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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 173-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE BUSINESS, INNOVATION & SKILLS COMMITTEE
MOTOR SPORT AND AEROSPACE INDUSTRIES
Tuesday 15 December 2009 MR CHRIS AYLETT, MR COLIN HILTON, MR ANDREW MANAHAN and MR MIKE DICKISON Evidence heard in Public Questions 123 - 219
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Business, Innovation & Skills Committee on Tuesday 15 December 2009 Members present Peter Luff, in the Chair Roger Berry Mr Michael Clapham Lembit Öpik Ian Stewart Mr Anthony Wright ________________
Examination of Witnesses Witnesses: Mr Chris Aylett, Chief Executive, Motorsport Industry Association, Mr Colin Hilton, Chief Executive, Motor Sport Association, Mr Andrew Manahan, Managing Director, Lola Group and Mr Mike Dickison, Principal Lecturer in Automotive Engineering, Coventry University, gave evidence. Q123 Chairman: Gentlemen, welcome to the last meeting of the Business Innovation & Skills Committee this decade and the last but one of this particular inquiry into the motor sport and aerospace industries. As you know, we are looking at what more, if anything, needs to be done in public policy terms to secure the future of the motor sport and aerospace industries, high in engineering skills and an important part of the economy in the UK, and of course we are aware of the very close relationships between motor sport and aerospace which I am sure we will explore during this session. You have all given us written evidence and we are very grateful for that and appreciative of that. Can I ask you to begin by introducing yourselves one by one and just say a sentence or two about who you are in the broader context of our inquiry. Mr Hilton: Colin Hilton, chief executive of the Motor Sport Association. The MSA is the governing body of all motor sport in the UK. Mr Manahan: Andrew Manahan, the group managing director of Lola, an SME in Huntingdon, the oldest manufacturer of racing cars in the UK which has recently diversified into the defence and aerospace sector. Mr Aylett: Chris Aylett, chief executive of the Motorsport Industry Association, which is the world's only trade association focused on the business of motor sport. We have our international headquarters here in the UK, the majority of our members are British based and we work closely with our sports governing body. Mr Dickison: I am Mike Dickison, I am from Coventry University, I am responsible for automotive R&D programmes amongst other things and I am also responsible for industrial placements of students in the automotive and niche vehicle industries. However, that is a relatively recent post. Up until early this year I was in a vehicle consultancy company for the whole of my career mainly dealing with niche vehicles. Q124 Chairman: Thank you very much. Obviously the Committee, which was in Silverstone three weeks ago, was delighted by the announcement that the Grand Prix has been secured for the UK, which has its own importance in securing the industry in the UK we realise so we are very grateful for that. That is the good news but it has been a bit of a difficult time recently for the industry in many respects because of the recession. Would any of you like to paint a picture of the impact of the recession on the motor sport sector, both from a sport and engineering perspective? Mr Hilton: If I can answer for the sport side. We have figures because statistics come back to us and we were expecting about a 10% downturn. We have been pleasantly surprised that towards the end of this year against last year we were only about 3% down on licence holders, that is the people who hold licences, and also on activities, which is the number of people entering events across the UK. What we have seen is a big shift in people moving down, so people who are normally at the expensive end of the sport have gone for cheaper opportunities. Also we have seen a huge hit on corporate activities - corporate sponsorship and hospitality - and that is down about 50%. So day-to-day stuff, hardly affected but the commercial end of the sport has been hit hard. Mr Manahan: From an SME's perspective in the motor sport world which is not involved particularly in Formula One, it has been catastrophic; the amount of sponsorship that is now available in motor sport at our level. I am talking basically about the jewel in our crown, our involvement in Le Mans racing teams. From the perspective of an SME such as Lola, and we do not manufacture under the umbrella of sponsorship, we design and manufacture a race car for sale as a commodity to people and teams, be they private or works, who want to buy one to race it. It is a product like anything else. We have seen in everything from the Le Mans series all the way right through to the recent decline of the A1 Grand Prix very, very bad news for Lola on the racing front. Q125 Chairman: It has been very difficult for you? Mr Manahan: Very, very difficult. Q126 Chairman: So have the reductions in sponsorship and team budgets impacted you? Mr Manahan: Very much so. That is the driver for it. Pretty much anybody who is going to go motor racing is either going to be funding it privately or through sponsorship one way or the other. Most publicly you can see things like ING, a financial sector company, pulling out of motor sport, and there are quite a few big name sponsors who have pulled out of motor sport at a very high level. But at a low level as well money is very hard to come by for the lower formulae, if I can call it that, to achieve sponsorship at this time too. We have seen it even since the time we submitted the written evidence to this Committee when there were still one or two motor manufacturers left in Formula One at that stage and some of them have since gone down the road. It is not the most politically acceptable thing to be seen to be motor racing when you are having cars stockpiled and possibly turning down or losing jobs in companies. So we have seen it certainly on the ground being a motor sport manufacturer; we have certainly seen a big effect in the racing industry. Mr Aylett: Just to explain where we see it, motor sport is split into two sectors in terms of its income-earning, one is in the service sector and one is in the engineering sector. Lola comments very clearly are about the engineering sector. The interesting fact is how the consumer has reacted to sports entertainment, whether people watch more television, and indeed they have because Sky TV has had quite an up-take in that because, sadly, people have more time to watch sport on television but nevertheless sport entertainment has surged, and in that sense it is relatively buoyant. Some of the figures in terms of attendance have been very good this year, and I think Colin will comment on that later. So in terms of the spectacle it has held up, it has not collapsed; it has not boomed as the cinema world has done but it has kept up as entertainment. That is quite critical in terms of resolving the sponsorship problem because the sponsors are involved because they want an audience, so maintaining the audience is quite essential. In terms of the engineering side, it is split into two, the commercial side of motor sport which again Lola work within and then there is the hobbyist, if you like, the people who just enjoy two-wheeled or four-wheeled sport, and I refer back to Colin on both of those. So there are two levels of the sport. In the commercial area, which is the one which creates to some degree the high profile jobs, although right across motor sport there are jobs, there are nearly 4,000 companies in the UK which rely on this industry. 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. However, it is nonetheless holding up relatively well compared to some other industries, I have to say. Q127 Chairman: I suspect your time will come later, Mr Dickison, unless there is something you want to say now? Mr Dickison: Briefly, our students spend their third year in industry and we have students going into Formula One teams and various motor sport teams, and we have noticed that it is harder to get placements now and sometimes it is on the basis of instead of being paid it needs to be voluntary, so it is getting tougher. But we still have students going out into the industry. Chairman: I am sure these themes we will explore later in the evidence session. I will move on to Roger Berry. Q128 Roger Berry: Since the onset of the recession, many SMEs have diversified into other areas - aerospace, defence and so on - to what extent has that enabled them to weather the recession and to what extent has that compensated for difficulties in motor sports? Mr Manahan: It has been absolutely and utterly essential. We would be dead without it, quite simply. If we were relying on just the motor sport business to keep Lola afloat - it is a very, very simple thing to say - we would be dead. One of the things that motor sport has, and I have come from more than 20 years in the defence and aerospace industry to spending my last two at Lola, and something which actually every single day never ceases to amaze me is how fast we do things. It is a bit of a joke that in the defence and aerospace world there is a 16-week rule; if you want to change something on a drawing, put a little bit on a widget, anything, the answer will always be, "16 weeks". Sixteen weeks is a lifetime in the motor industry; 16 days is almost too late in motor racing. The whole thing about motor racing is innovation and time, and they were two things which from my experience I found sadly lacking in the defence and aerospace industry. At this time, when we have two active theatres going and urgent operational requirements, it seemed to me a very good proposition to try to sell what we had into the defence and aerospace sector, which has been very successful for us. Everything from UAVs to radar systems to comms systems and underseas systems in marine, and that is one of things I would like to think Lola pioneered a little bit and certainly Chris and his organisation are extremely active in trying to spread that message into the motor sport arena to try to get others to follow suit, and it has been very successful. Q129 Roger Berry: Have the motor sport to defence initiatives and motor sport to aerospace initiatives been instrumental in bringing this about, or would it have happened anyway? Mr Manahan: For me, I did them because I happened to come from the defence and aerospace sector but for other companies who have not got people running their companies who have been in defence and aerospace, then initiatives like Chris is running, are very useful and valuable and essential I would say. Mr Aylett: It is very interesting. The value of time is one of the resources we are all running out of and really gaining in value every day, every minute, and motor sport uses its time very profitably and they do not realise how rare that is in an engineering delivery sense - they really do not - because perforce they would lose their customers without delivery on time. Strangely enough, because they are focused, they are so very focused, they never recognised their abilities to diversify, they did not realise these jewels they had which Andrew has spotted. It probably did need the MIA with Lord Drayson in Defence and Lord Astor but we also pioneered motor sport to aerospace with the SPAC, motor sport to marine with the BMF, and motor sport to defence. I think motor sport to defence has captured not the limelight but the heat of the moment because urgent operational requirements were made for motor sport, they are in field, instant demand, requiring innovative engineering solutions, and that is the thing at the moment. We are beginning to build good relationships in marine but there is not quite the urgency. Aerospace we found hard, which we will have to get back to, because we are an unregulated industry but innovative and in a non-regulated form, so we are really tremendous partners to aerospace because we can go off, test and develop, but the legislation involved in aerospace, the accreditation, the processes through safety, slow it down. Q130 Roger Berry: You mention Lord Drayson, to what extent has Government been involved? Could Government have done rather more or less? Should it have done more or less integrating these sectors together? Mr Aylett: I have never sat in one of these chairs before and I suppose one could answer that financially Government has put not one penny piece in this programme and that is probably a death knell for me asking for any further support! They could say, "You are succeeding without it, why would we bother?" In actual fact it was led by Lord Astor and Lord Drayson, so they were the kind of sparring partners in the other place, and they kicked it off, and then they left it to the intuition of businessmen who needed to face up to business opportunities. This is the pump-priming period and I have always thought that if after just one year, maybe two, they have made significant successes together with no money at all other than that we have rented barns and done little table top displays, the lower key we did it the happier we would be, but in actual fact with Government support carefully planned through industry, it would have made a significant effect faster. I cannot deny that. But we did not ask and we did not get. Roger Berry: Thank you. Q131 Mr Clapham: When we look at our competitors, are we unique in that diversification with aerospace? Does it help us to keep the lead because we have some competitors who are chasing close behind us? Mr Manahan: Do you mean competitors internationally? Q132 Mr Clapham: Internationally, yes. Mr Manahan: Absolutely. Outside I was having a chat with Mike. I was in Malaysia last week or two weeks ago, looking at the investments they have put into the composites aerospace industry. What Chris mentioned a while ago about motor sport into aerospace, yes, it is more difficult, yes, there are regulations, but they are achievable. One of the things we did at Lola was to set ourselves up to get AS9100, which we have achieved, and we will achieve NADCAP as well at some stage once I can afford to do it. When I went to Malaysia I saw, quite shockingly for me - I know I am Irish but I am a passionate British industrialist - investment in the composites technology for the future at state level which left me absolutely frightened rigid. What I saw was an incredible and politically driven strategic positioning of a South East Asian Muslim country I know but they are taking composites into aerospace very, very seriously. Where am I coming from? They do not have the front end yet, they do not have the engineering, they do not have the design, they do not have the tooling; when they do we are finished. I know this sounds dramatic but when they get that, we are finished. Right now we have, I would say, with a lot of help, a five year lead, maybe more, but they will buy that, they will get it, they will acquire it. Unless we invest in keeping our lead in that innovation, in that design, in that expertise, we are finished in that particular sector because we can never compete on production costs. Mr Aylett: May I add a motor sport to aerospace thought to Andy's excellent comment. Malaysia have just acquired their Formula One team through the