3 The Motorsport Industry |
The current state of the industry
42. The United Kingdom's motorsport industry
is a global leader, and is of greater economic significance than
is generally understood.
The sector consists almost entirely of SMEs, predominately based
in "motorsport valley", in southern and central England.
It is centred around Silverstone, which forms the hub of the industry.
It comprises of approximately 4,500 small businesses involved
in both high performance engineering and supporting services.
The industry's annual sales exceed £6 billion of which approximately
60% are exports.
The industry supports 38,500 full and part-time jobs, including
It is extremely R&D intensive, with 30% of sales revenue being
reinvested in research.
In addition to manufacturing, many businesses deliver services
to the sport for example, commercial rights, IP management, race
track and events management, public relations, marketing, sponsorship,
finance, legal, freight, logistics, insurance. These services
account for 30% (£1.7 billion) of the industry's annual turnover.
43. The impact of the recession on the motorsport
sector has been far more pronounced than on the aerospace industry.
One reason for this is because it is dominated by SMEs. Mr Manahan,
the Managing Director of Lola, a motorsport SME, explained to
us how the recession had affected his business:
From an SME's perspective in the motorsport world
which is not involved particularly in Formula One, it has been
In addition to the fall in orders the recession has
had a negative impact on sponsorship, with teams scaling back
their operations, and lower turn-out and participation in the
sport at the grass roots level. Mr Aylett, Chief Executive of
the Motorsport Industry Association (MIA), reported that:
The commercial side of the sport has probably lost
15 to 20% of its sales value. In terms of the UK, whilst we dominate
the world of Formula One, which is a high profile statement and
is probably the one which attracts most commercial sponsorship,
so therefore unfortunately disproportionately as a nation around
the world we have been hit probably more definitely than anywhere
else. An estimate we have is that Formula One has scaled down
its employees from maybe 500 to 600 in a team and they are in
a process of reducing that to maybe 250 to 300 per team maximum.
So we will see in the order of a thousand to 1,500 jobs dropped
out of Formula One alone. Formula One is only the tip of the pyramid;
each Formula One team has approximately 200 local suppliers so
it will go down to those SMEs to some degree.
44. The Motor Sport Association (MSA) told us
that the recession had led to a "predictable collapse [
in the corporate market both in terms of hospitality and events"
which it argued would have a "significant impact" on
the associated service industries. It also said that the full
impact of the recession on sponsorship would not be fully felt
until later in 2010 when current sponsorship agreements expire.
45. The Government has acknowledged that motorsport
companies have had to focus on cost issues to mitigate the effects
of the recession. They cited a survey conducted in December 2008
which reported that three quarters of motorsport companies were
undertaking cost reviews and cost reductions. It also found that
companies were also looking at other opportunities with 67% of
those companies diversifying into new markets and more than half
developing new products and services.
46. Despite the world beating position of the
UK motorsport industry and the difficulties that the recession
has caused, the message we heard repeatedly from industry was
one of government complacency. The Motorsport Industry Association
Many countries envy the success of [the UK's] high
value-added industry cluster and have active Government programmes
to try and capture a shareoften initiated by investment
in hosting an F1 race. Such moves represent a genuine and constant
threat to the leadership position enjoyed by the UKan economic
asset which requires less complacency and better awareness and
active appreciation from HMG.
47. Mr Aylett of the MIA said that if complacency
was a "feeling of contentment and an unawareness of danger"
then the Government was certainly guilty of it:
We are in danger, through complacency, of allowing
this jewel in the crown, [
] to just slip through our fingers.
He went on to argue that:
The Government does not seem to be aware of the danger
and they are allowing the industry to meet these dangers, but
] that is really where Governments can play a spectacularly
48. The MIA highlighted the fact that the Government
had not commissioned a comprehensive survey of the industry since
2000 as an example of what it saw as complacency. The MIA told
Ministers and Departments regularly rely on these
(significantly outdated), figures in their answers and speechesyet
they are undoubtedly increasingly inaccurate figures. [
is hard to imagine any other country so consistently ignoring
such a vibrant and innovative cluster and not wishing to understand
and celebrate its growing success.
It is a mark of complacency that you would not wish
to look at where we are now because that is really what will set
the strategy for the future. I would not now like to hazard a
guess as to how valid those figures are.
49. The New Automotive Innovation and Growth
Team (NAIGT) Report, published in May 2009, set out the Government's
vision for the automotive industry over the next twenty years,
but that did little to address the concerns of the motorsport
industry. Mr Aylett
reported that the motorsport industry was "not consulted
at all" during
the drafting process, and that the Report itself contained only
a few brief references to motorsport and just one recommendation
relating to the industry.
