Aerospace chiefs attack tax rise and warn of 40,000 job losses

The leaders of Britain's aerospace industry yesterday launched an attack on government red tape and tax rises after warning that 40,000 jobs and orders worth more than £2bn will disappear this year.

The industry, already reeling from the effects of 11 September, said it was "extremely concerned" about the additional burden being placed on companies by new legislation and the increase in employers' National Insurance contributions.

Gordon Page, president of the Society of British Aerospace Companies and chairman of Cobham, said the 1 per cent increase in NI contributions would cost the industry £45m – more than wiping out the £40m benefit from new tax breaks for research and development spending.

"Large companies can cope with the burden of tax and increased regulation but how some of the smaller companies in the supply chain will cope is a mystery," Mr Page added.

The SBAC said that last year the industry had a turnover of £18.4bn and provided 500,000 jobs in total – of which 147,000 were direct employees. This year it expects 20,000 direct job losses and a further 20,000 in supply companies while civil aerospace sales are forecast to fall by 20 per cent or £2.2bn.

Aircraft orders at this year's Farnborough Air Show, which begins in three weeks, will be nowhere near the $52bn announced last year, said the SBAC. It added that security costs for the show had risen by 50 per cent to £700,000 with the introduction of metal and explosives detectors while increased insurance premiums would take the bill to well over £1m.