company that they acquired called Lotus, so they are now going to get access to the red hot kind of competition which Formula One is which drives this innovation. The company called Hexcel, which I met many years ago, do something like 2% of their turnover with motor sport but 98% of the innovation comes out of that relationship. I always remember that over dinner they said, "The things your chaps are doing are way beyond innovative terms", and when you have access to that that will expand their interest. I have to say that as I wander the world of motor sport the question is more about our competitors. I came back from America yesterday and they are in awe and very keen on knowing how to engage their defence industry with their motor sport industry, but their motor sport industry is not as advanced as ours so the engagement is going to be rather more difficult. However, it opens up a marvellous opportunity for Britain's motor sport industry to connect with the American defence industry. Boeing, for example, and others, are connected to our top level of motor sport. So there is a very exciting opportunity for us with the American defence industry. Mr Manahan: We have re-engineered a radar systems - we do a seven-piece petalised gap filling radar system - and each one of those petals has to be handleable by GI Jane as well as GI Joe and we have actually re-engineered the composite (because they are composite radar panels) in Lola via a UK company in exactly the manner which Chris is talking about for Lockheed Martin. Mr Aylett: I should also say that those of you who know the company Cosworth, which is equally prestigious, if I may say, to Lola, on our day in Parliament, the motor sport day, they were very keen on explaining that their defence successes were almost entirely with US defence and almost none with UK defence. They were not critical of it, they were just saying they did not know why it was. That is another company which could replace Andrew and say exactly the same, that they diversified their success and their innovation and have gone into defence very successfully. They make a very good case for the opportunity which exists. Q133 Ian Stewart: In my 20 years as a Transport and General Workers' Union full-time officer, the Working Time Directive was implemented. The Working Time Directive was a health and safety piece of legislation. Why do you think the motor sport industry should have an opt-out? Mr Aylett: We put out a questionnaire to the industry and we have a motor sport employers group in the industry. I would not want to sit and discuss it in detail, as a trade association I wanted to hear the employers' views. We have a motor sport employers group from the top all the way down to the smaller businesses. This is not a question whether it is good or bad legislation, the practicalities of operating in our particular sector and our particular skills base and the way we make our money, simply predicates that we could not do anything other than support an opt-out. For example, a 24 hour race, which if you like is the foundation of the success of Lola, demands that the workers are there for 24 hours, probably in unsociable conditions - I say that gently for those who read this later - and it is the same with Formula One and so on. They are paid well, they volunteer, in fact not only do they volunteer, they line up to volunteer to get involved in this because they want to understand and gain from the skill sets which are attached to team working, rapid delivery, rapid innovation. They are willing to do that. Our difficulty is just simply technical. Q134 Ian Stewart: A road haulage transport driver may wish to drive for 24 hours because he makes more money, but that is not sensible. What is the difference between that scenario and what you are describing? Mr Aylett: If I may say, and Andrew can explain this, a team goes to Le Mans with, say, ten mechanics, they are looking after one car which is running consistently for 24 hours without a break. There is no tacho in the cab, there are no stops for change of drivers, they have to run that car on television to earn the money from the sponsors who pay for the wages; they have to keep the car running. They cannot change the technological team support for that car in the middle of such an activity. Q135 Ian Stewart: Are you saying that because that is a 24 hour effort from the team they cannot change technical team members? What would you say to the union's assertion that this is just to stop more people being employed, that the contrary to that would be better with more technicians employed and involved in that 24 hours? Mr Aylett: For example, without going into the technology, if a data technician was working on the data for a particular race - and it may be they have flown for five hours, six hours to the other side of the world to deliver - they cannot generally transfer that knowledge to another human being in the middle of a competitive race. It is rather like half way round a relay race saying, "This chap has run too far, find another one to do the next 50 metres". It just would not be a sporting competition in the way it has been conceived. There is no question that you could re-write the whole structure of motor sport to accommodate changes of mechanics, changes of engineers, but there has never been a proposition that the sponsors would support such a thing. Mr Manahan: It could not be costed. I agree with the extreme example of a road haulage guy who would happily run 24 hours a day if it made him more money. Everybody can see that is obviously an extreme scenario. I would agree with everything Chris has said. If you take a look at any 24 hour race, put it on television, you usually see two or three mechanics asleep in the corner, so they do tend to shift to an extent on the 24 hour race. But the way we have to run the company means we have to be quite lean and contract-in staff when times are demanding and shrink them down when times are not. Actually the contractors which keep a lot of the SMEs going in motor sport are almost like a band of wandering minstrels, and they will work all day and all night. Nobody is advocating that we send them up chimneys or anything like that --- Q136 Ian Stewart: And they work on adrenalin? They are excited? Mr Manahan: These people love being in motor sport and they appreciate it is a little bit different ---- Q137 Ian Stewart: Would it be more costly to a company if they had more technicians employed during the 24 hour period? Mr Manahan: You are asking about the 24 hour race or the manufacturing? Q138 Ian Stewart: Earlier you were describing a situation where there was a 24 hour race and therefore, as Mr Aylett said, you cannot change the personnel. Mr Manahan: Yes. Q139 Ian Stewart: If you did change the personnel, would that be more costly? Mr Manahan: Yes. Q140 Ian Stewart: Is there a financial cost element involved in this decision to have an opt-out? Mr Manahan: I would say so, yes. Q141 Ian Stewart: I think that is very honest. Thank you. Mr Hilton: The same applies with the volunteers. When you have a 24 hour race running, if you had to have, say, three shifts of volunteers, perhaps 500, 600 volunteers around a circuit, you could never do it; you would never get that number of volunteers. They are there because they love the sport and they love what they are doing. You have to manage it so it is safe so you give people time off. Mr Manahan: I have to say, coming from other industries into defence and aerospace, I do find that the motor racing industry is bizarre in that. I have never seen - dedication is probably too strong a word - anything quite like the motivation of being involved in motor sport at the basic factory floor worker level; they would not want to do anything else. Mr Aylett: If I may say, I wrote on one of our notes that one of the speeches in the House of Lords pointed out that the success on track is enjoyed by everybody in the factory. There may be some chaps fast asleep in the pits because the wheels have just been changed so they get a catnap, but I can promise you, having been at the factories - I do not mean the front of factories, the Brawn front of house, I am talking about the chap who supplied the brakes - they will stay up all over the weekend just to watch the race and then cheer it home because they are very excited. I am not an engineer, I am an enthusiastic individual in every other way and I was stunned that engineering did not seem to engender that much enthusiasm and when I touched it in motor sport it is palpable. It is palpable and successful and that is something very unique; unique to have that size of workforce who are enthusiastic for an engineering success. It is pretty rare around the world. Q142 Chairman: We saw that for ourselves when we visited Brawn. They are still called Brawn, are they not? Mr Aylett: I think as of this week, yes. Q143 Lembit Öpik: We already have a picture of the health of the motor sport industries which you have described already, how important is the Silverstone 17 year deal to the future of motor sport in the UK? Mr Hilton: It is absolutely critical we have a British Grand Prix in this country. We are one of the founder members of the sport. About five countries came together to form motor sport over 100 years ago and as a founder member not to have a British Grand Prix not only influences the industry in this country, it affects our influence in the world of motor sport as a senior governing body. Also I think there is a halo effect. If you look where the Formula One teams are, mostly down that A43 corridor, it is the halo effect of Silverstone that has attracted them, and all of the companies are based in Silverstone and in the local area. Also I think you have the engineering skills there. Why are they all there? Because it is easy for them to move around. Most companies are within an hour's drive - High Performance, Formula One, and all the other companies. If Silverstone were not there I think probably over ten years it would start to drift away; the Formula One teams would start to drift away. That is a personal opinion. I defer to my colleagues. Mr Aylett: We have done some research because we were very concerned whether we were jingoistically saying we needed a British Grand Prix. This is the industry speaking, not the sport and clearly, Colin has explained from the angle of having a major sporting spectacle. The industry felt over a period of time it would erode our international reputation if we lost the Grand Prix. People then said, "How long?" How long is a piece of string? Over a period of time you would find that domination eroded; our friends in Malaysia would make a strength out of our weakness and so on. Would the motor sport value cluster, which is the leading cluster in the world, collapse overnight? Probably not but it would be weakened. Please remember that the battle to secure the Grand Prix is between one British company, CVC, and a British organiser, so Britain actually controls the rights to the event and also organises the event, so it was a win for Britain but rather a hard struggle to get them to agree terms. There was no question that securing it for a long period of time, and 17 years is almost a record --- Mr Hilton: It is a record, yes. Mr Aylett: It is the longest they have ever signed. It is a good commitment. We have a good company in CVC and now they are saying, "Let's get on with stimulating the sporting product for the next 17 years." I think you will find, if the Government deals with this correctly, there is a great opportunity to consolidate that over the years ahead and bring more business into motor sport valley with Silverstone as its heartland. Q144 Lembit Öpik: Does our focus on Formula One take away from other motor sports, because we do tend to focus on that? Mr Aylett: I have often asked this about the aerospace business, and it is such a diverse business; does a Fighter Jet take the thing away from the Cessna? I do not know. I think it probably does but you are still in the aerospace business. I am sure Andrew can capture the spirit of that. The industry prospers from the pyramid and trickle down effect from Formula One in every single way, whether it is the hospitality or whatever. It rises to the top. The best people want to be seen in Formula One and they have the budget for it, and then there is the second division and the third division and so on. It is our premier league. Mr Hilton: Just from a sports perspective, it does cause a vacuum underneath Formula One. All the funding is sucked into Formula One, so if you are looking for sponsorship for anything else, or even coverage in the newspapers, it is a really hard battle. It is fantastic to have Formula One and to have teams here but it does have an impact on the sport. Mr Manahan: Formula One is a tremendous jewel in our crown, for sure, in terms of British motor sport and its technology, but it does dominate. It does cause me a curious problem from time to time in that we are very close to that motor sport valley in Huntingdon and if one of my people that I spent a lot of money on training gets - I always call it somewhat comically the Willie Wonka Golden Ticket - the Formula One people knocking on his door, I cannot afford to pay him the kind of money that they pay, so I constantly lose very good, very well trained people to Formula One. I echo what Colin said, there is a vacuum underneath. Look at things like the A1 Grand Prix, which is great racing, really good wonderful racing between countries, a great contest, but, quite honestly, with your average sports fan the budget of attention he has for motor racing is pretty much dominated by Formula One. That is reflected in air time as well I think. It is the same in the States with NASCAR; NASCAR dominates in the States. The other formulae underneath that do struggle a bit for attention. I wish that it was a little more balanced but Formula One has done a fantastic job and no one can take that away from it. Mr Hilton: It also creates an illusion. People see Formula One and they think that motor sport 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. Q145 Lembit Öpik: Do any governments actually sponsor their Grand Prix? Do any nations sponsor their Grand Prix? Mr Hilton: All but two, I think, so there is only Britain, I think, that is not getting funding now from the central government funding, direct funding. Q146 Lembit Öpik: Would there be any benefit in it, or would we just be sponsoring something which is happening perfectly well already? Mr Hilton: Well, if you look at motorsport within the United Kingdom, in Ireland you have got the Cross-Border Rally which was brought to bring peace across the border and both governments are funding that, in Wales you have got the Wales Rally GB, funded by local government, and in Scotland now you have got the International Rally of Scotland, which is funded by the Scottish Executive. It is only England which, for some reason, has not managed to get the funding to bring people to this country, to fill bedrooms within 50 miles, and there is a £50 million contribution from the British Grand Prix, so we could never understand why we can get funding for the home countries, but we cannot get funding for England. Q147 Lembit Öpik: Is there any risk that we would lose some of our expertise and some of the industry abroad because