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Motorsport

I start by declaring an interest, as the unpaid president of the Motorsport Industry Association, the MIA. Five years ago, the DTI Minister, Patricia Hewitt, announced government support of £16 million, "““to sustain and develop the British Motorsport Industry””." She went on to say that, "““this industry is the jewel in the crown of our British Automotive Industry. In such a fiercely competitive market, we cannot afford to be complacent. This industry is exactly where the future of British manufacturing lies””." The following year, the noble Lord, Lord Sainsbury of Turville, in reply to a question that I had asked, confirmed the Government’s commitment to provide £16 million over five years from four regional development agencies, the DTI and the DCMS. In January 2005, the House of Commons Trade and Industry Committee report on the UK automotive industry clarified that 50 per cent of the £16 million of public investment into the motorsport sector was earmarked for ““skills””. Anyone reading those positive statements would applaud the Government for their positive plans to sustain one of the few globally successful British business clusters. However, the reality has proved to be a long way from the rhetoric. The scheme has failed to live up to its promise. It is time to admit this and move back to the traditional sector relationships with government. In January, Motorsport Development UK, the body set up by the Minister to co-ordinate this programme, produced its annual report. It makes very sorry reading and is the primary reason for my Question today. The highly publicised £16 million has been reduced by 40 per cent to only £10 million. The report is entirely devoid of any financial details or figures covering salaries, overheads or expenses used in distributing the fund— nor does it explain the value, efficiency or effectiveness to the industry, or the taxpayer, of the objectives. This lack of explanation by a publicly funded body is a scandal. It appears that MDUK still remains funded by just four of the 12 devolved administrations and regions, plus the Department of Business Enterprise and Regulatory Reform, to the tune of only £400,000 each per year from their multi-million-pound budgets. Why is the Department of Culture, Media and Sport now absent from the list of funders? Is it no longer associated with this initiative? Has it kept the £6 million earmarked for this project for some other sport? If not, what has happened to this significant sum and why has this not been made public? As the report fails to clarify many important points, and there is real concern in the motorsport industry, would the Minister's department be able to provide a clear, detailed financial breakdown of the MDUK performance and expenditure, with regional budgets and spending, and explain what happened to the full £16 million announced by the former Minister to such fanfare? I suggest that this is done in the form of a letter to me, with a copy placed in the Library. The apparent lack of understanding of current issues in the sport and the industry led me to note that, of the current eight members of the Motorsport Development UK board, just one appears to be fully engaged in the UK motorsport manufacturing industry. I am even more concerned that one member of this UK-focused board is fully employed and living in Bahrain, where he is the director of the Bahrain international circuit, a newly developing competitor to UK circuits. How and by whom were these appointments made? The chairman of MDUK, when presenting his report, admitted in reply to a question that the body had not, "““achieved much in the area of business development””." Yet this had been one of the most important objectives for both the Government and the industry. He also said that the industry was in, "““a healthy state, particularly at the high end””." In contrast to this reassuring view, it has been widely reported that, in fact, the UK industry faces a dramatic downturn at the ““high end of motorsport”” in the very near future. The sport’s governing body, the FIA, has confirmed that it will shortly require a significant reduction in the spending budgets allowed in Formula 1. As the majority of F1 teams are based in this country, this will commercially affect us far more than any other country in Europe. There will be substantial cutbacks in the employment of engineers in the teams and by their specialist UK suppliers. Sadly, it seems that we will be a victim of our past success. The Prime Minister’s Strategy Unit discussion paper, issued last month, Future Strategic Challenges for Britain, identified UK motorsport as a prime example of Britain hosting world-class, high performance innovation and engineering leaders. These skilled employees are precisely those on whom the Prime Minister relies for the future of UK manufacturing; they are all well skilled in advanced, innovative, value-added high performance engineering. Through no fault of their own, or of their employers, they will find re-employment difficult within this specialised sector during a period of such significant decline. Will the Minister seek an urgent meeting with the FIA, the MIA, the UK Formula 1 teams and their UK suppliers to see how best these clearly commercial decisions from a sports governing body can be mitigated? When other UK industries faced similar problems, regional and national support was swiftly made available to help re-employment. These skilled individuals