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Government and industry pledge £2bn for UK aerospace manufacturing

18 March 2013

The government and industry have announced an ambitious long-term partnership and pledged a hefty £2bn investment in UK aerospace manufacturing.

Launched today (Monday 18 March) by Deputy Prime Minister Nick Clegg during a visit to Airbus in Filton, it sets out how they will ensure the UK continues to thrive in the face of increasing global competition and is able to exploit rapid changes in technology.

Ministers also confirmed an additional £500m of funding for other key sectors in its industrial strategy where the UK has a comparative global advantage, such as agricultural technology and automotive. Life Sciences One Year On was published in December 2012 and strategies in all eleven key sectors will be published in the coming months to help secure sustainable future growth in the economy. The government aims to at least double the £500m with industry funding by working in partnership with business.

Underpinning the aerospace strategy is £2bn of investment over seven years to create a UK Aerospace Technology Institute (ATI). Government will provide over £1bn funding with industry matching this amount.

The ATI will allow industry and academic researchers to develop technology for the next generation of quieter, more energy efficient aircraft. It will secure in the UK the research and development activity necessary to win work on future aircraft programmes. It is estimated this will secure up to 115,000 high value jobs in aerospace and its supply chain in the long term.
Business Secretary Vince Cable, who chairs an aerospace business leaders group, said: “This long-term commitment of £2bn investment in aerospace Research and Development - half government, half Private - will anchor the sector in the UK for a long time to come.
“Our aerospace sector already supports more than 3,000 companies and employs 230,000 people across the UK. The potential for growth is huge. By 2031 the civil aerospace market will be worth in excess of $4.5 trillion.”
Marcus Bryson, CEO of GKN Aerospace and Land Systems, and co-chair of the Aerospace Growth Partnership said: "Today’s announcement is the culmination of a lot of hard work from ministers, civil servants, academics, ADS and industry through the AGP. The creation of an Aerospace Technology Institute puts the UK in a strong position to deliver the technologies, skills, capabilities and investment we need to take advantage of the exciting growth opportunities that are forecast for the sector.”
To ensure the UK aerospace industry remains second only to the United States the industrial strategy focuses on investment in four key, high value areas of modern aircraft where the UK excels – wings, engines, aerostructures and advanced systems. With the next generation of aircraft set to feature substantially different technologies from those used today this will ensure our position is protected in the face of growing international competition.

Improvements enabled by the ATI are expected to lead to a reduction in CO2 emissions of more than 100 million tonnes each year from next generation aircraft - equivalent to taking 20 million cars off the road around the world.

The aerospace industrial strategy also tackles access to finance issues faced by the sector - due to the heavy up-front investment costs and long timescales required to make a return. An Aerospace Finance Forum has been established that will see aerospace companies working with the banks and professional services firms. This has already delivered a commitment from Barclays and RBS to create a network of regional aerospace finance specialists.

This sector strategy is a key component of the government’s work on industrial strategy. The aim is to give businesses, investors and the public greater long-term certainty and to maximise the opportunities for promoting growth.

Steve Radley, policy director at the Engineering Employers' Federation (EEF) hailed the announcement as a positive development for the Aerospace sector and the companies in its supply chain. "The growth partnership has begun to set the course for ensuring the UK aerospace sector has the expertise and capacity to be world leading for the long term and, getting ahead of the curve in the development of key technologies is an important part of this," he said. "Government’s matching commitment is needed to make this a reality.

“Companies and sectors with the potential to deliver new technology and long term growth in the economy will do it where these is a coherent, consistent and certain approach from government. Tough choices on spending are the norm now so the government’s approach to funding industrial strategy priorities must be transparent and span the technology cycles of the sector they support.”

The policy paper, Lifting Off: Implementing the Strategic Vision for UK Aerospace can be downloaded here.

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