Full speed ahead: maintaining UK excellence in motorsport and aerospace - Business, Innovation and Skills Committee Contents

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.[67] 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.[68] The industry's annual sales exceed £6 billion of which approximately 60% are exports.[69] The industry supports 38,500 full and part-time jobs, including 25,000 engineers.[70] It is extremely R&D intensive, with 30% of sales revenue being reinvested in research.[71] 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.[72]

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 catastrophic.[73]

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.[74]

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. [75]

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.[76]

Government complacency?

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 argued that:

Many countries envy the success of [the UK's] high value-added industry cluster and have active Government programmes to try and capture a share—often initiated by investment in hosting an F1 race. Such moves represent a genuine and constant threat to the leadership position enjoyed by the UK—an economic asset which requires less complacency and better awareness and active appreciation from HMG.[77]

47.  Mr Aylett of the MIA said that if complacency was a "feeling of contentment and an unawareness of danger"[78] 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.[79]

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 effective role.[80]

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 us:

Ministers and Departments regularly rely on these (significantly outdated), figures in their answers and speeches—yet they are undoubtedly increasingly inaccurate figures. […]It 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.[81]

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.[82]

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.[83] Mr Aylett reported that the motorsport industry was "not consulted at all"[84] 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.[85]

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."[86]

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 complacent?[87]

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."[88]

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 the Department.

Government assistance

53.  In the following section we consider those government programmes and initiatives which are aimed at supporting the motorsport industry.


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."[89] 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 chain;
  • Provide a stronger public voice for the industry to support the value of the industry to the UK and to global partners, and
  • Ensure a strategic, continuous conversation between government and the automotive industry.[90]

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.[91]

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 industry.[92]

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.[93]

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 aeroplanes—we 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."[94]

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 industries.

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:[95]

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.[96]

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.[97]

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.


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."[98] 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 based—East 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.[99] 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 regional level.[100]

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."[101]

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".[102] 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 rigid—and seemingly needless—insistence that all project management and delivery be contracted to a 'remote-from-industry' third party, resulted in poor delivery and development of the required aims.[103]

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 and confusion."[104]

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.[105]

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.[106]

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.[107]

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."[108] We have already made clear that we are not satisfied with this arrangement.

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 argued that:

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.[109]

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."[110]

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.[111] We are delighted with the final agreement which has secured the future of the British Grand Prix at Silverstone for the next 17 years. We 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.[112] 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.[113]

The Autocycle Union has calculated that in 2008 the major motorcycle races generated £100m in the UK.[114]

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 not have.[115]

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 sports.[116]

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 team.


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."[117] 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."[118] 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.[119]

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 and Wales.

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."[120] 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 barmy.[121]

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."[122] They also argued that the flat fee structure was unfair as the repair work that was required after a rally varied depending on the location:

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.[123]

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 industry—it 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 economic activity.[124]

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.[125]

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."[126]

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."[127] 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 is an international showcase for UK expertise, July 2008 Back

68   Ev 120 Back

69   Ev 120 Back

70   Ev 70 Back

71   Ev 120 Back

72   Ev 120 Back

73   Q 124 [Mr Manahan] Back

74   Q 125 [Mr Aylett] Back

75   Ev 117 Back

76   Ev 67 Back

77   Ev 120 Back

78   Q 156 [Mr Aylett] Back

79   Q 156 [Mr Aylett] Back

80   Q 156 [Mr Aylett] Back

81   Ev 126 Back

82   Q 159 [Mr Aylett] Back

83   http://www.berr.gov.uk/whatwedo/sectors/automotive/naigt/page45547.html  Back

84   Q 176 Back

85   New Innovation and Growth Team, An Independent Report on the Future of the Automotive Industry in the UK  Back

86   http://www.bis.gov.uk/cleaner-racing-conference  Back

87   Q 265 Back

88   Q 259 Back

89   Ev 74 Back

90   Ev 74 Back

91   Q 263 Back

92   Q 259 Back

93   Q 154 [Mr Aylett] Back

94   Visit to Brawn GP, see Annex Back

95   Q 260 Back

96   Q 267 Back

97   Q 260 Back

98   Ev 68 Back

99   Ev 68 Back

100   Ev 68 Back

101   Q 283 Back

102   Ev 122 Back

103   Ev 125 Back

104   Ev 116 Back

105   Q 167-168 Back

106   Q 168 Back

107   Q 170 Back

108   Q 281 Back

109   Ev 118 Back

110   Q 143 Mr Hilton Back

111   http://www.parliament.uk/parliamentary_committees/bis/bispn2_0910.cfm Back

112   Ev 118  Back

113   Ev 118 Back

114   Ev 118 Back

115   Q 144 [Mr Milton] Back

116   Q 286 Back

117   Ev 119 Back

118   Ev 119 Back

119   Q 147 [Mr Aylett] Back

120   Ev 119 Back

121   Q 148 Back

122   Ev 119 Back

123   Q 148 Back

124   Q 162 [Mr Aylett] Back

125   Q 162 [Mr Aylett] Back

126   Q 164 [Mr Aylett] Back

127   Q 320 Back

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