Dick Elsy in the Sunday Times

Dick Elsy, chief executive of the High-Value Manufacturing Catapult, speaks to Kathryn Cooper from the Sunday Times on the subject of suggested Government plans to convert some or all of Innovate UK’s budget into loans.

Dick said the government was showing a “lack of understanding” of the importance of grant funding in getting genuinely disruptive technology off the ground. “I came from industry three years ago and, as a believer in free markets, I did ask whether catapults could be self-funding and not need the government. After three years, I have the polar opposite view.

“When you are talking about radical shifts in technology, no single company wants to tackle it on its own. We offer a place where companies can collaborate with each other and academia, and the government contribution is what brings them together.”

The benefits of catapults extend well beyond their bigger supporters, which include Rolls-Royce, GKN and BAE Systems, to the smaller domestic companies in their supply chains.

When Rolls needed to cut the time it was taking to make the discs that hold fan blades in its Trent engines, it sought help from the Advanced Manufacturing Research Centre in Rotherham, part of the manufacturing catapult. Through the centre, Technicut, a local tooling company, and Nikken, a Japanese fittings specialist, worked together to develop a tooling system that has halved the manufacturing time. It is used at the £100m Rolls-Royce facility in Washington, Tyne and Wear, which secured thousands of manufacturing jobs in northeast England when it opened last year.

“I doubt these companies would have come together without government funding. It was a high-risk project and it might never have got off the ground,”

Rolls-Royce argues that it has invested far more in R&D in Britain than it has received in grants over the past decade. It said it had secured £335m in research and technology aid in 2004-2015, but invested £6.5bn into Britain over the same period.

“Aerospace companies in particular are telling me that if the business secretary moves from grants to loans that sit on their balance sheets, they may as well borrow from their normal sources,” said Elsy. “And in that case, they may as well go elsewhere in Europe where they can still get R&D grants.

“There is a very real danger that we will lose highly mobile R&D overseas, just as we are making a success of it.”

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