50. Lord Drayson, Minister for Science and Innovation,
at the Department has acknowledged that the Department needs a
more active engagement with the motorsport industry. In a speech
he gave to the European Cleaner Racing Conference in Birmingham
on 13 January 2010 he conceded that "UK motorsport and Government
aren't talking to each other enough."
51. However, Lord Drayson's concerns do not appear
to have reached his Department, which does not seem to be aware
of the need to improve the quality of its engagement with the
motorsport industry. When we put the accusation of complacency
to Ian Lucas MP, the Minister responsible, he merely responded:
Who in the industry thinks it [the Government] is
We find the fact that the Minister was not already
aware of accusations of complacency deeply concerning. The UK
motorsport industry is pre-eminent internationally and we would
expect the Minister responsible for it to be properly briefed
on the industry's concerns. Furthermore, the Minister confirmed
that there was not a specified sector within BIS which was responsible
for motorsport but tried to reassure us that motorsport was "very
much integrated within the automotive team."
52. We were concerned by the
fact that the Minister appeared to be unaware of the accusations
of government complacency from the motorsport industry; whether
or not such accusations are well founded, the simple fact that
they are made so widely should be a matter of deep concern to
53. In the following section we consider those
government programmes and initiatives which are aimed at supporting
the motorsport industry.
UK AUTOMOTIVE COUNCIL
54. The establishment of the UK Automotive Council
was one of the key recommendations of the NAIGT Report of May
2009. The Government's response to the Report endorsed this recommendation
and organisation is now in the early stage of its existence. It
is designed to be "an advisory and consultative forum to
ensure a sustained high level conversation with the industry and
to put in place a long-term strategic framework for the development
of the industry."
Its aim is to:
- Create a transformed business
environment in the UK to provide a more compelling investment
proposition for the related industries;
- Develop further the technology roadmaps for low
carbon vehicles and fuels, and exploit opportunities to promote
the UK as a strong candidate to develop these and other technologies;
- Develop a stronger and more competitive supply
- Provide a stronger public voice for the industry
to support the value of the industry to the UK and to global partners,
- Ensure a strategic, continuous conversation between
government and the automotive industry.
55. In oral evidence the Minister suggested that
many of the industry's concerns could be addressed through a sub-committee
of the UK Automotive Council.
We want to see motorsport involved in that [the UK
Automotive Council] process, but we think that that is a model
that motorsport can fit into and we want to have them integrated
as part of the way that UK industry is approaching the automotive
56. However, we do not think that this response
is adequate. While clearly it is important that motorsport is
properly engaged with the Government's strategy for the automotive
sector, to conceive of motorsport purely as a sub-section of the
automotive industry ignores many important features of the industry
and is totally misplaced.
57. There is a large area of cross-over between
the aerospace and motorsport industries and the industry does
not think of itself as merely part of the automotive industry.
As Mr Aylett, Chief Executive, MIA, explained:
There is a good relationship between most of the
major aerospace companies and most of the leading Formula One
companies. British Aerospace is very public in its connection
with McLaren [
] Boeing, I know, are related to another Formula
One team. These major aerospace companies have gained relationships
with the top of our pyramid.
58. During our visit to Airbus in Bristol we
saw those relationships at first hand. Both industries are at
the forefront of high performance engineering, and we were shown
several examples of technologies and production methods that had
been tested in the motorsport sector prior to their adoption by
aerospace companies. Our visit to Brawn GP underlined for us the
similarity between the design of racing cars and aeroplaneswe
were told that "a Formula One racing car is only a low-flying
aeroplane, except that the aerodynamics are to keep them down
rather than up."
59. While we welcome the Minister's
promise to ensure that the UK Automotive Council engages with
the motorsport industry we do not believe that it should be the
primary organisation that takes forward motorsport policy. To
treat motorsport purely as a sub-section of the automotive industry
would be to ignore many of the features which have made it a globally
successful sector, for example its close links with aerospace.
We recommend that a separate, dedicated policy unit in the Department
be established to ensure that these links are properly made and
that the motorsport policy is fully integrated into developments
in automotive, aerospace and other high performance engineering
60. The Minister expressed a hope that the newly
established centres of excellence, which are discussed in more
detail in paragraphs 141 to 145, would act as a forum to enable
cross over between the two sectors:
We cannot take motorsport out of the automotive sector,
but clearly we do not want to limit it either because there are
specific cross-overs because of the nature of the research and
innovation that goes on in motorsport that apply to other sectors.