we do not sponsor the Grand Prix or given that it is fairly circuitous, as Chris has already suggested? Mr Hilton: I think it is an industry question rather than one for us. Mr Aylett: It is a strange thing. Rather like that steady erosion that I mentioned, having spoken to lots of the other governments who do support, and some to a larger degree than others and some in a situation of sovereign states where they can use their funds and so on, they recognise the complexity of the UK funding, but they are surprised that, as we have the bonus of an industry which is paying its taxes at pretty substantial levels because they are profitable, there seems to be this complacency, the kind of, "Well, we'll go wherever we go and we'll see what the commercial world will bring and hope that CBC will strike a deal with these chaps at Silverstone". Now, again it is rather like my comment about defence, that we can just get on with it, and we have got on with it, and Silverstone has struck the deal, so I do not know whether we shot ourselves in the foot. I do think an interesting thing for Government is that they put in, and I forget the numbers, between 8 and 15 million to improve the roads to the Grand Prix and that was a bit of a struggle, but it was pushed through. You can now drive from the centre of London, if you are interested, straight up a dual carriageway, straight into the heart of a major event and, since you invested in that, they have pretty much always had a sell-out at the event, so it was in that sense of why are you investing for this single event, but it brought, for those of you who use that road, a very popular arterial trunk road that has improved the rest, so to say that the Government has not been involved in the success would be wrong, but could it be more involved? I would hope, and I am sure we all would, in order to keep the industry here, the sport would benefit from some government involvement. Lembit Öpik: When we question the Secretary of State for Transport, I am sure we will take account of that. Chairman: Perhaps a departure lounge! Q148 Lembit Öpik: This is a specific question for you, Colin. How important for motorsport are the issues you raised about the Road Traffic Act and the Forestry Commission in terms of the Rally? I know in Montgomeryshire that we take a lot of money from having the Rally, but it has always been quite precarious. Mr Hilton: There are two different issues. In the Road Traffic Act, the Motorsport Association acts as a department of the Department for Transport in that we provide the route authorisation of any event on the public highway, and we have been doing that for over 30 years. We are disadvantaged in this country because anywhere else in Europe and in Northern Ireland and the Isle of Man, you can actually close the public highways off-season in Wales, perhaps in Snowdonia, and have a hill climb out of Betws-y-Coed or somewhere and fill the bedrooms all around for that festival of sport. In this country, you cannot do that 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. I have written to every Secretary of State for Transport in the last 20 years to try and get that changed and have failed, so there is a huge opportunity just to make a slight change to legislation so that, with local authority approval, we could use the public highway for major events off-season with the public interest. The Forestry Commission is a different situation where we have a common access agreement for all the forests, apart from in Northern Ireland, and I think it is correct that we should do that because we have to ensure that we look after the environment, that we have health and safety within the forests and so on, but I think it is wrong that there is a monopoly with the Forestry Commission. We put over £1 million into the Forestry Commission every year just for 40 events. That is crippling our clubs, our clubs cannot afford that, and we should be able to negotiate separately with the home countries at least to try and get some different deals. In fact, it is wrong anyway because 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. Q149 Lembit Öpik: You may not know the answer to this, but is the McLaren company which deals with aero-engines the same as the McLaren company which deals with motorsport? Mr Hilton: We may have to defer that; I do not know the answer to that. Mr Manahan: The McLaren company that deal with aero-engines? Q150 Lembit Öpik: Yes, there is a very successful company which deals with aero-engines called McLaren and there is obviously the McLaren in motorsports. The reason I ask that is because, if they are the same company, that is an interesting synergy. Mr Aylett: I believe they are not. It might be Nicholson McLaren. McLaren itself does not make engines. The McLaren Formula One team does not make engines, it has them or had them from Mercedes or others, so I think it is unlikely. Q151 Lembit Öpik: That is a shame because I wanted to say I was flying a McLaren! Mr Manahan: As far as I know, there are three McLarens. Two of them are in the same group and that is McLaren Automotive, who make the McLaren-Mercedes SLR, for which we do the bodywork, there is the McLaren Formula One, and then there is Nicholson McLaren which was John Nicholson's company that make the engines that are separate. Q152 Lembit Öpik: So I might be flying a McLaren! Mr Aylett: I would say it anyway! I am sure you do! Lembit Öpik: No further questions in that case! Q153 Chairman: Before I hand on to Tony Wright, I would just like to pick up a couple of things which you said earlier which I have just been reflecting on. I do not think this has been in the evidence before, but, when we went to Bristol, we heard a lot of suggestions of the very close relationship between motorsport and aerospace and the wonderful opportunities. When we went to Brawn, we heard about the wonderful opportunities as well of a fast-moving environment that could transfer across into the aerospace sector very easily and actually help the aerospace sector make changes more quickly, and it is just what we heard when you were talking about the defence sector earlier on, but you said that it is actually more difficult than that because of the testing requirements, the safety requirements and legislative requirements in the aerospace sector. Now, I do not think we have had any evidence on that before. Either do you want to expand on that now, or do you want to drop us a note afterwards just explaining what those issues actually are because it is quite an important point you have made? Mr Manahan: For aerospace manufacturing, the traceability of the parts that you are making is critical to anything that flies. At the very minimum, your company, your SME, whatever it is that your company is in the chain, has to be at least AS9100-accredited which is a quality approval in the same way as ISO9001 is, but particularly geared towards aerospace. The Society of British Aerospace Companies, or ADS as they are now, I think they are a good port of call for any of them that wants to make that transition as well, and the SC21 initiative that they are running is also quite good and quite healthy there, but yes, there are legislative, if you like, safety/quality requirements that you have to have as a mandatory entrant into the aerospace side of things. Mr Aylett: I think the point I was making, in a sense, Chairman, was that the SME in motorsport tends to enjoy success because of its unregulated environment. In fact, it does, I will not say it tends to, it does, the fact that they can test and try out in probably dangerous circumstances. They move very quickly and then they engage with that, so, when that SME of that kind decides to attack the aerospace industry as opposed to urgent operational requirements in defence which do not need these things, it acts as a barrier. It is relatively expensive to acquire that accreditation, so SMEs, and I am saying that the average size of a company in motorsport is 23 employees with a turnover of £31/2 million, that is the average and it is quite an investment for them to head off into the aerospace business, so inadvertently it acts as a barrier. Q154 Chairman: But we were told, and we have heard this on a number of occasions, but we were told, I think, particularly at Brawn, that a Formula One racing car, in particular, is only a low-flying aeroplane, except that the aerodynamics are to keep them down rather than up, which is a very important distinction. Mr Aylett: That, if I may say so, is the higher-ranking companies that could easily do this. There is a connection between them, and I can tell you that Boeing are very closely related to one of the Formula One teams. Some of these things are confidential, but I would be happy if you wrote a note and I would ask the F1 to expand on it. 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, and I would not wish to go into the relationship, but they might wish to. Boeing, I know, are related to another Formula One team. These major aerospace companies have gained relationships with the top of our pyramid. Would that be right, Andrew? Mr Manahan: Absolutely right, yes. It is not terribly easy for the very small SMEs, the likes of the 20/30-staff SMEs, to embrace and to pay for the accreditations that you need. It is not terribly difficult to do, to be fair, but it is an investment in the future and that would be quite a difficult proposition for some of those people to bridge at the moment. Again, if there were some government-led industrial initiative to make that easier, such as you have done with SC21, then I think that would be a welcome addition. Chairman: Tony is going to ask you about those issues now really, I think. Q155 Mr Wright: Just to expand on the Government's support to industry, I think it has been mentioned, the complacency there appears to be in Government so far as the industry is concerned and certainly about the UK leadership in the motorsport industry. Does everybody believe that the Government is complacent, or is it just ignoring it and, if so, why do you think that is the case? Mr Hilton: To kick off just from a historic point, I do not think the Government has been complacent because it set up MDUK. They had a competitiveness panel, it must be, five or six years ago now and a lot of research was done and MDUK was set up to bring government funding into the sport and the industry, and there were one or two very good initiatives, there was Volunteers in Motorsport and we got some funding for that to get more volunteers into the sport. The problem was, I think, in the correct, transparent way, that a board was set up to direct that group, MDUK, based on the findings they had. It created its own head and went in its own direction and a direction which neither the industry nor the sport actually wanted, so I think that the Government has done the right things in the past, but unfortunately it just went off in the wrong direction. Q156 Mr Wright: Is it the case of putting the wrong people in the wrong place? Mr Hilton: I do not know what happened. I think the people who were actually on the panel, some of them were very experienced people, others perhaps were not, and the group of civil servants who got together seemed to deliver all the things that we did not want or duplicated what we were doing, though Chris may have a different view, but I do not think the Government have been complacent. Mr Aylett: I think you will be returning to MDUK later, but, let me just say, I looked up the word 'complacent' so that I knew whether I was being very insulting or very factual and I just wanted to be sure because it was in my report that I said it was. It is a "feeling of contentment and an unawareness of danger", in which case I disagree with Colin and I think the Government has been complacent because I wrote my first report to the Government in 2001 and I had it there for the DTI and the DTI picked up on it very quickly. We are in danger, through complacency, of allowing this jewel in the crown, as Professor Porter of Harvard says, to just slip through our fingers. I hate to say this, I am a strong Brit, but Britain does do that occasionally. It has a jewel and it sometimes does not know quite how to guide one and then it just allows it to slip because it is unaware of the danger. We are undeniably on 150-200 million TV sets every weekend, saying to people, "We're really good at this". Well, do not be surprised if the Chinese, the Japanese and the Germans and everybody else says, "Well, we would like a pop at that. It's a bit of entertainment. They can't even host a Grand Prix, they don't have that much interest, they build roads and so on". If I were a competitor, if I were Chinese or Malaysian, I would rub my hands with glee at the apparent, let us be gentle now, the apparent complacency because the Government does not seem to be aware of the danger and they are allowing the industry to meet these dangers, but in a general form that is really where governments can play a spectacularly effective role, to identify the danger, to help the industry move towards that danger, encourage diversification so that they have a much better base and so on. You allowed us to say where we disagree and I disagree with my good friend Colin; I think that there is a lack of awareness of the danger. Mr Dickison: I think there is a reasonable amount of support, and certainly I am thinking perhaps of lower-level motorsport, like track day cars, and the university is involved with a number of companies that are getting grants from Advantage West Midlands, and it is all biased towards making new vehicles more environmentally friendly, so there is not a sort of, "Here's some money. Go out and race and develop your cars". One example is we are working on a fully electric race car programme which will be the basis of a one-leg series, so yes, there is support there, but you have to make sure that you tailor your activities to suit where the funding is, but, from my point of view, I have found certainly that Advantage West Midlands have been trying pretty hard to do whatever they can to support the local, small vehicle manufacturers. Q157 Chairman: We want to come back and talk about the RDAs at some greater length. Mr Aylett: I must admit, I was talking about national governments, just to be clear. Q158 Mr Wright: We will go on to the question of RDAs in a little while, but surely is it not the case that perhaps the Government sees that the industry has been a huge success standing on its own two feet, it is going along, it is providing employment and it has certainly been a huge success on the basis that much of the Formula One companies are based in the UK? If there were an element of support that the Government could give, what sort of support would that take the form of? Mr Hilton: If I can talk certainly from the sport's perspective, I think the first thing would be that UK Sport and Sport England actually recognise us as a sport. We are constantly fighting the battle to say we are a sport, but we have been going through the process of trying to set up a charitable foundation to help young people get into the sport, to train them, to improve safety skills and so on, and continually the Charities Commission say, "Well, sorry, but you're not a sport. We can't allow you. We don't see that motorsport is a charitable activity", even