Labour warned over way forward for UK’s ‘crown jewels’ as Rolls-Royce threatens to construct engines overseas

Labour has been warned it is not doing enough to protect Britain’s industrial ‘crown jewels’ after it emerged that Rolls-Royce could build new engines overseas.

Industry body ADS said the government must step up the pace of support or risk damaging the UK’s world-leading manufacturing businesses.

It comes after the Mail revealed that FTSE 100-listed Rolls-Royce could build a new range of jet engines in Germany or the US instead of Britain.

The aerospace giant is being actively courted by politicians in Berlin and Washington over a programme that will create 40,000 jobs across the company and supply chain.

Any decision by Derby-based Rolls-Royce to launch build new jet engines outside the UK would be seen as a major blow to Labour’s faltering growth hopes.

It comes as surging energy costs – blamed on Ed Miliband’s Net Zero drive – are making it harder to make money from manufacturing in Britain.

The programme will create 40,000 jobs across the company and supply chain

An ADS spokesperson said: ‘This really underlines how competitive the global market is – we have a desperate need to make and sustain the UK as an attractive place to do business.’

ADS said proposals to funnel more government funding to aerospace research and to tackle high energy cots could be ‘pivotal’ in achieving this.

‘However that may not be sufficient in aerospace particularly where geographic sourcing decisions in the next two years will have huge consequences for decades and we must ensure we maintain our market position,’ the spokesperson added.

‘Our world leading manufacturing businesses are a jewel in the UK’s crown, but they will suffer without the appropriate regulatory, political and societal support.

‘The measures taken – or rather, announced – by this government so far are helpful; but it’s time they are delivered on at pace.’

Derby-based Rolls-Royce is looking to re-enter the narrow-body engine market – worth £1.6 trillion globally – for planes used on shorter-haul flights.

It is in talks with the Government over financial support for the programme – which Labour has identified as a key part of its industrial strategy.

And it is understood that developing the engines in Britain is the preference of boss Tufan Erginbilgic, who has led a turnaround of the UK manufacturing giant.

But insiders believe there are ‘plenty of options’ outside the UK.

And without the taxpayer support it is seeking – in the hundreds of millions of pounds – it will weigh up building the engines in Germany or the US, two countries where it already has manufacturing sites – and where energy is much cheaper, the Daily Mail understands.

The company is seeking financial backing from the UK towards some of the project’s £3bn research and development costs. But it estimates the business could generate more than £100bn for the UK economy.

For Rolls-Royce to launch such a major manufacturing business overseas would be seen as a body blow to Britain. It would echo other Labour setbacks, such as AstraZeneca scrapping a £450m vaccine plant on Merseyside.

Last month, the operator of the Channel Tunnel said it had cancelled future investments in the UK thanks to its soaring tax bill – further adding to fears that Keir Starmer’s government is driving business away.