INTERNATIONAL COMPARISONS OF PUBLIC
SUPPORT FOR AEROSPACE
74. We believe an important criterion on which Government
support for the UKAI should be assessed is how it compares with
the support given by foreign governments to the UKAI's main competitors
and collaborators. Unfortunately, such comparisons are difficult
to make, since not only do methods of support vary from country
to country, but much of the support given to individual companies
by governments is treated as confidential, especially for defence-related
Dr Sally Howes, Director General of the SBAC, told us that the
AeIGT Report on the UKAI had estimated that support for research
and technology (R&T) ( a stricter definition of R&D) by
the US Government had provided investment to US civil aerospace
companies worth £620 million in 1998, compared to government
support of £120 million in Germany, £50 million in France
and £20 million in the UK.
These figures suggested that the public support given to the UKAI
for R&D was less than that given to the aerospace industries
of the UKAI's main competitors by their governments.
However, the AeIGT Report readily admitted that its conclusions
took no account of government support for UKAI R&D through
RLI and R&D tax credits.
Further, since the report was published, increased support for
the UKAI through the DTI's new Technology Programmes has also
75. We asked the DTI if they could shed some light
on the overall level of government support provided to the UKAI's
main competitors through programmes such as RLI. They told us:
"in order to get an idea of this you would need to see individual
contracts. You would need to get into the detail of the agreements
that the governments strike with the companies and of course that
is highly commercially sensitive".
We were concerned with the apparent lack of UK Government information
about the support given by other countries to their aerospace
industries and asked the DTI how they would know other countries'
aerospace industries were not being subsidised beyond 'reasonable
grounds'. They told us: "there are a number of checks and
balances in the system. For some launch investment, the European
Commission will scrutinise the details. Under the 1992 agreement
[The 1992 EC/US Agreement on Trade in Large Civil Aircraft], there
are some transparency arrangements which we had in the US, where
both sides would provide the other with details of support given
76. We recommend that the
Government conducts a study into the subsidies which are available
to other aerospace industries within the EU. If such a study suggests
that the UK's European competitors are giving aid to their aerospace
industries which could infringe state aid rules, this should be
reported to the European Commission at the earliest opportunity.
If other EU Member States appear uncooperative, the UK Government
should ask the European Commission to carry out its own investigation
of assistance given to the aerospace industry across the EU.
77. We conclude that Government
support for UKAI R&D has fallen over the last few years. The
recent re-organisation of DTI funding programmes has opened new
opportunities for aerospace R&D funding through the Technology
Programmes, such as the Collaborative Research & Development
grants and Knowledge Transfer Networks programmes. Aerospace companies
are also able to benefit from R&D tax credits. There is, as
yet, little evidence as to whether these new funding streams will
compensate the UKAI for the loss of the Civil Aircraft Research
and Technology Demonstration (CARAD) programme. However, evidence
from the distribution of latest round of Technology Programme
funding, where the aerospace industry received a quarter of the
£60 million, suggests to us that they might.