Economic Impact - PwC Report
In 2020, the Team Tempest partners, BAE Systems, MBDA, Leonardo UK and Rolls Royce commissioned PwC to analyse the expected economic impact of the Tempest programme in the UK from 2021 to 2050; the first thirty years reflecting the development, production and entry into service phases of the programme as well as the early stages of operation.
The PwC report
Assessment of the expected economic impact of the Tempest Programme (2021 2050) analyses the national and regional economic contribution measured in terms of GVA and employment of the Tempest programme in its own right, as well as wider Combat Air activities. The report findings provided a conservative assessment excluding the benefit beyond this point, including significant benefit from exports.
The report also illustrates the additional, wider contributions of the Tempest programme on UK economy through a set of case studies, focusing on skills development, R&D skill over effects and regional development.
As our research outlines, the scale of the Tempest programme is significant and expected to deliver wide-ranging benefits to the UK, stimulating investment in new technologies and promoting critical skills and capabilities that ensure the UK can continue to operate at the forefront of world-leading technology. The programme will stimulate R&D in regions most in need and generate wider economic benefits for these areas, supporting the UK Government’s levelling up priorities and contributing to the UK’s economic recovery and prosperity in the decades ahead.
Diane Shaw, EMEA Aerospace, Defence and Security Consulting Leader, PwC
Key highlights
The Tempest programme is expected to deliver significant benefits to the UK over the full lifetime of the programme, benefiting all regions of the UK, including Scotland and Northern Ireland. Key highlights:
- The Tempest programme is expected to deliver £26.2bn economic contribution between 2021 and 2050 (NPV, 2019). These exclude benefits beyond 2050, which means most of the value generated by exports is not captured within this 30-year period.
- The programme is expected to provide long term critical sovereign capability in areas such as design and development of combat air systems, through the sustainment of high value jobs and support on average 21,000 workers per year from development to operational service (2026-50).
- The programme will create high productivity employment, with an average GVA per worker 78% higher than the UK national average at £101,000 and 42% higher than the UK manufacturing average.
Regional Benefit
The Tempest programme can contribute to the UK Government’s commitment to levelling up:
- The impact of the Tempest programme will be felt across all regions of the UK including Scotland and Northern Ireland, with 70% of the value in the North West, the South West and East of England
- Regional GVA per worker for the Tempest programme is 31% higher than the North West manufacturing average, 24% higher than the South West manufacturing average and c. 60% higher than the East of England and Scotland manufacturing average.
Sovereign skills and operational advantage
Maintaining access to a dynamic and innovative UK industrial base will determine the UK’s ability to choose how it delivers its future requirements. Tempest will enable the UK to reap the economic, international and strategic benefits of a major role in a future Combat Air acquisition programme.
The link between military advantage and economic prosperity cannot be overestimated. In order to maintain operational advantage and freedom of action, we need to generate our own intellectual property and develop our people and their skills - thereby securing our national prosperity and the UK’s position as a defence exporter.
The Combat Air Strategy highlights the criticality of cutting-edge UK technologies and intellectual property, including how this is generated, sustained and exploited.
The UK’s combat air sector is a proven success story, contributing to many areas of the economy, particularly manufacturing and technology. The freedom to choose how we deliver our future requirements is dependent on maintaining access to a dynamic and innovative UK industrial base. The ability to design and build combat aircraft in the UK makes a major contribution to our industrial base, providing a highly skilled and productive workforce, which generates significant exports for the country.
Preserving this sovereign capability is vital to ensure we as a nation retain independent military ‘freedom of action’ and our national security, and at the same time make a positive economic difference to the UK.
Return on investment
Combat Air delivers on average £6bn of revenue to the UK every year and is responsible for 85% of defence exports from the UK. Every major programme has returned significantly more money to the UK Government than originally invested. Programmes including Hawk and Typhoon have delivered impressive economic return for the UK:
- The initial £800m the Government invested in Hawk led to the most successful trainer aircraft in history with over 1,000 platforms sold, the vast majority exported, delivering a return of more than £16bn to the UK economy.
- On Eurofighter Typhoon, the UK Government has invested £12bn, but from export sales has seen double that revenue return to the UK economy, with the potential of more to come.
The principles and objectives for the Tempest programme, focused on delivering a capable, flexible and affordable product will ensure that this track record continues.