Conclusions and recommendations
1. The
UK aerospace industry (UKAI) requires Government help to reduce
barriers to trade in terms of technology transfer, especially
in the US. We recommend that the UK Government should continue
to press the US Administration to support increased access to
US technology for UKAI companies through an International Traffic
in Arms Regulations (ITAR) waiver for UKAI companies. (Paragraph
48)
2. We conclude that
the challenge from the emergent competitors, be they lower-cost
economies or other developing economies, is growing. Subcontracting
abroad is increasing as a result of lower cost or more favourable
incentives, such as public R&D investment. As far as we can
see, there has been no official study into the 'threat' from emerging
competitors to the UKAI. Research which has been carried out has
tended to focus only on UKAI's developed competitors. We recommend
that the UK Government should undertake a study of these emerging
aerospace industries as soon as possible to gauge the future challenge
to the UKAI. (Paragraph 53)
3. We believe that
the development of aerospace equipment has become increasingly
complex, risky and expensive and in some cases these investments
may represent a proportionally larger financial commitment by
the companies concerned than investments which are currently supported
by repayable launch investment (RLI). We recommend that the DTI
adopts a more positive attitude towards applications by equipment
makers for RLI, and that it takes into account the size and resources
of equipment companies when assessing whether or not projects
require RLI to go ahead. (Paragraph 73)
4. 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 our 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. (Paragraph
76)
5. 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. (Paragraph
77)
6. We are content
that the DTI holds a 'watching brief' over the implementation
of the National Aerospace Technology Strategy (NATS) by the Aerospace
Technology Steering Group (ATSG) and the co-ordination of funding
for the NATS by the National Aerospace Strategy Group (NASG).
However, we believe that there is a wider public interest which
needs to be addressed. We therefore recommend that a report be
made to Parliament annually by the Government on the progress
that has been made towards the NATS. This should, as a minimum,
include a report on the work of the ATSG and the progress that
has been made by the NASG. (Paragraph 100)
7. Aerospace is a
technology-intensive industry and the benefits from public sector
investment in aerospace R&D are not confined solely to the
industry itself. This is witnessed by the number of 'technology
spill-overs' into the wider economy, which has allowed other sectors,
such as the UK motor racing industry, to be world beaters. We
recommend that the work of the National Aerospace Strategy Group
should be prioritised and the public funding requirements of the
NATS be granted so that the vision of the Aerospace Innovation
and Growth Team, that the UK will continue to be recognised as
one of the world's most innovative and productive locations, can
be realised. (Paragraph 101)
8. The work of the
Aerospace Innovation and Growth Team (AeIGT) is a prime example
of what can be achieved for an industry through the willing collaboration
of all of its stakeholders. The UKAI is one of the most important
sectors of the UK economy and we believe that, through their support
for the AeIGT, this has been recognised by the Government. (Paragraph
112)
9. With a target date
of 2022 for the implementation of the recommendations of the AeIGT's
Report on the future of the UKAI, we believe it will be some time
before a meaningful assessment of progress towards the vision
of the AeIGT can be made with any degree of confidence. However,
the progress which has been reported to us suggests that a good
start has already been made. We have no doubt that our successors
will wish to investigate the competitiveness of the UKAI before
2022. The progress made towards the AeIGT's vision, that by 2022
"the UK will offer a global Aerospace Industry the world's
most innovative and productive location, leading to sustainable
growth for all its stakeholders", would doubtless be one
of the main areas that they would wish to review. (Paragraph 113)
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