though we have highly trained doctors and incident officers and so on, so I think the first thing would be yes, please recognise us as a sport and we can start working with Sport England and UK Sport. I think also the recognition of the skills that we bring, and I have mentioned that it is engineering, it is incident management, it is medical, there are all sorts of things that motorsport brings to society to help society and gets people out of their homes. The Grand Prix is 1,000 volunteers, the Wales Rally GB is 3,000 volunteers and none of them is paid and all of those people come out to help the sport. It is a social activity, so why not recognise it? That is my position. Mr Aylett: That is a strange thing for the sport, and we work closely through the Motorsport Alliance. As far as the industry is concerned, I just want to read from Brian Wilson, who was the Minister of State for Energy and Industry. In 2002, the DTI, as it was then, came up with a programme of "harnessing a world-class industry cluster, Motorsport Rally, to gain general competitive advantage for the UK". There was a paper written then by the DTI that was focusing on capturing this value and utilising it for the rest of the UK. It was never taken forward. Unfortunately, it was following that that they created the competitiveness panel and so on and it was never taken forward, but it was a programme led by industry for industry and the DTI on a national basis, and I will not go into the details now because you can have access to it, but it was announced that it would go ahead and it was a very simple programme of encouragement for the industry, so prior to this problem with motorsport development in the UK, the DTI, as it was then, was looking at the national programme and there were simple ways that they could help industry. I will not go through the full details now because of the time limits, but they were to help the industry in some of these strategic areas, but not interfere with its global success. Q159 Mr Wright: How much of the complacency is down to the fact that the government research on the health of the industry is ten years out of date? The fact is quite clearly it was 2000 when the last research was actually carried out within the industry. Is it one of the areas where it is the fact that it has gone along and perhaps we need to fund new research to look at the health of the industry to see exactly how it has moved on because, even since Brian Wilson's day, the technology has moved on at such a pace that now we are talking about the aeronautical industry and the motorsport industry coming together because they share technologies? Mr Aylett: You are separating them, and I know Colin would speak up on that too. The MIA led on raising the funds and some came from the MSA back in 2000. It was not a government initiative, it was the industry saying, "Where are we?" but we were funded through DTI, UKTI, some of the regions and some of the universities came together and it was a very thorough bit of research and it has been quoted, as you know, by the day even now, so it is that far out of date. It is an indication of complacency if you have this successful, fast-moving industry and every year we have applied for funding through the RDAs or through MDUK and each time we were turned down, so, as an industry and a sport, we were never able to capture the movement, so yes, 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. Mr Manahan: I understand the point as well and I totally agree with what Chris said previously about the complacency aspect. I think there is actually a link to a previous question as well, that a lot of that complacency comes from the fact that Formula One dominates people's views when they think about motor-racing straightaway and, just like Colin said, if you scratch the surface 5% down and if that were all you were looking at, I do not think anybody would be complacent because it is certainly in need of attention. Q160 Mr Wright: Colin, you mentioned earlier the MDUK, Motorsports Development UK, but it is not really doing the job that the industry wanted and, as I understand it, it is now defunct and finished as from this year. Was that the right decision to take? Mr Hilton: I personally believe it was the right decision to close that operation down because it was becoming, I would say, unviable from its overhead costs. They ended up with nearly as many people as we have in the governing body just issuing out these funds to various projects. I think it needs looking at in a completely different way and we would welcome the opportunity to work with Government in that way again, but I think the structure would have to be different so that the needs of the industry and the needs of the sport are actually delivered rather than this strange concept which came out of MDUK. Q161 Mr Wright: So are you suggesting that there should be a successor organisation being formed? Mr Hilton: No, no, I do not think so. I think the industry and the sport are quite able, working with the departments, whichever Department it is, with ourselves, DCMS and DBIS for industry, let us work directly and help those departments direct funding where it should go. Q162 Mr Wright: Because there is a tinge of going back on what you said earlier because, quite clearly, you have mentioned MDUK and the fact that the Government was showing a direct interest by setting up MDUK at the time, but now you are saying that it did not even serve the purpose it was formed for because the wrong people were on the board, there were too many people on there and it did not actually deliver. Mr Hilton: I think the mechanism was incorrect. I think the concept of what was being created was correct, and we all contributed to that and we all contributed to the strategy of where the needs were, but I think the actual delivery mechanism was the problem. Mr Aylett: May I add a comment because to say I was the person involved in this is almost an understatement. The original document that was written from the industry was a strategy document in 2000 which led to the DTI nationally saying, "We'll run a national scheme to help this national cluster develop", and that was Brian Wilson. Then, and I know this was through direct intervention at high level, some folk went directly to other ministers and said, "This would be wrong. We now need..." and the decision was to have a competitiveness panel which took a year or more to review this idea. That competitiveness panel led to Motorsport Development UK and we steadily drifted away from a national programme run through a national governing body and a national interest to deal with a national cluster, and it was eventually handed to a region, which happened, on that research you referred to earlier, to be a region with only 15% of the economic activity. The neighbouring region, SEEDA, had twice as much economic activity, but the national programme was given to a region to handle 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, first of all, there were the disputes between regions, but also you lost and, if you look at the trail of the board, they thought they were advising a national programme, but found they were driving from Kent to Nottingham for meetings on a regular basis, and I do not blame EMDA 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 and, I have to say, I support Colin. We have in the last 18 months done all we can successfully to restore our relationships with DBIS, née DTI, to great success, with sensible dialogue on national issues, and we are beginning to rebuild that relationship for a national cluster, so I think it was, sadly for us as a small industry, an experiment that was just flawed. Q163 Mr Wright: You mentioned the regions and we can go on to the regional development agencies. Have the RDAs caused more problems to the industry in the past, the fact there seems to be this element of competition between the RDAs' role and UKTI's role and the RDAs playing more of a inward investment role which was the domain of UKTI? Is there a degree of hostility in the industry towards them? Mr Aylett: I do not know whether you deal with the RDAs, Mike. Mr Dickison: We deal with Advantage West Midlands and we have found that we have quite a good, close working relationship with them and I would not say that there is anything I would like to raise to say that there is a big problem here. There have been various research initiatives going on and we are currently midway through a £3 million R&D programme for environmentally improved vehicles. I do not think there is anything that I can think of where I would say that there needs to be some huge change. Q164 Mr Wright: I think in the MIA's evidence, Chris, you mention unhelpful competition between the RDAs, and I think I am right in saying that Silverstone was split between two RDAs because it straddled the border between the two. Did that create problems or is that creating problems? Mr Hilton: I think it caused more complications than problems. I think the mechanism of getting funding or trying to get funding from two caused the difficulties. Mr Aylett: I do not know whether Andrew has something to add, and I do not want to be coy, I just want to make sure my friends are heard. Our difficulty is a national trade body dealing with a national cluster where the suppliers never even know where an RDA begins and ends and nor should they care. To try to deal with that on an economic growth area is difficult. We work very closely with DBIS/DTI/DBERR and we have consistently worked well with UK Trade & Investment as an industry. Bizarrely, as you raise UK Trade & Investment, nationally based in Glasgow, we run national programmes. We are often at a show that is being funded nationally by UKTI and there is a regional UKTI activity going on of which we are unaware, the customers, if you like, the international customers were unaware, they do not understand why there would be an East of England UKTI activity, and in fact it has become so complicated that we just invite anybody with the card of UKTI to anything that we do in the hope that they can work it out because it is very, very complicated. If you are from one region and you strike lucky, you can get an extra £500 to attend the show, meet the chap from the East of England who on that particular show did not get it, they meet on the plane, "Didn't you get the £500?" "No, I'm in Huntingdon", and they say, "Well, is that not AWM?" "I don't know where it is", so, sadly to say and it may belittle my organisation, we simply advise everyone to contact whoever has a card from UKTI and try and gain some funding because it is beyond us to work out, as a national trade body, how you can win the lottery region by region. This is UKTI. Q165 Mr Wright: Yes, I understand that. Mr Aylett: That was not what you raised, but it is a great sadness because it is probably not the most co-ordinated international effort and they are good people. Everyone is motivated as well, but not the best. Mr Hilton: Just to give you an idea of what happens in other areas, this year we have introduced an advanced apprenticeship scheme for young drivers and what we try to do is ensure that they get education when they are enjoying their sport so that they will come out with the equivalent of three A levels while they are competing. We find ourselves in a situation where it is very successful and we can go to 100 apprentices next year, but we can only actually get funding for England. We can only fund those kids who are based in England, but we are a UK governing body, so we have got to have separate schemes for Scotland and Wales, and it is bonkers really. Mr Manahan: I am so happy that I am not the only one that is totally confused by the organisation of these because I thought there must be something wrong with me because I have not a clue what half of these people do. Mr Aylett: You should know! Mr Manahan: It is not that I do not try, but I do not know if you guys ever remember Drop the Dead Donkey, but I get approached by these agencies who speak like Gus Hedges and you get these hands-on/hands-off interface matrix units, and I have not a clue what any of them are trying to deliver for us. It is bewildering, it is confusing, it is irrelevant, and I am being generous! Like I said, the UKTI people are trying, and anybody who comes to us with a UKTI specific hat on - I even had a very relevant text from one of them first thing this morning trying to help us to do some business overseas, they are trying, but, I must admit, it is the agencies, the regional agencies, which are the confusing aspect for me. Mr Aylett: We are very keen in motorsport on how you trust me. We, and you can go back to my first argument, we prosper by attracting inward investment. It is a very courageous statement, but it has come through Professor Porter of Harvard, that really strong global trading clusters welcome international competition into their midst, so actually, as a trade association, and I have spoken to many others, they say, "We're amazed at how aggressively you go after the inward investment" because there's protectionism, but our members love it, absolutely love the inward investment. They are courageous people, they want to bring these guys in because they know they are the best and then they will gain from them, so we get a lot of enquiries, as a trade body, for inward investment and then we have this rich inward investment opportunity which I have to pass into this UKTI, and I know that there will be a national approach, there will be a regional approach, there will then be a county approach and there will be a local approach and, by the time this poor Chinese company has been passed around this group, I am not sure how it really helps, and I have many practical experiences of the confusion that it conveys; all the goodwill intended, but not the most professional approach to an inward investor. Q166 Mr Clapham: If I could just pick up an enormously important issue, Mr Aylett, you seem to be saying, from the letter that Brian Wilson sent out, which seems to hint at a national plan for the motorsport industry and the clusters, in particular, that what we really require there is to say that we need a plan that sort of transcends the regions on the one hand, but at the same time the regions are to be involved in implementing that plan to make sure that this sport is prosperous. Mr Aylett: Yes, I must admit, and I will let you have a copy of the letter, it is very eloquently written actually and it kind of captures with some vision the chaos that did actually arrive because it was taken, if you like, to the next level and it became part of the regional problem. He was saying that it is an industry-led, DTI national programme, but it will engage on a regional basis as and where necessary. Let me remind you, the date of 2002 was in the birthday period, the honeymoon period of regions and this is how it should work and, I have to say, that is probably true of MDUK when I sat with senior civil servants. The way RDAs were going to operate was still, "We presume this will work. We're looking for national schemes to be led by certain regions", and I was intimately involved in those conversations. Sadly, as a businessman, I was able to say, "Are you sure? Are you not motivating these people to compete with each other? Are they really going to be able to stay