61. He also argued that there was a large degree
of cross-over between the skills of those who work in the two
industries, commenting that:
It is quite clear that a lot of people move between
the two sectors, because similar skills are involved a lot of
the time and, therefore, the knowledge transfers that are happening
can be very beneficial to both, and I am sure that both industries
can learn from other.
62. The Minister is right to
acknowledge the skills required by the two industries are very
similar, and we believe that this should be reflected in the Department's
approach to the industry. The rationale behind the creation of
a single department with responsibility for both business and
skills was to align skills training more closely with the needs
of industry. The Department should no longer merely think of industries
in terms of what they manufacture but also the skills they require.
Failure to do so would undermine the value of the new arrangement
of departmental responsibilities. The skills that underpin both
the motorsport and aerospace industries have much in common, and
it would be damaging to pigeonhole the motorsport industry in
the general automotive sector.
MOTORSPORT DEVELOPMENT UK
63. The Government has made attempts to engage
with the industry. In 2003 Motorsport Development UK (MDUK) was
established as a partnership between the sport, industry and Government
to "lead, coordinate and prioritise development activities
and drive growth and improvement of both sport and the industry."
MDUK received £11.5 million of funding from the then Department
of Trade and Industry and from the four Regional Development Agencies
in which 80% of the sector is basedEast Midlands Development
Agency, Advantage West Midlands, East of England Development Agency
and the South East England Development Agency. This funding was
spent on a range of projects including: improving the skill base
of the sector, business development programmes, outreach schemes
and improving energy efficiency of vehicles.
Its work has now concluded and an evaluation Report produced,
in June 2009, commented that:
MDUK was innovative and ambitious, based on a robust
rationale to support the competitiveness of a pan-regional industry
cluster, and in doing so deliver a national sectoral policy at
This was also the view of the Minister, who remarked
that "it made some very positive contributions to the working
relationship between the Government and the motorsport industry."
64. However, despite this positive evaluation
from Government, industry representatives were less than impressed
with MDUK. The MIA's evidence referred to the organisation as
the "now, thankfully, defunct Motorsport Development UK".
It clearly believed that MDUK failed to live up to its description
as a "partnership" between the sport, industry and government:
Despite its Industry Advisory Panel's insistence
that any programme must be 'industry-led', the DTI failed to honour
this vital requirement. The consequence was an ongoing lack of
vision, relevance and industry understanding of the original proposals.
The rigidand seemingly needlessinsistence that all
project management and delivery be contracted to a 'remote-from-industry'
third party, resulted in poor delivery and development of the
Similarly, the Motorcycle Sport Political Strategy
Group (MSPSG) argued that the initiative "did not deliver
what the sport or industry required and in many areas sought to
re-invent what was already in place, leading to duplication, inefficiency
65. The poor administration of MDUK appears to
have dampened the industry's enthusiasm for engaging with Government.
Mr Aylett said that during the period when MDUK was active his
attitude to government involvement had become:
Please stop. Please stop loving us in this manner
] We'll do okay without the Government's love and affection.
We've appreciated it as best we can, but no more.
However, Mr Aylett went on to tell us that the attitude
of the industry was now beginning to change:
Now what we are saying [
] is that we would
love to re-engage on a national scheme that recognises the national
sport, the national industry and the importance of a national
cluster of sport and industry.
66. We asked witnesses if they knew how the Government
would take forward its work with the motorsport industry following
the end of the MDUK programme. Mr Aylett told us:
I had Baroness Vadera's promise in March to deal
with it and she then said she would meet in June, and I was reminded
on the train this morning that we are now in December, so that
is the complacency of which we spoke.
The Minister told us that he did not envisage there
being a successor organisation to MDUK, but asserted that: "I
think I have made clear already that I would like to see a phoenix
rising through the UK Automotive Council."
We have already made clear that we are not satisfied with this
67. The clear view we received
from industry was that Motorsport Development UK (MDUK) failed
in its aim to act as a partnership between industry and Government.
We are particularly worried that it might have lessened the industry's
willingness to work with Government. The Department needs to reflect
on why the evaluation report's conclusions differed so greatly
with those of industry. We invite the Department to use its response
to this Report to outline how it will ensure that future engagement
with the motorsport industry is more successful and what lessons
it has learnt from the failure of MDUK to do so effectively.
Health of the sport
68. The health of the motorsport industry is
closely linked with the health of the sport itself. There is an
obvious symbiotic relationship between the two; the industry exists
to support the sport, and Britain's ability to continue to hold
high profile events is based to a significant extent on the strength
of its manufacturing base. The Motor Sport Association's submission
The strength of the UK's domestic motorsport scene
is a fundamental factor in the success of the UK motorsport industry.
