TRADE AND INDUSTRY COMMITTEE
COMMITTEE OFFICE HOUSE OF COMMONS
7 MILLBANK LONDON SW1P 3JA
Telephone: 020 7219 5777/5779
PN 36 of Session 2004-05
PUBLICATION OF REPORT: THE UK AEROSPACE INDUSTRY
The Trade and Industry Committee's review of the UK aerospace sector was published today as the Committee's Fifteenth Report of Session 2004-05, The UK aerospace industry, (HC 151-I). The main conclusions of the review are summarised below.
The UK aerospace industry remains one of the most successful sectors of UK manufacturing. It is one of the UK's major export sectors, generating a trade surplus of just over £2.5 billion in 2003 and, directly or indirectly, it provides employment for more than a quarter of a million people. As with UK manufacturing in general, however, productivity in the aerospace sector lags behind the industry's main international competitors. The Committee was encouraged by signs that the productivity growth of UK aerospace is beginning to outpace these competitors. It noted, however, that competition from emerging economies is growing and will present a new challenge for the sector.
The Committee also noted a trend amongst UK aerospace companies towards subcontracting or outsourcing abroad as they seek to reduce costs, or are attracted by incentives such as publicly-funded R&D. While the UK aerospace sector itself invests heavily in R&D, Government support for R&D has fallen over the last few years. However, the recent re-organisation of DTI R&D funding has opened new opportunities for aerospace R&D funding through the Department's Technology Programmes. Aerospace companies can also benefit from R&D tax credits and repayable launch investment. While there is, as yet, little evidence of whether the new funding streams will compensate the sector for the loss of previous support programmes, the Committee was encouraged that in the latest round of Technology Programme funding the aerospace sector was awarded £15 million, or a quarter of the funds on offer.
The Committee commended the work of the Aerospace Innovation and Growth Team (AeIGT) as a prime example of what can be achieved for an industry through the willing collaboration of its stakeholders. With a target date of 2022 for the implementation of the recommendations of the AeIGT's Report on the future of the industry, it will be some time before a meaningful assessment of progress can be made with any degree of confidence. The Committee felt, however, that the implementation programme had got off to a good start.
Copies of this Report may be purchased from the Stationery Office (enquiries: 0870 600 5522) and the Report will be available on our website soon after publication at http://www.publications.parliament.uk/pa/cm/cmtrdind.htm.
For further information please call the Committee Office on 020 7219 5777/5779.
5 April 2005