outside?" "Yes, that's what we're going to do" "Oh good, that's the view of the politicians", but it did not work in practice. It may not be for other industries, but ours is a good case to study. I know there is a report, I am close enough with DBIS to know that you have a report, which has not yet come out, but there will be a report which you can read and see how successful it has been in the view of the industry, which is not that good, but I have to give you this information to add to your knowledge. Chairman: We welcome that, and we have the Minister coming in after Christmas. I cannot remember when, but we will be having him in. Q167 Mr Wright: Just in respect of the MDUK, I have just looked at the figures and the actual cost of the MDUK was £11.5 million. It is quite clear, now it is defunct, that that money has gone back into the Department's coffers or perhaps the Treasury's. Would you suggest that perhaps something else should go in its place because £11.5 million is not a small sum? Mr Aylett: To be honest with you, after five years we regularly have meetings on what do we want to do and the 100%, "Please stop. Please stop loving us in this manner", really. Q168 Mr Wright: It was that bad? Mr Aylett: Yes, it was that bad. It was, "Please stop". If we try and negotiate a little bit, someone will say, "Let's build it", so the decision of our members, not Colin and myself, but our members was, "Let's just stop. We'll do okay without the Government's love and affection. We've appreciated it as best we can, but no more", and now what we are saying, both of us, 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. Q169 Mr Wright: Has there been an indication that that is actually happening? Mr Hilton: None whatsoever. Q170 Mr Wright: So, since MDUK finished in March of this year, there has been no discussion whatsoever of what is going to replace your discussions or anything else of that nature? Mr Aylett: No. I will not bore you with it, but 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. Mr Hilton: I have not spoken to anybody in MDUK for over two years. Mr Aylett: Colin and I meet regularly, as you can tell, and there was a period when we said, "Well, I actually haven't heard from MDUK in over a year", and that was the industry and the sport. They were claiming to spend £16 million and it turned out to be 11, but 16 was the illusory promise that disappeared, and we were not in touch with them at all, not slightly but not at all. Q171 Chairman: That is a fairly unequivocal answer you got there, Tony. Can I just ask about something else for consultation and we have some questions which will involve you, Mr Dickison, so do not worry, your moment in the sun will come. Were you consulted about the establishment of the UK Composites Centre actually as an industry because composites are very important to you as well? Mr Manahan: No, we were not. Q172 Chairman: Because you made a very powerful exposition earlier on of the challenge we face from other places to our competitors, and composites are hugely important for aerospace and for motorsport. We now have the announcement of the Composites Centre at Bristol, which personally I am very happy about, I think it is the right outcome, but no consultation? Mr Manahan: We have not been consulted on it. The first I saw was reading about it relatively recently. It certainly seems to have had a lot of input from the tier ones, as I call them, in the aerospace side of the industry, the Airbuses, the GKNs, people like that. I welcome the concept of it, but I am slightly fearful of what it might mean for our business. I would like to know a lot more about it and I would be very happy to engage with it in a way that I am not threatened by it. Q173 Chairman: If you want to suggest some questions that we might ask the Minister on this when he comes on 26 January, I would be happy to ask them for you, Mr Manahan. Mr Manahan: That would be great, thank you. Mr Aylett: Mr Chairman, may I just say, you are reading my report. I am a little concerned as to why this industry is not involved in some of these consultations. Q174 Chairman: Exactly. Mr Aylett: It is a very strange process. The Technology Strategy Board, Iain Gray, and another is in the room here today, we have very cordial relations and they do enjoy motorsport and they enjoy talking about it, but they find it very difficult or it is very rare, they do not engage as if we are an industry, and that is the Technology Strategy Board ---- Q175 Chairman: Well, we heard, when we were in Silverstone, that the innovations in composite use in motorsport were happening faster, to go back to the evidence, and were happening more regularly than they are in aerospace. Mr Aylett: They are. Q176 Chairman: There is a huge amount to learn across. Mr Aylett: Well, it is very strange, these consultations, and the only excuse I can come up with, and I mentioned the Technology Strategy Board, but the Automotive Innovation and Growth Team has just come up with its report and we were not consulted at all, the motorsport industry, not at all about the Automotive Innovation and Growth Team for the next 20 years in the UK. Now, Malaysia, if it discussed its automotive industry, would undoubtedly embrace somebody from motorsport, but we were not, and the excuse that I will give you is, I am afraid, the vacuum of the dialogue all went through MDUK for five years. Would I be right, Colin? In all government departments every discussion was focused on, "We have committed £16 million. These are the people who know. Pass all your enquiries to MDUK" who had no connection going on, and I have a feeling we are in the aftermath of that and we would love to break free of it. Q177 Chairman: I think the timing of our inquiry is serendipitous. Mr Aylett: Incredibly so. Q178 Chairman: That is a word I like using, and I managed to get it out as well! Let us move on to academic issues, broadly defined, and Mr Dickison, I suspect, will have his moment in the sun now and I think others will want to contribute as well. Motorsport obviously, particularly the top-end stuff, is seen as a very glamorous activity that can excite young people's interests in the science, technology, engineering and maths subjects. What can we do to maximise that opportunity and do we need to do more? Mr Dickison: Well, I am not sure insofar as, in the way that we structure our courses, we try and have them so that they are very interesting for the students and they are very relevant to the industry itself. Q179 Chairman: I want to talk about the courses later, but I want to talk about attracting young people into the STEM subjects more generally because motorsport and, for that matter, high-end aerospace, there are some industries which are genuinely exciting to young people and can be used to excite their interest in engineering subjects, so do you think more could be done? I am thinking particularly of the Learning Grid, which I do not know how many of you are aware of, where, I understand, its funding has now ceased from EMDA. Mr Aylett: That was one of the MDUK programmes. You might be interested if I just give you some of the stats of young people. Swansea started its course, its engineering degree, in 1998 with 20 students and it now has 300 going through. Q180 Chairman: You are running ahead of me. I want to do schools. I am talking about kids at schools being excited by engineering because the example of motorsport can show them what the opportunities in engineering actually are more generally, and that is what I am asking about. Mr Aylett: The Rockingham Festival has 3,000 pupils and 300 teachers every year and they say that it enriches the curriculum significantly. Formula Schools started in 1997 and has handled 30,000 pupils and 1,000 schools for Key Stages 3 and 4 using biofuel and electric cars. F1 in Schools with Mr Eccleston and Formula One support now reaches 31 countries and 12 million students and in the UK, in the age group nine to 19, 200 schools and 1,000 students, and Ireland won last year and England won the year before, and that was supported by DCSF, I have to say, and Green Power is another ---- Q181 Chairman: I have got a document I got from the Learning Grid in the post actually this week which has all of those schemes in it enumerated, so the question is really: how valuable is the activity and could we have more of it, or are we striking the balance about right? Mr Dickison: I think it is an extremely valuable activity and it is very relevant to me insofar as I have two young boys, one in senior school and the other going this coming September, and one of them is running a sort of little race car programme where they build their own car and drive it around, and my son is actually doing a little remote control car programme and they get so enthusiastic and then all of a sudden they realise that this boring maths and sums is actually for a purpose, you are not just punching a few numbers, but you can calculate how to make something work better, how to be efficient. It is all very competitively based. In fact, my son went last week to a competition at Cranfield University where they were competing against other teams in our region, that is the Milton Keynes group. Q182 Chairman: So you agree it works, but are we doing enough of it or are we getting it about right? Mr Dickison: I think you can do more. Certainly I have been looking at the various schools in the area that our youngest son will go to and there was one which really focused on it, whereas other ones did not seem to have any sort of involvement in it. Q183 Chairman: The reason I ask is because are you aware of the Learning Grid itself? Mr Dickison: No. Mr Manahan: I am not aware of the Learning Grid, but we go to local schools, not as part of an initiative or anything, but off our own bat really, to try to get the kids interested in engineering and hopefully we will get some in an attempt really just to try and foster some interest in, as Mike was saying, what numbers and sums can do. We get the local kids in and they see the motor-racing cars, they see all the cool, sexy things that we are doing and we just try and engage them like that, but that is not part of an initiative or anything. Mr Aylett: We would say as the industry that this is the most important thing that we do, motivate schoolchildren. I just had this meeting with the Motorsport Employers Group three weeks ago and they categorically said that this is the area that they would like to see if we re-engage with Government, and these are the leading teams, if you like, for publicity and they recognise this fabulous enthusiasm that motorsport can give. NASA does this very successfully in America, and this is our space race. Whether you like motorsport or not is not the issue; it motivates young people to study those four subjects and compete with one another. Competition is not necessarily bad for them, but the battle to win is good fun for them and, if you come to any of those competitions, you are saturated with the enthusiasm from those kids who hardly know they are doing engineering. I have worked with the Institute of Mechanical Engineers and so on who said, "Creep up on them gently to tell them they're engineers. Don't frighten them off early, but just let them have fun", and they have found a way of having fun with STEM through motorsport because it is pretty cool. Q184 Chairman: Exactly, so that point is well-proven, but we are being a bit anecdotal as to whether we need more of it or not. I do not criticise you for that, but I do not think we are making progress on the issue. The reason I ask is that the Learning Grid is supposed to be a co-ordinating mechanism and the funding mechanism for this and, if funding has just been cut by EMDA, the East Midlands Development Agency, it may regard the fallout from MDUK just as you said, and I want to know whether that matters or not. Mr Aylett: If you read closely the Learning Grid, you will see it is an accreditation scheme for those schemes and that is not what was necessary, so again we have this MDUK involvement where they wanted to accredit these good people doing things, but what these people need to do is more simple support down at grassroots to attract more schools. There are very, very good schemes and those are run by very good people who need much more direct support than an accreditation scheme. Q185 Chairman: Certainly, and I went to see a school in my constituency highlighted in this report under the Engineering Club Scheme, which is one I rate very highly indeed, but I had no idea of the involvement of the Learning Grid in it. Mr Aylett: That particular scheme has run its course and there is an opportunity to do far more with our industry to use the power of motorsport to attract young children into STEM. Mr Hilton: I did not know actually that Williams F1 apparently have launched an educational programme in association with Cambridge University Press aimed at core mathematics and science subjects with motorsport themes. Mr Aylett: It launched it just a few weeks ago. Q186 Chairman: That is very helpful, thank you. Let us move on to the motorsport courses, which I think is something you were trying to get to earlier on. Now, we have heard some scepticism about this, and this is not a criticism of your institution or your courses, but I am asking you to speak for the academic sector now, that actually too many of the motorsport courses are inappropriate and they are not actually what the graduates actually want. We heard actually that the core engineering skills which are often what people need, for example, at Silverstone are not broadly based motorsport courses. Do you want to reflect on the value of the courses offered by universities in general? Mr Dickison: I think you need to bear in mind that the way that these motorsport courses are developed is such that they have all the core engineering subjects in them and then they have additional modules which are supposed to be relevant to the industry, and I think my comment would be that, if it is not relevant to the industry, there is a problem that people are recognising and feedback is needed. In fact, I think it is very difficult for me and the academic institutions to just guess, "Well, we think this is relevant and this isn't. These are the areas that we need to cover", so I think that there needs to be feedback. Personally, up until this year, I have actually been recruiting in people from the university courses for many years and I have found that some of the motorsport courses were very, very light on the real technical subject to the extent that what they had done is maybe done things which were perhaps relevant to day-to-day working within a race team, but, when you said, "Can you calculate how thick that piece needs to be?" they say, "Oh, I didn't do that module". Q187 Chairman: That is the criticism we heard actually and you have encapsulated it. Mr Dickison: Yes, I think that is actually quite valid probably in some places, but it depends on where you go and there is a huge variety of higher education establishments and their courses are not all the same. What is needed is some formal feedback. It is very difficult for the universities to react when it is just really based on maybe sort of anecdotes and, "I had a student come who couldn't do anything" sort of thing, and I have heard this sort of