The high-performance engineering sector grew up in the UK precisely
because the majority of leading motorsport teams were based here.
Mr Hilton, Chief Executive, Motor Sport Association
(MSA) highlighted the importance of a vibrant sport for the security
of motorsport manufacturing. He asserted that "if Silverstone
were not there I think probably over ten years [the motorsport
industry] would start to drift away; the Formula One teams would
start to drift away."
69. We embarked on our inquiry at a critical
time for motorsport, as Silverstone was in the process of renegotiating
the rights to host the British Grand Prix with Bernie Ecclestone.
These negotiations were vital, not only for the future of the
British Grand Prix but also for motorsport more widely and the
industry that supports it. Our visit to Silverstone left us in
no doubt about the importance of a successful conclusion to these
negotiations, and we called publicly for a swift conclusion to
secure the future of the British Grand Prix.
We are delighted with the final agreement which has secured the
future of the British Grand Prix at Silverstone for the next 17
congratulate all those involved in the negotiations to retain
the British Grand Prix for concluding a deal which has secured
the event's long-term future. This was important not just for
the sport in Britain but also for the continued strength of the
UK's motorsport industry.
70. The MSA has calculated that their competition
licence holders spend a total of £240 million each year on
motorsport, the majority of which is put back into the UK economy
either through engineering companies or the associated hospitality
and tourism industries.
Its evidence also contained further information about the economic
contribution that the sport makes to the UK economy:
[...] a recent economic impact assessment confirmed
that total expenditure of £54m within the UK was directly
attributable to the 2008 British Grand Prix, while Wales Rally
GB, the UK's round of the World Rally Championship, brings £10m
per year into the Welsh economy.
The Autocycle Union has calculated that in 2008 the
major motorcycle races generated £100m in the UK.
71. According to the MSA there are currently
33,000 people who hold competition licence holders in the United
Kingdom (from eight years of age upwards) and 750 motor clubs
which together have a combined membership in excess of 200,000.
The MSA issues permits for 5,000 events a year and holds a database
of 15,000 registered volunteer marshals and officials.
72. However, despite the relatively large number
of people involved in the sport at a grass roots level Mr Hilton
expressed concern that high-profile events such as the Grand Prix
distorted people's perceptions of the sport, and left them with
the impression that it was an activity in which only the wealthy
could afford to participate:
People see Formula One and they think that motorsport
is a very rich sport. If you come a little way down, just 5% down,
for the other 95% it is not a rich sport, it is people from their
own pockets paying for their own car and enjoying their sport.
It creates that illusion of wealth which the sport actually does
It appears that this is a mistake the Government
has made. During oral evidence it became clear that the Minister
did not appreciate the number of people involved in the sport:
The peculiarity of motorsport is that, in terms of
participation, there is not a large number of individuals who
are involved in motorsport compared to most mass participation
73. We were surprised that the
Minister appeared not to be briefed about the level of participation
in motorsport. We can only assume that this is again the result
of a lack of specialist knowledge about motorsport in the Department,
which would be remedied by the presence of a dedicated policy
GOVERNMENT SUPPORT FOR THE SPORT
74. The MSA highlighted the fact that other countries
were keen to develop their own motorsport industries and hosted
large-scale motorsport events in order to kick-start their industry.
It asserted that developing nations "are prepared to invest
at Government levels to secure leading motorsport events such
as Formula 1 and the World Rally Championship."
By contrast, the British Grand Prix is one of only two races on
the FI calendar not to enjoy financial support from Central Government.
The MSA believed that this "weaken[ed] the position of the
UK (and its motorsport industry) in the face of significant and
ever-increasing international competition."
That said, our witnesses acknowledged that the Government had
provided indirect support for the British Grand Prix through investment
to improve the quality of roads leading to Silverstone.
75. However, not everyone was in favour of direct
government support. When we visited Silverstone, the site's Managing
Director, Richard Phillips, made it clear that there was no appetite
for financial support from the Government. He was intensely proud
of the fact that his track was one of the few in the world that
made a profit and that it did so without government subsidy.
