Press release

Multi billion pound UK commitment to long-term industrial strategy

Government and industry today pledged an ambitious long-term partnership and £2 billion investment in aerospace manufacturing.

  • £2 billion joint government-industry funding for aerospace to secure 115,000 high value jobs
  • pledge of further funding for other key sectors

Government and industry today pledged an ambitious long-term partnership and £2 billion of investment to retain the UK’s position at the forefront of world aerospace manufacturing.

The industrial strategy for aerospace has been developed by government and industry. Launched today 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 £500 million 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 £500 million with industry funding by working in partnership with business.

Underpinning the aerospace strategy is £2 billion of investment over seven years to create a UK Aerospace Technology Institute (ATI). Government will provide over £1 billion 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.

Deputy Prime Minister Nick Clegg said:

Aerospace experts with highly specialised skills are working hard to make sure the UK remains Europe’s number one aerospace manufacturer. We’re doing all we can to maintain this jewel in our crown, which is why government is working hand in hand with industry to inject £2 billion into a unique long term strategy to maintain Britain’s position as the centre of aerospace technology.

The UK’s best technical experts can ensure we remain the world’s preferred supplier and continue to build and design the planes of the future - lighter, quieter, faster, and more fuel efficient.

Business Secretary Vince Cable, who chairs an aerospace business leaders group, said:

This long-term commitment of £2 billion 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.

There is still much to do, but today’s announcement is a significant step forward and there is no doubt that it will help safeguard this valuable sector to the benefit of the nation for decades to come.

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.

Notes to editors

1.The aerospace industrial strategy can be found at Lifting Off – Implementing the Strategic Vision for UK Aerospace.

2.The government is committing over £1.6 billion during the next 10 years to back our Industrial Strategy. This includes more than £1bn new money from HM Treasury and more than £500m from the Department for Business, Innovation and Skills (BIS) budget. Working in partnership with business we will aim at least to double this with industry funding. Government funding for the ATI will reach £150 million annually by 2014/15 and will be committed for a seven-year period. Industry is committed to matching this investment.

3.The ATI will consist of a small core team (30-50 staff) mainly seconded from industry and academia. It will provide better alignment between early research (such as that supported by the Engineering and Physical Sciences Research Council) and cross-sectoral R&D innovation delivered through the Technology Strategy Board. Larger scale projects will be delivered through the Technology Strategy Board by collaborative groups from industry and academia. Some projects will be carried out in the High Value Manufacturing Catapult centres, maximising the return on the government’s investment in these facilities.

4.The Aerospace Growth Partnership (AGP) brings industry and government together to tackle barriers to growth, boost exports and grow the number of high value jobs in the UK. The AGP is jointly chaired by Michael Fallon, Minister of State at the Department for Business, Innovation & Skills (BIS), and Marcus Bryson, CEO of GKN Aerospace and Vice President of ADS.

5.The government’s industrial strategy is about looking to the future, presenting a long-term, whole of government approach to supporting British business, giving them the confidence they need to invest, hire staff and grow. Long-term strategies are being developed in partnership with industry in key sectors including nuclear, education and the information economy – which will be published in the coming months.

6.Today’s announcement builds on the government response to Lord Heseltine’s report “No Stone Unturned” which was also published today. As part of our work on a long term industrial the government are accepting the overwhelming majority of Lord Heseltine’s 89 recommendations. At the heart of this is action to reverse excessive centralisation, freeing local areas from Whitehall control and giving businesses and local leaders the power and the funding to do what they need to achieve their potential. The full response is available at: www.hm-treasury.gov.uk

7.The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set four ambitions in the ‘Plan for Growth’ (PDF 1.7MB), published at Budget 2011:

  • to create the most competitive tax system in the G20
  • to make the UK the best place in Europe to start, finance and grow a business
  • to encourage investment and exports as a route to a more balanced economy
  • to create a more educated workforce that is the most flexible in Europe.

Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.

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