Policy paper

Aerospace Sector Deal: one year on

Updated 13 February 2020

Background

The UK’s aerospace sector is a world leader in the manufacture of engines, wings and advanced systems. It directly employs 115,000 people across all parts of the UK and is worth £36 billion a year to the economy.

Building on the existing strong relationship between the sector and government, through the Aerospace Growth Partnership (AGP) sector council, the Aerospace Sector Deal was launched on 6 December 2018. The deal is helping industry move towards greater electrification, accelerating progress towards reduced environmental impacts. This has been delivered through greater investment in research and technology, improving productivity across the sector, a focus on increasing diversity and a drive to identify the future skills needed in the sector and put appropriate workplace based opportunities and training in place (apprenticeships and T Levels).

Ideas

As part of the Sector Deal, and in an effort to help meet the Future of Mobility Grand Challenge, through the Industrial Strategy Challenge Fund the government committed an investment of up to £125 million in the Future Flight Challenge which, when matched by industry, will deliver a £300 million programme. This challenge will help transform the way people, goods and services fly, through increasing the electrification and autonomy within aircraft.

Future Flight will support the development of new technologies in the UK - from freight-carrying drones, to urban air vehicles and hybrid-electric regional aircraft. The challenge will also develop the supporting ground infrastructure, regulation and digital systems that are required to safely integrate new aircraft into the airspace. This investment will help position the UK as a world leader in new aviation products and markets worth over £500 billion to 2050.

The challenge was launched in August 2019 with applications to phase one closing in November 2019. More than 200 organisations applied and following independent evaluation, 150 applicants representing over 110 organisations, including new entrants, were shortlisted to attend a 2-day workshop in February. Those attending the workshop represented a diverse range of organisations from across the aviation sector in terms of size, geography and capabilities. Phase 2 will commence later in 2020 and will look to invest, as a first round of funding, up to £60 million of government and industry money over 12 to 18 months.

The Future Flight Challenge builds on the ongoing strategic £3.9 billion research and development (R&D) aerospace technology research programme delivered with the Aerospace Technology Institute (ATI) and industry. To date, this co-funded programme has invested £2.6 billion across 299 projects involving 331 individual companies and organisations, including 203 small and medium enterprises (SMEs), across all parts of the UK.

The projects supported by this programme help ensure the UK remains a global leader in the industry through the development of cutting-edge technologies, which also help air travel reduce its environmental impacts. The programme also supports a number of projects developing new, innovative technologies for use on future aircraft.

The ATI published its updated strategy document in 2019 to help direct future R&D investment activities that will keep the UK globally competitive whilst helping to develop technologies that reduce the sector’s environmental impact. These technologies will focus on future propulsion systems, complex structures and complex aircraft systems and how they can be delivered with greater electrification and autonomy; address future sustainability and mobility challenges.

Through the strategic ATI programme, support is also provided to SMEs to take forward R&D activities. The first call for the National Aerospace Technology Exploitation Programme (NATEP) closed in December 2019 having received 23 applications. Successful applicants to the programme will be informed in February. Applicants will benefit from guidance and support from technology managers and larger customer companies as they enter a structured R&D process and develop their innovative technologies. This will encourage companies to continue their journey investing in R&D activities helping to grow their businesses into successful, internationally competitive businesses.

People

Having highly skilled people entering and staying in the aerospace sector is critical to ensuring technology development and ongoing manufacturing activities support the UK’s continued ability to be globally competitive. The sector employs around 115,000 people directly, they are typically highly skilled and in high demand, both from other advanced manufacturing sectors and from competing countries. It is therefore important to ensure a good pipeline of talented people continue to enter the sector; this typically means reaching out to young people to encourage them into an engineering-based course.

At the same time as encouraging young people to enter the sector, industry are working with education providers to ensure the right types of qualifications and learning are available so these young people are suitably skilled to help design and deliver the technologies ‘of tomorrow’. These jobs will be focussed on developing technologies that continue to reduce the environmental impacts of the sector – green jobs. The sector undertakes a great deal of outreach activity across national skills and engineering exhibitions as well as directly talking to schools and universities in all parts of the UK. Industry also continues to provide places for apprentices across all areas of their business as well as contributing to the ongoing consideration and development of T Levels. Industry have worked to develop three new apprenticeship standards and in 2019 had over 7,000 apprenticeship starts.

Industry’s participation in these areas is reported back to industry through the Aerospace Growth Partnership skills working group to ensure as broad as awareness as possible.

