Work on the programme to upgrade the tanks will begin this year, with Challenger 3 having an expected in-service date of 2027. Full operating capability for Challenger 3 is planned for 2030.

The long-awaited upgrade will see the UK’s Challenger 2 tanks equipped with a new 120mm High-Pressure L55A1 smoothbore main gun capable of firing newer rounds and programmable ammunition.

Other upgrades will see the tank fitted with a new upgraded engine the features a new cooling system as well as suspension design to improve fire-on-the-move accuracy.

The Challenger 3 tank will also feature a target detection and tracking system and fitted with new long-range cameras as part of a day/night imaging system. The upgrades will cost roughly £5.4m per tank.

RBSL said the contract would create and sustain 450 jobs within the UK supply chain and a further 200 jobs at RBSL.

Work will be led from RBSL’s Telford plant with support from the company’s other sites.

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Commenting on the announcement, Defence Secretary Ben Wallace said: “This represents a huge shift in the modernisation of our land forces through the increased lethality of Challenger 3. This pioneering new technology allows us to deliver immense warfighting capabilities in battlespaces filled with a range of enemy threats.

“The £800 million investment will also create hundreds of highly-skilled jobs across the country ensuring our soldiers benefit from the very best of British engineering.”

The MOD says Challenger 3 will be ‘fully digitised’ and able to travel at speeds of up to 60mph. The tank will also feature increased range and be able to carry more ammunition.

The decision to upgrade the tanks was confirmed in the UK’s recently published Defence Command Paper. The MOD has said the tank will be the ‘most lethal’ in Europe.

Defence Equipment and Support (DE&S) director land equipment Major General Darren Crook said: “This is a significant step forward for Defence and UK industry as we continue to develop and modernise our fleet of land vehicles and I am looking forward to working closely with our industry partners to deliver the very best capabilities we can for the British Army.”

The Challenger 2 tank that will be upgraded to Challenger 3 has been in service since 1998 without any major upgrades to the vehicle before now.

RBSL board chairman John Abunassar said: “What a moment for RBSL, for our Armed Forces, and for UK prosperity. We are delighted to make this announcement and solidify the

return of armoured vehicle engineering to the UK. This announcement comes after years of hard work and collaboration with our customer, especially in the recent extraordinary circumstances brought about by COVID-19.

“The British Army will receive a world-class capability. RBSL, Vickers Defence Systems at the time, handed over the first Challenger 2s to the British Army over 25 years ago, and it is a great deal of pride for our engineers to take this next step together too.”