thing before. Q188 Chairman: The sum of all the anecdotes becomes a pattern of some significance there. Mr Dickison: Yes, but there needs to be a mechanism for feeding back in. Q189 Chairman: We do not want to do any more kicking of MDUK because we have done quite a lot of it already and your views are pretty clear, but it refused to draw up a list of the motorsport industry recognition of academic institutions. Would that be a good idea still? Mr Aylett: The word they overlooked was "industry". The difficulty that the industry has is that it has not been engaged as closely as it should with these courses to make sure that they produce an employable student. Originally, the idea for MDUK was that industry would help go through the universities and not accredit them, these poor guys are accredited to death, but actually engage with them and explain this fast-moving business, and that has failed to take place. Sadly, during this period the universities have been led on a 'bums on seats' reward basis, so they are using the power of motorsport, and it has worked, to attract a lot of students into engineering courses that were otherwise overlooked, but unfortunately the quality and connection with the industry, and this is from the industry I am speaking, not myself, the Employers Group say, "Unfortunately, there has been so little engagement. What we've had is lots of young people studying motorsport engineering" and ---- Q190 Chairman: But you have SEMTA, the Sector Skills Council, you have the Motorsport Academy, so surely this liaison should be happening effectively already? Mr Aylett: Well, originally, a long time ago, we had a meeting with SEMTA and they said, "Well, we look after the students inside the factory gates and the IMI look after", I have forgotten the other Skills Council, "they look after outside the factory gates". I said, "We have a difficulty because we don't have any factory gates and we're quite modern in that sense", and we struggled and SEMTA did create some very original course structure, but it was disjointed, not connected with industry, there was no other connection with any other sector skills council, so again we ran up a white flag and said, "There's only so much one can do. The engineering courses are excellent in the UK, so let us just go with those and allow this incredible complexity of sector skills councils to run its course". Indeed, in the last few months, since the demise of MDUK, we have tried to re-engage, but we have not had much of an answer yet. Q191 Chairman: So Mr Aylett and Mr Dickison are agreeing absolutely here that there is a need for better co-ordination of institutions of higher education and the industry? Mr Aylett: That is the only way to move forward. How you create that ----- Mr Dickison: I would not want anyone to go away with the impression that nothing is being done. For example, I am actively working with a number of companies and our students are given real, live problems to solve, and the way we term this is 'activity-led learning', so, rather than dusting down some old example where you work through this and end up with the numbers, we are applying students to solving real, live problems with the lecturers acting more as guides to try and help them. Q192 Chairman: That is very good and very commendable, but systemically it is worrying that actually there is not a better assessment of needs of the industry and the ability of the academics to deliver them. I was at another sector skills council who were saying they have a total of 500,000 graduates working in their sector and the universities are turning out 300,000 graduates a year with the qualifications for their sector, so there are a number of mismatches going on here at NVQ Level 4 and higher. Mr Aylett: We have 26 universities in the UK delivering qualified motorsport engineering on a declining scale of employment, so 26 universities and they have all come on stream in the last ten years, so it is a significant growth in the number of courses, and four of those were at Masters level, so, if you like, the universities are selling the courses very well and filling those, and so they should ---- Q193 Chairman: But? Mr Aylett: There is a rather obvious 'but'. Q194 Chairman: From another aspect of the relationship with academia and the industry, and this is the dialogue I had between Mr Manahan and Chris, when we came to Coventry a year/18 months ago, we were really impressed by the work that Coventry was doing, again with the help of AWM, and other universities in the West Midlands as well, but particularly Coventry, to engage the SME sector with innovation work in the university, but Mr Aylett's submission says that the links between SMEs and universities generally, and it is not a Coventry-specific point, do not work as closely or as well as they ought to. Now, what can be done? We all know the reasons why SMEs sometimes cannot do this, pressure of time, it is difficult, or there is the simple fear of engaging with academia which it does not properly understand, so what can be done to build better links in the motorsport sector between SMEs and academia? Mr Manahan: It has got to be financially attractive to do it. It is as simple as that. Nothing would give me more pleasure than to be involved more, and with what we were talking about just now I was just reflecting to myself that actually Lola really has not had any input at all and we have never really been asked about what we would like to see coming out of universities. I know from my own experience, and this might not be what my colleagues around the table would like to hear, but, if I am looking at engineers at the moment, I would prefer to have a very competent aerospace-trained engineer with a motorsports module than a specific motorsport one, but it depends on the position I am put in and that is probably not a fair statement to make. Quite honestly, and I will probably mention this a little bit later on, I view SMEs in a little bit the same way as, and you are probably all familiar with it, Maslow's hierarchy of needs pyramid that everybody always trots out on various courses, but there is an SME version, and the SME version, at the bottom end of the triangle, you have got survival, so survival, survival, survival, cashflow and orders, whereas innovation, design, development, innovation, the things that the tier ones and the customer wants, are at the top of that pyramid. Their eye is on the top of that pyramid and that is all they want from us. Unfortunately, our eyes are very, very often at the bottom end and, unfortunately, things like engaging with universities and engaging with organisations that are for the greater good, for people like me, I just cannot afford it. I cannot afford the time and I cannot afford the cost. If I go to my board and say that I want to spend £X,000 of somebody's hours engaging with universities, they are not going to go for it. Q195 Chairman: It is the Innovation Voucher Scheme which works in the West Midlands which, I think, Coventry has made good use of as a university, which actually provides precisely the financial incentive for the engagement you are talking about. Mr Manahan: If that is the case, I do not know about it. Mr Aylett: You are not in the right region. Q196 Chairman: It is in the West Midlands. Mr Hilton: I wonder, Chairman, whether there is a need for a co-ordination role, and it might be MIA, I do not know what Chris's view is, on the actual resource requirements for the industry. Somebody should be pulling together the needs of the SMEs and others and saying, "This is the resource requirement that the educationalists have to provide for". Mr Aylett: As I say, I will die knowing the competitiveness panel report intimately. That was what the industry asked. It wished to work closely with quality universities to try and make sure that they matched the requirement not only in the course content, but quantity, but of course that was fool's gold really because, once you have said, "This could attract young engineers into your university", then they took them. I lecture at the Cranfield University and have 30 students, 28 of whom are foreign and two from Britain because they have come here to learn all of our secrets and return home and the universities like to have them because of the financial contribution, so it is not a comfortable situation, but Colin is right, there should be a much closer link. Mr Manahan: That said, funnily enough, and you were mentioning the Midlands, we do work with Warwick. We supplied them at a very low cost with a Formula Three car so that they could do some experiments with renewable material body systems, eco-friendly body systems, and it has worked very well actually, that car. Q197 Chairman: How did that process begin? Mr Manahan: They contacted us actually, to be fair, and that is what they did. Initially, they asked for a racing car and we were not in a position to completely give one away, but we more or less did to support them. We have done some other things too, but they have all been on a sort of case-by-case basis and there has not been any great initiative. Mr Aylett: I have to agree and, if my submission is to be read correctly, that is the point. If you take all our SMEs on their total engagement with universities in the area of R&D, it is very scant and it is quite often, "Do you have a gearbox I could borrow? Could you let me have some brakes?" To suggest that was a robust relationship would be foolish; it is friendly. Q198 Chairman: Do you want to make any comment, Mr Dickison, now that you have heard this analysis? Mr Dickison: I think, having been in industry most of my career, certainly the view I always had was that universities are very busy teaching people and, when it comes to actually contributing to a business, they are probably going to be too slow and not very motivated to actually help. I think the tide is changing. Certainly at Coventry we have got a Business Development Office so that we can get good liaison going on between the academics and the companies, and I think there is a tremendous amount of potential there, and all I would say to industry is, "Give us a chance and I think you will find that not just Coventry, but a lot of the universities, will perform very well". Obviously, there does need to be the time made available for the academics within the universities to support these initiatives, but I think there is very good potential there, and there is a lot of intellectual content that you can tap into. Mr Manahan: Well, in preparation for this, I took my best engineers together and asked them what had been beneficial to them and instrumental to them in their finding their way from the various options that they could have followed and finding their way into the Lola design office. Quite a few of them said it was the Formula Student initiative, and that was one of the things that universally they agreed was an extremely good thing. Mr Aylett: That is one of the competitions using motorsport to attract young people. Q199 Chairman: You yourself, Mr Manahan, speaking for Lola, have praised the Advanced Manufacturing Research Centre at Sheffield University. Mr Manahan: Yes, very much so. That is outstanding. Q200 Chairman: What attracted you to it and why do you praise it? Mr Manahan: Well, I praise it because I think it is a really good, concrete way of delivering something tangible. The AMRC is a department of the University of Sheffield which was very far-seeing and they engaged with Boeing to create the AMRC and, what they call, the 'factory of the future'. It was, I suppose, a way of galvanising support for the traditional skills associated with that area. You have got a lot of metalwork suppliers and you have got a good tradition of technical industry around there. They established the AMRC, as I said, in conjunction with Boeing. Lola is a board member of the AMRC, but they have various representations from machining companies all the way through to aerospace companies, and they do a number of things. They have composites departments, they have got departments which are trying to bring a link between academia and industry with real relevance to new technologies as well, and I think 'relevance' is the key word for them. Q201 Chairman: You said you did not have any engagement with academia, but you have a good relationship with Sheffield and a good relationship with Warwick, two of the country's finest universities, so you seem quite deeply engaged. Mr Manahan: We do, I suppose, in those two instances. The only thing we have done with Warwick is give them a car, to be honest, which was not a great deal of hardship for us. We are very keen on our relationship with the AMRC for a number of reasons. They are very good at getting European grant funding for research programmes. They do not get all of them that they go for, but they have got a better batting average than most, and I think a lot of that comes down to the very excellent work that Professor Keith Ridgeway does. I will give you a small example, if I may. There are new technologies all the time in the carbon fibre world, and you were mentioning earlier on that aerospace is not maybe as fast as motorsport at embracing some of them, but there are things like fibre tape-laying procedures and things like that which are very interesting to people like us. Now, we could never afford a fibre tape-laying machine, but the fact that the AMRC have got together the funding to buy one and allow us industrial time on it is very useful to people like us, otherwise we would not have a chance to look at that ourselves. Q202 Chairman: I am going to ask you a question I know the answer to before I ask it, but I must just ask it. Were you aware of an advanced manufacturing facility being established by Advantage West Midlands in the West Midlands area? Mr Manahan: Where is it? Mr Aylett: It is in Coventry. Q203 Chairman: It is in Coventry, is it not? Mr Aylett: I was going to ask that too! Q204 Chairman: The Government has just given a big grant to enable the establishment of the advanced manufacturing facility in Coventry, which seems to be doing the same thing as Sheffield is already doing, to me, but that is what I have heard already. Mr Manahan: The answer to the question is no, I was not. Q205 Chairman: Thank you, you are giving the answer I expected. Mr Manahan: I hope it is successful because that would be good news. Is there a danger that it is going to duplicate effort? That is the question. Chairman: That is the question I was asking myself, yes, and that is something we will need to reflect on, absolutely, yes, exactly. Q206 Mr Clapham: Before I look at innovation, just coming back to the education scene and what was said about Sheffield and the factory of the future, it seems that what Sheffield have got is putting together, as you said, things that are relevant. It is looking at, for example, the aerospace industry as well as the motorsport industry and it seems to be that kind of ingredient that makes it very relevant particularly to your industry, Mr Manahan. Mr Manahan: Absolutely. The fact that we can be sitting round the same table as Boeing is useful, though, I have to say, we have not done any business with Boeing yet, but hope springs eternal, with the factory of the future concept and the kinds of things that we can get involved with and the kinds of technologies