As well as ensuring high-levels of education and training, promoting diversity in the sector is seen as a priority. Since its launch, the Women in Aviation and Aerospace Charter has secured 133 Signatories and 43 supporting organizations who have signed up to the Charter principles.

The Women in Aviation and Aerospace Charter work programme has 5 main pillars:

• Research and Report

• Networking and Communications

• Best Practice Sharing

• Driving the Charter and Signatory Development

• Financing and Funding Strategy

In addition to the Aerospace Sector Deal, the Charter has also been embedded within Department for Transport’s Aviation 2050 – The Future of UK Aviation consultation.

The Charter has also provided active support to other industries embarking on their own gender diversity journeys such as the Women in Maritime Charter, the Women in Technology Charter, and the Women in Defence Charter.

Infrastructure

Investment in infrastructure in the aerospace sector is highly expensive and typically ensures a presence in the location for a number of years. Therefore, when investment decisions are being considered the technology offer and ability of the supply chain to meet the needs of the customer are critical.

By supporting the development of R&D and helping create competitive supply chains, longer-term infrastructure investments are expected to follow. Examples of this include Dowty Propellers new Headquarters which opened in December 2019 or Meggitt’s investment of £130 million for a new global headquarters in Coventry, due to open in 2020. Investments such as these, and others, ensure the economic benefits generated by the UK’s aerospace sector are felt across all parts of the UK helping to ‘level-up’ those areas.

Alongside investments in new facilities, industry will also be continually investing in new machinery to help deliver cutting edge new technologies or to ensure up to date processes are being used to improve capability and/or productivity.

Business Environment

Developing new technologies is only part of the approach to securing maximum economic value to the UK. Having a supply chain that can manufacture products at rate and deliver them on time is equally important. It is this, coupled with the technology offer, that helps suppliers win business.

To support this approach, the £20 million Supply Chain 21 Competitiveness & Growth (SC21 C&G) aerospace productivity improvement programme was launched in September 2019. This is a pilot programme to help improve the competitiveness of ~60 aerospace supply chain companies. Initial interest has been strong with over 120 expressions of interest for the available places.

SC21 C&G complements the existing, and intensive, Sharing in Growth (SiG) programme. Following the ongoing successes of the programme, BEIS awarded SiG a further £6 million to ensure its continued full-scale operation in 2019 and take a further 6 companies on to the programme. Since its implementation in 2013, SiG has delivered over £4 billion in contracts retained and/or won and provided over 3 million hours of training to the 64 beneficiary companies.

Looking ahead

As we move through 2020, government, industry and the AGP will continue to work to ensure the UK’s aerospace sector remains globally competitive, including through the delivery of technologies that help reduce the environmental impact of air travel.

Government will continue to invest in R&D and will continue to support the Future Flight Challenge. Government and industry will also work together to ensure the successful delivery of a productivity improvement programme for the supply chain. There will also be further calls of NATEP to encourage small innovative companies to undertake structured R&D.

As the majority of the UK’s aerospace sector is outside of the south east of England, many regions and individuals will benefit from investments and economic impacts generated by industry and the higher than average wages paid by the sector. This will also apply to the Devolved Administrations where the sector has a strong presence - Bombardier in Northern Ireland, Spirit Aerospace in Scotland and Airbus in Wales.

The sector is also continuing its engagement with Local Enterprise Partnerships (LEPs) and held a second engagement event with the automotive sector and those LEPs with an interest in these sectors.

Industry and government will also continue to engage constructively and openly though the Aerospace Growth Partnership to challenge each other and focus on issues that are strategically important and which will help the long-term economic impact of the sector in the UK.

Implementation plan

Date	Milestone
January 2020	Aerospace & Automotive Local Enterprise Partnership engagement event
February 2020	Future Flight Challenge 2-day workshop for shortlisted applicants
February 2020	Sector Deal One Year On event
March 2020	Interim Women in Aviation & Aerospace report on diversity in the sector
March 2020	Aerospace Technology Institute R&D funding call
March 2020	NATEP funding call
May 2020	Aerospace Technology Institute R&D funding call
July 2020	Second anniversary of the Women in Aviation and Aerospace Charter anniversary
July 2020	Farnborough International Airshow – a bi-annual international airshow that provides an opportunity to showcase, to the international and domestic aerospace community, all the innovative activity underway in the UK to support and grow the sector and which makes the UK an attractive place to invest in
August 2020	Aerospace Technology Institute R&D funding call
Autumn 2020	Future Flight Challenge phase 2 funding award (£60 million)
October 2020	National Aerospace Technology Exploitation Programme funding call