Clegg Launches £1bn Aerospace Pledge

Mark Kleinman, City Editor
Clegg Launches £1bn Aerospace Pledge

The Government will next week commit hundreds of millions of pounds of public money to Britain's aerospace industry as it attempts to accelerate the rebalancing of the flagging economy.

I understand that Nick Clegg, the Deputy Prime Minister, will make the pledge on Monday when he unveils the latest phase of the Aerospace Growth Partnership (AGP).

Similar to initiatives already launched in the automotive and defence industries, the AGP will involve money committed by the major companies in the sector - including Airbus, Bombardier and Rolls-Royce - being match-funded by the Government.

Insiders said on Saturday that the total funding under the AGP could reach £1bn within a few years.

Unusually for an industrial initiative of this kind, Mr Clegg will commit to resourcing the AGP well beyond the lifetime of the Coalition Government by saying that the commitment will run for 10 years.

The longer duration of the pledges to support the aerospace industry are designed to counter accusations that the Government is too short-term in its industrial outlook and should enable big companies to make longer-term investment decisions, officials said.

The focus of the new funding will go towards supporting the infrastructure on which the aerospace industry depends, such as research and development activity, and protecting and enhancing the sector's supply chain.

Aerospace is one of the UK's most important industries, directly employing more than 100,000 people and recording more than £24bn in annual earnings, according to a document published by the Government last week.

"The UK's current strength is the result of significant public and private investment in research and technology in the late last century.

"The UK aerospace industry is faced with increasing competition globally, not only from traditional aerospace manufacturing nations but also from developing aerospace nations," it said.

"We can't stand still. To stay at the forefront of the increasingly global aerospace industry, the UK needs to secure strategic work packages on the new programmes, as those we are currently working on come to the end of production and support over the next few years.

"Action is needed now to ensure that public and private investment is increased to globally competitive levels."

Mr Clegg's announcement will come two days ahead of a Budget in which George Osborne, the Chancellor, is under pressure to provide much greater stimulus for industrial growth.