOD and foreign governments.

Paul Lester, chief executive of VT Group, said: “The formation of BVT will create a world class provider of naval ships and through-life support that will secure thousands of jobs in the UK and will enable the company to compete effectively for export work.”

BVT will be 55 per cent owned by BAE Systems and 45 per cent owned by VT Group. The new company will be chaired by Sir John Parker, also chairman of National Grid, and its chief executive will be Alan Johnston, previously managing director of AgustaWestland, the helicopter maker and a one-time Cammell Laird worker.

The move requires approval from VT shareholders at a meeting on 30 June. Assuming that approval is received, the new joint venture company will become operational on July 1.

A spokesman for VT Group said that contracts with the MOD for the aircraft carriers will be signed soon after that date.

The new aircraft carriers, Queen Elizabeth and Prince of Wales, will measure 920ft by 230ft and carry 40 warplanes.

The prospect of the construction programme has sparked a revival of shipbuilding in the last four UK shipyards and companies have dramatically increased their numbers of shipbuilding apprentices.

Babcock and Thales UK are also part of the consortium building the warships.

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