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Airbus to receive £340 million from government

18th August, 2009

The aerospace sector is to benefit from millions of pounds of taxpayers’ money in an attempt to prop up ailing aircraft manufacturers. Airbus, announced business secretary Peter Mandelson, will receive £340 million in loans to support the development of the A350, the European competitor to Boeing’s 777 and the 787. Rolls-Royce, meanwhile, has been awarded a £45 million grant to help finance the building of three factories for aerospace production and one for nuclear power machinery.

When even tourism companies describe the aviation industry as ‘carbon-dependent’ , such funding sits uneasily with the promises made in the Government’s low carbon transition plan to generate 1.2 million green jobs. Earlier this month the Vestas wind turbine factory, on the Isle of Wight, was forced to close after the Government turned down requests for financial support to boost the renewable energy market.

These latest announcements provide just two examples of the kind of benefits the aviation sector routinely enjoys. Millions of pounds in grants are made available by the UK and EC for aerospace research and development, while national and regional funds are frequently offered for route development, airport expansions and marketing. Research by George Monbiot found that over the past ten years government agencies have spent £80m helping the aviation sector to expand its business.

Meanwhile, the sector is protected from many of the costs faced by other industries. Airlines pay no fuel tax, and no VAT is levied either on tickets or on aircraft used from international travel. Even policing costs at airports are often paid from the public purse. London City Airport, for example, costs the Metropolitan Police over £5 million per year.

Several prominent airlines have mounted campaigns to oppose the increase in air passenger duty announced in this year’s budget – a levy paid only by air travellers. UK taxpayers, meanwhile, will now be shelling out to Airbus and Rolls Royce even if they never set foot on a plane.