Aerospace Equipment Manufacturers (Hansard, 31 January 2000)

§ Mr. Alan Johnson

Launch investment is a risk-sharing Government investment in specific civil aerospace projects in the UK, enabled by the provisions of the Civil Aviation Act 1982. It has been used to support the design and development of airframes (or parts of airframes, such as wings), helicopters and aeroengines. The investment is not a grant and is repayable to the Government at a real rate of return, usually via levies on sales of the product developed. Large aerospace projects typically have high costs, pose a high level of risk, and generate a return only in the long-term. This has created a market deficiency in the availability of development funds for such projects. Launch investment remedies this, and also recognises the international mobility of aerospace projects, and the significant financial incentives that are available in other countries.

Any UK aerospace company can apply for launch investment, and each application is considered on its merits against a range of established criteria and also, by the Treasury, against public expenditure constraints. An applicant must demonstrate that the project is technically and commercially viable; that Government investment is essential for the project to proceed in the UK on the scale and in the timescale specified in the application; and that Government will recoup the investment at a real rate of return. Finally, the Government must be persuaded that support for the project will lead to major strategic advantages to the UK economy.