are a particular asset to the UK and must be retained here. The Financial Times, in the same week as the MDUK report, headlined that Britain was losing its global dominance in this sector. British motorsport companies have lost many major global contracts over the past three years. Sadly, this trend continues unabated and unrecognised by either the Government or their MDUK advisors. Most worrying is that this business is not going to the emerging nations of China or India, but rather to our direct competitors in high-value-added engineering; the US, Italy, France and Germany. The motorsport industry is regularly highlighted as the perfect metaphor for future British manufacturing by the noble Lord, Lord Jones of Birmingham, as he sells Britain to the world with UK Trade & Investment, as does the FCO. I am pleased that the redevelopment of Silverstone appears to be making good progress, with planning approval close to being agreed. This will attract many global companies to the UK and create a sound financial base for the British grand prix at last. We trust that the Government will do what they can to help resolve any planning matters that are outstanding. We congratulate the Government on the R&D tax credits. Motorsport SMEs are innovative, creative and competitive, attracting commercial sponsorship for their R&D. They spend over 30 per cent of their annual sales on R&D—nearly three times as much as the pharmaceutical industry. This reaps commercial rewards, delivered on the track, for their sponsors. Outcomes from their substantial investment in innovation strengthen industry partners in defence, aerospace, automotive and maritime areas throughout the UK. In 2002, the industry told the Minister that it required a series of, "““urgent, co-ordinated actions to ensure the leading position of our industry is retained in the face of increasing overseas competition””." We must actively and intelligently sustain our leadership where it occurs in such high value-added sectors, and not stand by and allow it to decline. What has happened? After six years, the government response through the MDUK has singularly failed. The fears of those original industry advisers have become reality. I am surprised that no national survey has been undertaken since that delivered by the MIA and the MSA in 2000. Government departments still rely on this clearly outdated survey, citing £5 billion of sales, 38,000 employees and so on. Although the MDUK claims to have spent £10 million, it declined bids by research groups and the industry association to update this vital knowledge. Such research would allow a much clearer understanding of the success, or perhaps failure, of this initiative and the industry that it claims to sustain. Will the Minister’s department work with the MIA and the MSA—the national motorsports governing body—to enable them to update their joint national survey so that they can work with government departments to create a strategy for the future? I am pleased that the leading role of the FIA under the inspired leadership of Max Mosley in creating innovative environmental technology programmes was highlighted in the recent European Parliament report, CARS 21. The FIA also recognised, "““the role motor sport can play in changing attitudes and customer behaviour towards environmentally friendly technology””." The urgent need to popularise and increase public demand for energy-efficient vehicles is one of the greatest social challenges that we face while dealing with climate change. In 2003, the world’s first Energy Efficient Motorsports Conference was organised here in the United Kingdom by the MIA to gain the leadership for Britain in this exciting new opportunity. This was actively supported by the Government, but not by the MDUK. Sadly, today, the USA is securing the high ground in energy efficiency in motorsport. Washington recently announced a direct partnership between its Environmental Protection Agency, the American Le Mans Series and the US Department of Energy. Rhetoric and lack of initiative from the MDUK has allowed global leadership to pass largely to the USA, to Germany through Audi, and to France with Peugeot—another example of the very complacency of which the Minister had warned. In a recent nationwide electronic survey to the industry, over 70 per cent of those who replied said that the MDUK had ““not helped their business””. The same number felt that little or no progress had been made in co-ordinating investment into the cluster to widen sports participation or attract world-class events. However, 100 per cent made it clear that these issues, among others, remained critical. Professor Porter of Harvard University advised the DTI as a world expert in successful business clusters, and explained the importance of industry-respected institutions for collaboration. Such a credible institution was and remains the MIA, which has grown its UK membership by nearly 50 per cent in the same period in which this funding experiment has remained in place, and is fully owned by the industry itself. Its members should be putting their expertise and knowledge into working more closely with government in future to ensure that Britain does not further weaken its position as a global leader. In the light of that, what are the Government’s plans for Motorsport Development UK once its five-year plan has been completed? Can the industry and the sport return to dealing directly with relevant government departments, all interested regions and devolved Administrations?