Summary
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Motorsport and aerospace are two industries in which the United Kingdom is a world leader. The United Kingdom can boast the second largest aerospace sector, after the United States and is a global leader in motorsport. Both epitomise the best of UK manufacturing and form key parts of the higher value-added economy. They are knowledge-intensive, utilise a highly skilled work force and consistently invest in Research and Development (R&D) to improve their products and maintain their edge over international competition. We believe that the future success of the UK economy will be based on these types of industries.
The aerospace sector is highly competitive with many existing competitors in Europe, the US and Japan. Many developing countries are also trying to establish themselves in the sector and capture a share of the market. The Government needs to ensure that British aerospace firms can compete on a level playing field. While the United Kingdom, like many other nations, invests in the aerospace industry its ability to do so is currently subject to a United States' complaint in the World Trade Organisation (WTO). The Government needs to robustly defend its right to support this industry through Repayable Launch Investment, which is much less generous than our competitors, while simultaneously exploring alternative measures of support that could be adopted in the case of an unfavourable outcome. We are also concerned that the UK aerospace sector has access to export trade credit at less favourable rates and through a more complex system than other countries. The Government needs to address this imbalance so that customers do not have difficulties in securing the credit they need to purchase aircraft.
When examining the motorsport industry we were struck by the lack of understanding and effective engagement by Government. The industry repeatedly told us that the Government was "complacent" about UK leadership in this sector and that previous attempts by the Government to support the industry had failed to produce meaningful results. The Government appears to be unaware of these concerns. We are not content with the Government's current plans to take forward its work with the sector through the UK Automotive Council. That approach runs the risk of treating the motorsport industry purely as a subsection of the automotive industry, ignoring many of the features which make the industry world beating. Instead, we recommend that the Government establish a dedicated motorsport policy team within the Department for Business, Innovation and Skills (BIS).
Small and medium-sized enterprises (SMEs) play a very important role in supporting both sectors, but they have been worst hit by the recession. We are encouraged by the steps the Regional Development Agencies (RDAs) have taken to support efforts to drive up the quality of SMEs but believe that the Government needs to do more to encourage high-performance engineering firms to diversify into other sectors. This would not only better insulate them from future economic shocks but also provide a mechanism for spreading best practice across different sectors; in particular the "motorsport ethos"—which provides a rapid, tailored response to engineering challenges.
The Government wants academia and businesses to work more closely together to better align the education system with the skill needs of industry and to encourage more effective research. This is a laudable ambition but we are not convinced that the Government has yet articulated how it intends to bring about the kind of culture change it wishes to see in this relationship.
Both sectors require a highly skilled workforce able to adapt, develop and deploy new technologies successfully. This should be addressed by all parts of the education system, from encouraging children to study science and maths at primary and secondary school to ensuring the universities design their engineering courses with the needs of industry in mind. Further education also plays an important role in training the workforce, but the sector skills council need to properly engage with industry, something that is not always happening at present.
The UK's competitive advantage in these industries is based on its constant investment in R&D to discover new and innovative ways to improve their products and processes. However too often the excellent research done by universities is never developed to a stage where companies are able to take it forward and create a new product. Much of that research is left to languish in the "valley of death". To combat this the Government has established a number of centres of excellence designed to bridge this gap between academic and corporate research.
We fully support these new centres but have concerns over how the Government ran the procurement process that led to their establishment. In particular, the National Composites Centre of Excellence in Bristol was only established after a process that was at best disorganised. There was a lack of clarity about the exact specification of the project and those bidding for the centre were asked to provide additional information at short notice, sometimes less than 24 hours. This was an unhappy example of mismanagement by Government and lessons need to be learnt to ensure that future projects are more professionally run.
Not all R&D is done through research organisations; much is conducted by SMEs working on the ground. These companies have benefitted greatly from the Government's R&D tax credits. We fully support this scheme.
During the course of our inquiry it became clear that both industries believed that they were burdened by a "non-green image", which they believed, put them at odds with government policy. However, much work is being done in this area, often supported by the Government. In addition to financial support for "green" research, the Government is considering the potential for using motorsport to challenge people's perception of environmental issues. We welcome the fact the Government is considering this as an area of action and agree that motorsport has the potential to shift the debate about carbon emissions away from a dry conversation about carbon budgets, towards a more valuable debate on the role that technology and innovation can play in addressing climate change and other environmental issues.
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