Motorsport Industry

Part of the debate – in the House of Lords at 7:30 pm on 23 October 2002.

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Photo of Lord Astor of Hever Lord Astor of Hever Conservative 7:30, 23 October 2002

rose to ask Her Majesty's Government what plans they have to ensure that the British motorsport industry remains a world leader.

My Lords, I declare an interest as president, unpaid, of the Motorsport Industry Association. For the past 25 years Britain has dominated the global motorsport industry with specialist teams, racing car manufacturers and parts suppliers forming a cluster of expertise. The industry has an annual turnover of £4.6 billion and employs 40,000 people in 4,000, mostly small businesses. Recently there have been signs that the industry is drifting into crisis.

Successful attacks on our position have been made from the USA, Germany and Italy. They recognise the huge knock-on effect in terms of the UK's wider reputation for technology, innovation and design brought by success in global motorsport. Motorsport is not only about developing vehicles and technology. One of the main reasons Honda, BMW, Mercedes and Fiat invest in motorsport is for the development and training of their people. They learn vital lessons in teamwork, timely delivery and competition. It is an environment that brings out the best in people.

Sadly, we appear to be witnessing the beginning of a brain drain of motorsport talent away from the UK. As overseas motorsport clusters begin to grow, such as in Germany, around Mercedes, BMW, Toyota and Porsche, we shall see those areas attracting growing numbers of UK motorsport personnel. People, and their innovative and competitive minds, are singularly the most valuable resource within the "community of knowledge" that is Motorsport Valley UK. The Government must ensure that the working environment not only retains these talented people but also attracts more of them to this cluster. The majority of motorsport-linked companies have freely chosen to opt out of the Working Time Directive. That option might be lost in 2003, and those companies forced to comply with a 40-hour week or less.

The essence of successful on-time delivery to the deadlines imposed by world motorsport customers is flexibility of working hours. No motorsport event has ever been delayed by the failure of delivery of a spare part! Once the flexibility of our workforce is lost, the UK loses yet another competitive advantage.

The Government need to consider their tax treatment of businesses in this valuable sector to find a better understanding of some of its unique aspects. Could an advice note be issued from Her Majesty's Treasury to the Board of the Inland Revenue covering clarification of motorsport engineering, R&D and circuit developments? An example would be that of development expenditure under SSAP13, where engineering products used in motorsport have a life of just a few months yet must be written off over two or three years. If such activities, which are more correctly described as applied research, could be 100 per cent expense in the year in which they occurred for tax purposes, that would encourage and benefit innovation in motorsport.

I understand that the aerospace industry receives favourable tax treatment on R&D expenditure. But motorsport companies spend a far higher level of R&D, as a percentage of their sales—often exceeding 25 per cent—than any other part of the engineering sector. Will the Government apply a similar helpful approach to motorsport?

The predominantly small businesses rely for their success on substantial interaction and collaboration with other advanced engineering companies—from precision to bio-medical micro-engineering; from aerospace and defence to automotive. It is important that world-class standards are maintained across all these sectors in the face of increasing competition.

Overseas governments appear more willing to find creative ways to subsidise or support businesses in motorsport and so gain the valuable international recognition for their own countries. I believe that the Italian Government, in support of the growing cluster around Ferrari, provide motorsport export rebate schemes and subsidise factory visits from overseas customers through their state tourist offices. It is vital that our Government move quickly, and with just as much creativity, to level this playing field. If they do not take urgent action, our industry will suffer the same fate as the once world beating British motorcycle industry—it will be destroyed by complacency.

All world-class sports events such as the World Cup or the Olympics receive state support. The televised audience for the Formula One series is of a similar size. The British Grand Prix is hugely important to this country. It is vital that this event is secured for the long term to add value and international recognition for our industry. I think that it is right to congratulate the Government on providing the extra cash to speed up the building of the Silverstone bypass. Substantial private funding has been secured for Silverstone, and yet further funding is needed. A bid has been delivered to the Prime Minister and government Ministers by Sir Jackie Stewart, and I hope that that will be seriously considered.

This November, Wales is again hosting a round of the World Rally Championship, the most prestigious event of its type, which attracts large tourism revenues into South Wales. What role are the Government playing to ensure that that event remains in the UK? UK motorsport, as a sport, and the many circuits and venues on which it depends, is starved of government support. A review of sports funding by the lottery, UK Sport or Sportsmatch shows motorsport to be virtually ignored—a few thousands of pounds compared to millions for other sports. Why is that so? Motorsport is the most capital intensive of all sports but it has no parent body from which it can derive funds. The sport relies on finance from individuals and the industry for its funding.

Healthy and active motorsport would benefit the industry and jobs, and secure our international competitiveness. Government funding should be made available more freely to develop the grass roots of the sport, to create a ladder of improvement for young drivers, and to assist in the updating and development of venues. The sport requires a national review to establish the most appropriate areas to which government support should be directed.

Professor Porter, of Harvard University, has indicated to the Government on several occasions that the Motorsport Valley performance engineering cluster is one of the rare global "jewels" in our industrial crown. The MIA put forward the industry's own cluster development strategy last year. The entire programme gained substantial financial and resource support, exceeding £10 million per year, from a wide range of advanced engineering companies from aerospace to automotive, defence to ceramics.

Such clear and substantial support, offered in March of this year, demonstrates just how keen and enthusiastic industry is to develop this valuable cluster. It is an asset which we cannot afford to lie fallow as we watch this sector slip away overseas and bureaucracy struggle along. Can the Government urgently find some way to match these commitments and make inroads into these cluster development plans?

Richard Burden, the Member for Birmingham Northfield, was recently appointed the parliamentary representative for motorsport. I very much welcome his appointment. In a debate in the other place in June, he called on the Government to do everything they can to nurture a sport and industry in which Britain excels. The Minister for Sport agreed and said that the strength of the sport and industry coming together bodes well for the future. He applauded the MIA and the MSA for playing an important role and working together. I am therefore mystified as to why neither the MIA nor the MSA has apparently been invited to join the DTI's competitiveness panel. They are, surely, the two key players. As the membership bodies, they represent the industry and the sport. The MIA has been the single source of cluster and industry knowledge for the past three years and represents nearly 300 members. On behalf of that business community, many members of which have contacted me before this debate, I believe that I am entitled to a full explanation from the Minister of that oversight.

This surely demonstrates the need for greater cross-Whitehall working. A number of officials in the DTI and DCMS have an interest in motorsport. The industry wants and deserves a clear leadership role and a strong voice in Whitehall. For, in the mean time, in a fast-moving international sector, overseas competitors are stealing this industry from under our noses.

May I urge the Government to change gear, up the pace and secure a victory for Britain in this vital economic race?