we will have access to. I will give you another small piece of relevance, if you like, as an example. We won the Watchkeeper airframe programme, so we manufacture and supply the Watchkeeper airframe to U-TacS, which is Thales and Silver Arrow, for the UK's medium-range tactical UAV. Now, there are something like 350 metallic parts on each airframe that we make and we place the order for those parts through the AMRC with one of their constituent metalwork entities that were set up for aerospace-grade metalwork parts. That is just one good example of how they have helped two of their entities to do good business with each other. Q207 Mr Clapham: And of course the sort of transfer of innovation between the two industries that we are talking about. I do not think that we could over-emphasise the importance of innovation to the motorsport industry, but how do we sustain the momentum of innovation, particularly as we are coming out of a period of recession? Mr Aylett: This is one of those things that, as I am in an innovative industry, you are in the woods, looking out rather more than talking to my friends who are looking in, saying, "How do you maintain that innovation?" so I can only speak on behalf of motorsport. They retain this innovation through competition, aggressive, dynamic, hourly, daily, weekly competition for which they are instantly rewarded either down at the pub with a good story because they won or financially because someone has paid them full ping, but they get an instant reward. I am a passionate believer that there is one massive value in this industry and that is the exploitation of IP. If you ever want to have some fun and check out with the Patent Office how few patents have been lodged by British motorsport companies over 50 years, you will be aghast because they spend 30% of their sales revenue, which is twice the pharmaceutical average, on R&D and yet they patent nothing. Q208 Chairman: Because, by the time they patent it, it will have been taken. Mr Aylett: Well, they have found a better way of exploiting than the IP mechanism. Our frustration is that it sits there as this untapped power for Britain that could take it into so many areas, but they are in such a competitive, innovative chase that they put it under the bench, and these are their own words, and they will come back to it one day. As one of the team members said to me, "Chris, your concept of IP exploitation and this royalty business and this publishing it and advertising it and so on, if I just win the race this weekend, I get $10 million. Isn't that exploitation?" and, as he flew past me in his jet, I thought maybe he does understand the exploitation of IP better than I do! Nevertheless, Britain, if we could ever engage correctly with your national government, this has to be statistically one of the most amazing values that has yet to be taken, and we got a little grant from MDUK. We came up with a scheme three years or four years ago where we were going to take 30 cases of Britain's motorsport industry and take them through an innovative IP exercise, and they were our role models. We found these guinea pigs and they signed up, and there was a Formula One team and so on and we got enough money from MDUK to take them through an IP process so that someone like Lola or Williams, it did not hurt, made some money and it happened. Sadly, MDUK, after the first year when they had attracted 120 companies, pulled the plug and said that was it. We had already stimulated the interest and then it just stopped, and I can tell you, having stayed in touch with those companies, that none of them went forward with any exploitation at all because they just needed that guide, they just needed the book at the end of the journey to say, "It worked, you know, and we carried on winning races because the real concern is that, if we faf around with these things called 'IP exploitation' or whatever, just imagine if we are beaten on the race track, and the only defence we have for our sponsor is, 'But we're filling in our patent application forms right now'", which would not go very well. In terms of innovation, I have to bring it to you all, there was a super article in the Sunday Times this week, and I was with people from X-Prize in America. This business about revolution through competition, I recommend you look at the X-Prize in America where they have put up a prize, do you remember, for this driverless vehicle. Audi are now going to go into this motorsport competition, Pikes Peak, one of the world's most complicated rallies with a driverless car two years after being involved in that competition, which they failed to win, by the way. I think they lost their car and it is still driving round the desert, but they had a go and now they just recognise that competition is a great driver for innovation, and they are not vast quantities of money, these are $1 million/$1/2 million, and they just pack innovation into competition because it is what people enjoy, innovators actually enjoy, and they are unique innovators, they are aggressively competitive people and they are very rarely passive. Mr Hilton: They certainly would not want to share it for the next season though, would they! Mr Aylett: Not in motorsport terms, but nevertheless, it is innovation through competition and the encouragement of competition in X-Prize. Virgin Galactic came out of an X-Prize. That whole programme has come out of attacking an X-Prize. Now, Britain would not aggressively attack innovation. Bleriot flew the Channel for a Daily Express prize; it has been going on a fair while. Mr Manahan: Survival drives innovation too, and innovation and rapid response has been the vehicle by which we have certainly found success in the defence and aerospace field. Q209 Mr Clapham: So we have got the two ingredients of competition and survival, but we have just gone through a very difficult period and we are just emerging and, given that we were talking earlier about the way in which competitors, like the Malaysians, are breathing down our necks, as we move out of the recession, is there sufficient momentum there to get us back to the kind of innovation that is going to keep us in the lead? Mr Manahan: I have not seen any evidence that we are moving out of recession. Q210 Mr Clapham: Well, there is some evidence that things are beginning to get a little bit better and, okay, some of our competitors may have moved a little bit quicker than we have out of the current situation, but it is so important that we keep that innovation and, as we move forward, we need to see that the momentum is there. Do you feel that there is such vigour there that we can maintain the momentum as we move forward from the recession? Mr Aylett: No, and I honestly hear more words spoken about innovation than action and it is a very easy word to throw around. You need to sit in a room of innovators to realise how dynamic, aggressive and fast-moving they are. You reminded me that there is a good lesson there, that delivery in a period of time is innovation in itself. I feel that we have read about innovation and we have talked about innovation, but I do not think we are as vigorously pursuing it as we should, and we are talking nationally now, and we are human beings as well as running governing bodies and so on and I do not feel an air of vigour in innovation. I was encouraged by the recent change in the R&D tax credits which sounded a little bit of support to help people, but to say that was vigorous support would be generous. It is clever and it is useful and in fact I think the whole R&D tax credit programme was good, and in fact our industry has prospered from it, profited from it and innovated because of it, so it has worked, but to suggest that the word 'vigour' comes to mind, not necessarily and it is vigorous opportunity, as I say, where prize awards or something to capture the imagination could work. Q211 Mr Clapham: So how do we do it? Does it need a national plan? You have talked about the ingredients of competition and survival, but those are within a framework, shall we say, so is a national plan necessary for the motorsport industry so that we get competition and we get survival within that framework driving this forward? Mr Aylett: I think that, if you go back to the letter of 2001, that was an integral part of DTI saying, "These are the most innovative people. If only we could capture how they are so innovative, our advanced engineering community", and that was ten years ago nearly, "would be better off to understand how they do it, what they are doing and how Lola is able to respond so much more quickly than someone who doesn't have that motorsport heritage". We do not have the time to study ourselves, nor the money as a sector, but there are clearly lessons that it could utilise. Mr Hilton: I think that the competition is more at a world level. The French plans, which seem to have gone on hold at the moment, to build a motorsport centre outside Paris, that is trying to create a whole halo effect to draw the engineering into France away from the UK, so I think that is the challenge and it is a world challenge rather than UK. Mr Aylett: Professor Porter of Harvard was very keen to point out that Britain's success was on a global scale in this particular sector, and not in many other sectors do we succeed on a global scale, but we step up every weekend and put our necks on the line and, if I may say, it is a sad demise of Toyota's Cologne exercise, but the Japanese decided that they would invest outside motorsport by adding billions of dollars later when they have not won anything. In an engineering competition, if you like, the Scrapheap Challenge every weekend on television, they have had a fair go at it and they have retired hurt, so we are good at it and really we should know more about it, recognise it on a global scale and then we would have an innovation plan. I am kind of surprised that we are not doing that with the Technology Strategy Board, if I am honest, but, as I have not engaged very closely with them, I am not too sure what we are meant to be doing with them. Q212 Mr Clapham: A little earlier, Mr Aylett, you mentioned the tax credit system. What would be the impact, for example, if the tax credit system were to be stopped? What would be the impact on the industry? Mr Aylett: Well, it is strange, but, when we had our day in Parliament this summer and I wandered around with my friends from Lola and all the others, I do not want to exaggerate, but they said that it would be a disaster, and that is in a relatively short time since, and we have been very proactive working with the Treasury on some of the wording to make sure it helped the sector and then promoted it like hell because it is made for us. Almost every one of our large and small companies is in some way, and I was trying to get a kind of league table from the Treasury, saying how good are the sectors at claiming the tax credits because I have a feeling that we will be in the premier league of claiming tax credits in terms of R&D, and there were many instances reported to the ministers that we met on that day, specific instances where, had we not received the credit for that, we would not have done that, we would not have been able to do that. There were small companies, and I remember one chap who said, "Well, I got £40,000 and that enabled me to buy a design engineer to get to work on a project", which did exactly the concept of the tax credit, and you can ask me for specifics and I could go and get specifics, but they are legion in just three years, so it would be very, very damaging on our competitive position. Q213 Mr Clapham: The tax credit system is not due to be evaluated anyway before 2014. Has there been any particular announcement for the cause of the rumour that the Government may be looking to drop the system? Mr Aylett: I think it was just rumour at the pub, I suppose, that you could put it down to, I do not know. A change in government would be an opportunity to change the bed linen and R&D tax credits may not be there. I could not be more delighted if I were proved incorrect. Certainly we were robustly interrogated by Kenneth Clarke on this matter and you could gain from his robustness that he was not entirely enamoured with the tax credit system and I think he was hinting towards some abuse by larger companies rather more than the smaller companies, 'abuse' is probably too strong a word, where the larger companies would be doing it anyway and it is the smaller companies that we are trying to promote, but that was a hint in a conversation that might have led to a large company saying, "I think they're going to knock this on the head", and that is how we wandered away, as I said, to the infamous pub and we said, "Maybe that's where the story comes from". Mr Manahan: I was at a dinner with Kenneth Clarke not too long ago and it was more than just a robust hint. Mr Aylett: It is obviously developing! Mr Manahan: It was a robust hint with a great big torpedo with a JCB behind it. He left us in no uncertain terms that R&D tax credits were going to be going in the event of a Conservative Government, which is disappointing from my point of view. Mr Clapham: Well, having heard what has been said, Chairman, I think we have got to make sure that they do continue and we have got to emphasise it. Chairman: The Committee will make recommendations on this subject before the election and whoever wins it will listen to our recommendations, I am sure. We are entering the final lap, you will be pleased to hear, and we have negotiated more chicanes getting here than I expected and we are running a little bit longer than I expected. Q214 Lembit Öpik: There is just one question which I have always wondered about in terms of innovation. The industry sets quite specific regulations in terms of what you can do to your cars and limits everything, I guess, from fuel tanks to everything else. Does that stifle innovation? Does that stop development or is it specifically because it enhances innovation and development that you have those regulations? Mr Hilton: It is really to try and get fair play. If you have got a sport, why you have a governing body is to provide rules which are common rules which everybody uses, fair play. If you look at innovation as far as perhaps the environment is concerned, certainly we have changed our regulations that we will accept any alternative fuels as long as they can be used in a fair competition, so we do what we can not to stop innovation, but we have to have rules and you change the rules as you go along. Mr Aylett: So speaks the legislator! I have to say, actually the legislator, and I saw you shaking your head, has been the most stimulating for innovation absolutely because the envelope of the engineer is then defined. Our guys go right to the edge of the envelope and, when they can get away with it with the legislator, they test their innovation by just stepping beyond, but, if you had no boundary, then it would be difficult to know where the effort has to go, so we have investigated that until I am blue in the face because I was, rather like yourself, saying, "Is it good or is it bad?" In actual fact, to say that we will allow kinetic energy recovery from wheels, and not much more than that, within two years they have created kinetic energy recovery systems that they are now exporting around