76. The MSA proposed a number of areas in which
Government could support the sport, including changes to regulations
that surround the organisation of races and changes
to their relationship with the Forestry Commissions in England
77. The Motor Vehicles (Competitions and Trials)
Regulations 1969 govern the organisation's motorsport events in
the United Kingdom. Under the current regulations it is not possible,
outside of the Isle of Man and Northern Ireland, to change the
speed limits on roads while races take place. This would require
the temporary suspension of the Road Traffic Act. The MSA have
argued that this "severely disadvantages the UK against other
countries who can make the decision to close roads at a local
level. It can also deprive local communities of the benefits associated
with creating and hosting suitable events."
Mr Hilton expanded on this point:
In this country, you cannot [use public roads for
races] because the Road Traffic Act allows you to close the road,
but it does not allow you to suspend the Road Traffic Act, so
you cannot do more than, say, 30 miles per hour on the road. You
have to have an Act of Parliament to actually close the road and
suspend the Road Traffic Act, which is barmy, it is absolutely
78. On the issue of the Forestry Commission,
the MSA was unhappy about the amount of money that they had to
pay for access to forests where they stage rallies. Their evidence
explained that the Forestry Commission received more than £1
million from UK motorsport for a total of 43 stage rallies which
took place on its land. While it supported the common access agreement
to maintain safety standards, the MSA recommended that Government
"allows for separate negotiations on forestry charges."
They also argued that the flat fee structure was unfair as the
repair work that was required after a rally varied depending on
in Scotland you have got granite, so we do not do
any damage to the forests. If you come down south to the south
coast, it is sand, we do a lot of damage and we have to put that
damage right by paying for it, so to have a common fee across
the whole of the UK cannot be right.
79. A flourishing and vibrant
sport is vital to ensure that motorsport manufacturing remains
in the United Kingdom. We have not had time to investigate the
Motor Sport Association's concerns about the regulations surrounding
races and Forestry Commission in detail but we recommend that
the Department, together with the Department for Culture, Media
and Sport engages with the sporting bodies to assess the effects
of these two concerns on the sport. We further recommend that
the Department provide us with their assessment of these concerns
in its response to our Report.
80. The Government's previous attempts to engage
with the motorsport industry have worked through regional organisations,
primarily the East Midlands Development Agency (EMDA). This has
left industry representatives with the belief that it is not being
treated or is recognised as a national industry of national importance.
We heard that while it was Government's initial intention to run
a national programme for the industryit did not deliver
on that intention:
We steadily drifted away from a national programme
run through a national governing body in the national interest
to deal with a national cluster. It was eventually handed to a
region, which happened [...] to be a region with only 15% of the
81. Mr Aylett told us that he believed that
the Government had used the motorsport industry as an experiment
to see how an RDA might be able to lead a national programme:
At the time a senior civil servant said, "This
is going to be an interesting experiment", and it did prove
to be interesting and, I have to say, a failure. Unfortunately,
the concept of a region taking a national programme [did not work
]. I do not blame EMDA [East Midland Development Agency]
at all, I do not blame the people who were given the task, they
were a region and they were leading it as best they could to fulfil
their regional strategy as opposed to their national base. Scotland
had nothing to do with it, Wales walked away from it and, instead,
here we were with a national industry begging for support for
a national sport just tied up in the delivery mechanisms of regions.
82. Additional challenges were presented as a
result of this experiment because Silverstone crosses the boundaries
of two RDAs, the East Midlands and East of England Development
Agency. The MIA said that this caused problems for them as a national
trade body because "suppliers never even know where an RDA
begins and ends and nor should they care."
83. When we raised this with the Minister, he
acknowledged the need to balance regional and national demands.
He argued that "RDAs have to be conscious of the national
priority that this industry has and bear in mind the overall picture
in their dealings with the industry as a whole."
That may be correct, but it is not, and should not, be a substitute
for government involvement in an industry of such importance to
the United Kingdom.
84. We have repeatedly emphasised
the fact that the UK motorsport industry is pre-eminent internationally,
yet the Government continues to perceive it as a niche area of
the automotive sector and not as an industry in its own right.
We disagree with this assessment. Motorsport is an industry of
national importance and it must feel able to engage effectively
with Central Government. It should not be restricted to engagement
at a regional level. The establishment of a dedicated motorsport
policy unit would represent an important first step in ensuring
that this happens.
85. We remained concerned that
the accusations of government complacency are not being taken
seriously by Government. The fact that there is no team or section
with responsibility for motorsport within the Department only
gives strength to that view. We find it hard to imagine another
country which would sideline such an important industry. We reiterate
our belief that the Department needs to establish as a matter
of urgency, a policy team which will have responsibility for the
industry. Furthermore, we recommend that the first objective of
that team is to commission an updated survey on the health and
needs of the industry.
67 UK Trade and Investment, The British Grand Prix
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