House of Commons South West Regional Committee (1st Report, Session 08-09): Impact of the economic downturn and the Government’s response

This report examined the impact of the economic downturn on the South West, and the mitigaty measures the Government has introduced.  The report indicated that although the South West’s economy is perceived as being dominated by tourism and agriculture, it is heavily dependent on manufacturing, construction, and distribution, including suppliers to the aerospace industry.

Evidence from the Confederation of British Industries (SW division) was included in the report, detailing the impact of the downturn on the South West’s aviation and aerospace industry, and coming to these key conclusions:

·                Passenger demand has been hit across the region for business and leisure flights, with discretionary travel notably impacted. 

·                Aerospace manufacture is a key industry for the South West, which has an estimated 27% of the UK industry and is home to the HQs or major facilities of 9 of the UK’s top 11 aerospace companies.

·                The manufacturing sector has not yet felt the consequences of the drop in demand for new aircraft, but may experience a time lag in activity from the economic downturn.  The sector fears that the mothballing of existing aircraft will hit companies’ demand once the current order book is built out.


The Committee welcomed the measures introduced by the Government, nationally and through the South West Regional Development Agency (SWRDA) to try and support businesses, but indicated these would need to be tailored to fit the specific needs of the region, particularly small businesses.  Unemployment has risen higher than the national average.  The Committee suggested a wage subsidy scheme to keep people in jobs and retain skills, particularly in specialist sectors.  Such a scheme would too expensive for the resources of the SWRDA, which indicated in its evidence that significant investments had already been made, particularly in the aerospace sector. 


As part of the National Aerospace Technology Strategy, SWRDA has spent over £11 million and committed another £8 million on major R&D projects to strengthen the UK’s expertise in composite materials, fuel efficient engines, and advanced design technologies.  These have leveraged around £140 million of external R&D funding. The Agency has been funding networking activity through the West of England Aerospace Forum, lean manufacturing programmes, a supply chain initiative and established a skills forum which together amounts to over £8 million of funding over the last five years.


The funding allocation for SWRDA is being cut over the next few years.  The Committee indicated that increased demands for essential frontline services on the Agency meant the reduced budget would have a doubly negative impact.


The Committee suggested that the Regional Minister Ben Bradshaw must continue to work with partners, and those in central Government, taking the concerns of the region to the heart of Government.  However the Committee was not convinced that the ministerial role added value.  The report urged the new Regional Minister to demonstrate how his work has led to identifiable progress in mitigating the impact of the downturn on the region and helping prepare it for the future.