the world. Q215 Lembit Öpik: So you actually feel that what you are doing, that the actual limitations or the defined envelope is the best way to create innovation that can then be reapplied in the commercial sense? Mr Hilton: Some of it is controlling costs as well because certain teams of innovators will spend every penny they have got to win and it is not good for the sport for millions and millions being spent just to win, so you restrict the materials being used, you restrict titanium and magnesium. Mr Aylett: But then we find ways we can make better materials to get around the regulations. Q216 Chairman: I said to you at the beginning do not agree with each other, but I sense that Mr Manahan is just boiling up to say something. Mr Manahan: Really? Q217 Chairman: Are you not? I do not want to cut you off if you are. Mr Manahan: I have got a whole engineering staff who do nothing else but dream up new ways to figure out how to make our cars faster within the confines of the new regulations that come out every single year when something comes along. I remember even as a boy, before I started working at all, being absolutely amazed at how in motorsport each year somebody would come out with a new regulation which would apparently make the cars slower, and one or two years later lap records would fall, and I thought to myself, "Blimey! There's your innovation right there". It is the halo effect of that motorsport brilliance in innovation that has not made us attractive to other industries, such as the defence and aerospace people who design by committee. Our offering in to them has been a breath of fresh air and it has made us hugely attractive and very successful in getting things out, and I am probably getting a bit carried away here, but I believe very strongly in supporting our troops on the ground and we get solutions to them faster than anyone else. The big boys of British Aerospace and Thales, et cetera, et cetera, have seen that now and some of the things that we have done and some of the things that we have achieved I am particularly proud that we have done, and we have delivered real benefit to them in theatre. Mr Aylett: And those deliveries actually are weeks, days. I will not bore you because we are running out of lap time here, but in terms of helping people on the ground in Afghanistan and so on, motorsport innovation has delivered solutions in days that would take months, so say the guys on the ground. Q218 Chairman: We are in danger of going over familiar territory again. You mentioned fresh air and that brings me to the last of the questions on carbon dioxide, being desperate for a link! I will try and wrap this up into one question, if I can. You, I think, the MIA, said in your submission that the Government has failed to engage with the industry on low-carbon technologies. We have heard concerns expressed that the Government has distanced itself completely from Formula One and high-end stuff because it is instinctively 'ungreen', it is quite the antithesis of the agenda. We have also heard that actually the engagement between motorsport and the automotive sector is declining because performance is not the game in town for the automotive sector now and actually it is fuel economy, it is those issues which, although they are important, given the tank restrictions you are facing, it is more about performance and that is more aerospace, so what can you do for carbon? Is the Government disengaging because it feels you are not really green? Mr Aylett: Your legislation has helped, and that is an interesting starting point. Mr Hilton: As the regulator, the FIA set up more than two decades ago an alternative fuels commission to investigate where we could go as a sport. After 20 years, they had realised that it is not about alternative energy, it is about sustainability. It is a bigger thing than just the fuel we burn or the energy that we burn, it is about noise, it is about the use of tyres, it is about the environment, the damage we may do in the forests. All of these issues affect motorsport, but I think motorsport can be used as a pilot. We can very quickly, very rapidly test new ideas through the universities or through the teams, but motorsport will always go where the manufacturers go because it is this 5% on the top which are the single-seaters, the Formula Ones and the F3s and they are not road cars, but the rest of motorsport operates off road cars, so we are really driven by the automotive industry. People are using road cars and modifying road cars for motorsport, so we will never go in a different direction from the motor industry. We will always follow the motor industry because 95% of the vehicles used in motorsport are road cars, modified road cars, so I think let us use motorsport as a pilot as a rapid way to test new technologies, but that is a personal opinion. Mr Dickison: I think certainly in terms of the green environment, concerns that sports cars, race cars, everyday cars, it is not just a question of changing to say, "We're going to have all-electric cars now", but it is getting weight out of the vehicles as well and that is highly relevant to motorsport and it is also highly relevant to aerospace as well, so we see more and more applications where people are trying to get relatively low-cost motorsport vehicles and indeed niche vehicles using exotic materials. Up until now, it has been, "Well, the materials are just too expensive, there's no point even thinking about it", but of course, as time goes on and as people realise they need to find a solution, the innovation comes out. For example, with carbon fibre, it has always been a very labour-intensive process actually making things out of carbon fibre, it has been an expensive material, and it has just been disregarded, "Oh leave that for the top-end cars", but of course now processes are coming into place where you can actually make very lightweight structures at a far lower cost, especially if the volumes are going up, so I think that there is a lot of connection there with the environmental green issues and with motorsport and not just Formula One, but dropping right down to track day cars and things like that. Mr Aylett: Again, if I may say, going back to my original halcyon days of DTI relationships, the DTI saw a national opportunity that we put to them. I wrote a paper to the industry, saying, "What future is there for motorsport in an energy-efficient world?" and the cumulative opinion was very little, and this was in 2000. Now, that meant that there was no strategy to cope with an inevitability, so it gave an opportunity for the MIA. We went to the DTI and said, "Would you like to fund some research into this because there is a good opportunity here?" and they did. We ran an investigation for a year, 80 engineers from motorsport, tree-huggers to the left, space cadets to the right. Q219 Chairman: Where was Jeremy Clarkson! Mr Aylett: To be honest with you, it was very interesting. En route, we discovered many things and the most important thing I would love the Committee to know is that we uncovered the fact that, since the very first race, at the heart of motorsport has been the efficient use of energy. If I may say, Mr Chairman, you were incorrect and it is not high performance in terms of speed, it is the efficient use of energy. They were only doing 30 miles per hour all those years ago, but they were using their block of energy, which could have been steam in those days or it could have been gasoline or it could have been diesel, ethanol or methanol, but they just used it efficiently and they used it by great aerodynamics. They did not know there were aerodynamics in those days, but they put a pointed bit on the front and a square bit on the back and it went a bit quicker, and they did it with lightweight materials, they did it with better use of tyres and grip, so this group uncovered that actually in Britain, if you believe that the motorsport industry is a jewel in the crown, as Porter did and does, then you would utilise the fact that you have over the last 100 years created the world's greatest pool of engineers, skilled in the efficient use of energy, and it was a most fabulous revelation for us as an industry. Now, they could not care less, that was the sad fact, because they just wanted to race and beat someone and, when we said, "You have an asset that's going to be valuable to Britain because they will want to know how we efficiently use energy", they said, "Well, call us when it happens and maybe we'll sell a bit of that knowledge". Of course, the date it would happen would be when the cost of energy made it interesting to people to try and save energy, so it was related to that. Hidden in there, we put forward this paper on energy-efficient motorsport and created the brand of energy-efficient motorsport and, I have to say, and Colin and I go back long enough, we were ridiculed to some degree. It was not instantly understood because how could motorsport be energy-efficient, but in fact it was inherently anyway and it was almost just a branding exercise. Since then, the most important thing that came out of it, whether we are at the forefront of the changes, the one thing that we can do, and Lord Drayson has spoken on this just now, a passionate convert to this particular line, winning in motorsport actually makes energy efficiency cool. If you can win Le Mans in an energy-efficient manner, as Audi did, you will definitely - if 100 years of cars on the forecourts have been sold by winning in motorsport, then clearly, if you win in an electric car, then you will make the public aware of the fact that, "Actually, that is quite a cool solution, I could buy one of those", so we found, and it sounds so obvious now, that actually you can utilise the power of the motorsport brand to make energy efficiency cool. Audi seized on it immediately and used their bio-ethanols, diesel first of all and then second-generation diesel, and a very proud story, a very short one: Shell were dismissive on first being approached by Audi with their diesel and after just 18 months, I said, "You'll be wrong. If I'm right, you're going to be very wrong here because, if they win, everybody will want it. Every green person, and every minute that we speak there are more people interested in it, they will be interested in this". They have set up a second-generation biofuel plant in Germany, and at one of my conferences which have consistently been supported by UK Trade & Investment, I have to say, and we run conferences all over the world on this thing, they said, "The first drop of second-generation biofuel from that car will go straight to win Le Mans. We won't argue it anymore. If we can win Le Mans with our second-generation biofuel", this is Shell, "then we know that the public will buy it", so within two years/two and a half years, the power of motorsport can change the public's attitude. In fact we have a conference in January on this very subject and in the time that the Automotive Innovation and Growth Team has been meeting, motorsport has actually delivered and raced hybrid electric cars, delivered and raced fully electric motorcycles at the Isle of Man TT. We are doers and deliverers, not visionaries, and the asset that Britain has in having this group of doers in the world of energy efficiency is an unbelievable asset, but we have to engage with someone who wants to listen. Mr Manahan: I was going to mention quite a few of the things that Chris has just done as a test-bed, as a test-platform and as an advert for new technologies, and endurance racing, in particular, I think, is fantastic and I really liked Chris's view that the most efficient use of a block of energy wins you a race, and that is a very interesting way of putting it as well. Going a little bit off the point or a little bit off-track in terms of Lola, we are really a composites engineering company that happens to make motorcars, race cars, as well as making things like UAVs, and one green area that we have contributed to, if I could say, is that a lot of civil aircraft now are going composite for weight purposes and obviously a much more fuel-efficient product, so we have the ability to work with the aerospace companies, such as Bombardier on the C-series aircraft and hopefully some of the other people like Boeing, in terms of manufacturing composite product for aircraft which will be more fuel-efficient. I totally believe in what Mike was saying, that in the future, with the new production techniques that are coming into carbon fibre technology and some very interesting technologies which I cannot go into for confidential reasons that we are working with some of the automotive OEMs, there is a very, very good possibility that future chassis development is going to get lighter and stronger, which is going to be fuel-efficient anyway or will certainly aid fuel efficiency, and all of that is born from our motor-racing development heritage. Mr Aylett: Just 18 months ago, because I know Lembit is a motorcycle rider, a British entrepreneur approached us to say, "I'm going to run the world's first zero-emission motorsport race", and I laughed at him, no joke, I ridiculed him. Just 12 months later, they ran at the Isle of Man TT a zero-emission Grand Prix. All British entrepreneurialism, absolutely classic motorsport, all the rules said they could not do it and they did it and actually they are pretty close to the performance of a 125cc bike, which, I would just remind us, is the world's biggest-selling category of bike to the Chinese and the Indians, so in actual fact this British entrepreneur has at his fingertips the chance of turning the British motorcycle industry and becoming leaders in zero-emission motorcycles using motorsport to sell back to the Indians and the Chinese. He entered into a contract or an agreement with the world governing body of motorcycling to take it and almost instantly they embraced him, put him on a panel and have launched the World Championships. Sadly, right now, there is now a dispute because they have decided to run a competition against him, so British entrepreneurialism is now being attacked by the international governing body and he needs our help. UKTI, and I will just underline this, were the first people in Government who put money into that project and helped him to go around the world to go and capture the teams that delivered the Isle of Man that zero-emission possibility of a motorcycle industry born to sell abroad, and it is the speed, that is 18 months from someone getting the idea; pretty revolutionary. Q220 Chairman: Your enthusiasm for your subject has led us to go on much longer than I intended. Mr Aylett: Sorry. Chairman: No, I am very pleased, it is very interesting. I think one of the questions we will ask the Minister is: how come, if we are so brilliant in innovation in the automotive sector in motorsport, have we got so little R&D outside the premium brand sector and the UK for the automotive sector in general? We are not very good at transferring these skills across, clearly. It has been a fascinating session and we are very grateful to you. It is frustrating that we have to draw this to a conclusion and, if there are things you want to tell us in writing afterwards, we would like to hear from you, but we really do appreciate the trouble you have gone to. Thank you very much indeed, gentlemen. |