The funding landscape: an overview

Business Wales can help businesses in areas such as investing in R&D, introducing new techniques and technologies in design and manufacturing, protecting assets through intellectual property (IP) rights, and accessing facilities and expertise. Funding and Innovation Vouchers are available for all phases of research and development, and support with applications for other UK and European funding is offered. The SMART Innovation programme can also support SMEs interested in accessing consulting expertise and financial support in design and manufacturing, with areas of support including Conceptual Design, Engineering Design and Rapid Prototyping.

Scottish Enterprise and Highlands and Islands Enterprise are the two primary economic development agencies in Scotland. They offer a multitude of services to support and encourage innovation, business growth, meeting sustainability targets and investment in capital.

Scottish Enterprise has several relevant funding mechanisms, including SMART: Scotland, Low Carbon Manufacturing Challenge Fund (LCMCF), the Highlands and Islands Pathfinder Accelerator. Smart Scotland supports technically focused feasibility studies, whereas the LCMCF supports projects aiming to speed up the transition to a low carbon economy in the manufacturing industry with grants starting at £150,000 (the scheme is currently temporarily paused). The Highlands and Islands Enterprise Pathfinder Accelerator is a funded programme for entrepreneurs aiming to accelerate their new product or business in four months; participants also gain access to practical tools and techniques to interrogate their ideas, plan for opportunities and optimise for marketplace success.

An overview of grant funding available from Scottish Enterprise and other relevant funders is available here: Featured business grants and funding calls – Scottish Enterprise (scottish-enterprise.com)

Invest Northern Ireland (Invest NI) is Northern Ireland’s regional economic development agency. It is a non-departmental public body (NDPB) of the Department for the Economy (DfE). It promotes business growth and inward investment, innovation, research and development and in-company training, encourages exports, and supports local economic development and company start up. Invest Northern Ireland offers innovation vouchers and special support to organisations new to R&D funding.

Invest NI’s Project Definition support offers up to £50k towards the cost of planning and defining your R&D project, allowing you to reduce your project’s risks and identify its costs and potential benefits. You can also use Project Definition to help scope out a collaborative R&D project and apply for either an Invest NI Grant for R&D or external funding, such as Innovate UK. Invest NI Grant for R&D offers both advice and financial support to help you develop your idea into a successful product, process or service ready for commercialisation.

In England, local institutions play an important role in supporting businesses through grant funding, advice, and other bespoke support.

Local Enterprise Partnerships (LEPs) are partnerships between local authorities and businesses to help determine local economic priorities and lead economic growth and job creation within the local area. A full list of each of the 38 LEPs, with a link to their respective websites can be found here: The LEP Network | Supporting all 38 LEPs across England. In the March 2023 Budget, the Government stated that it intends for the functions of LEPs to be delivered by local government in the future, and it is minded to withdraw central government core funding for LEPs from April 2024. Local growth funding for businesses will increasingly be delivered by Combined Authorities and local authorities in future.

Combined and Mayoral Combined Authorities (MCAs) involve two or more councils to collaborate and service a region. They are locally operated and are usually agreed with national government through a devolution deal. Examples include the West Midlands Combined Authority led by Mayor Andy Street, and the Greater Manchester Combined Authority led by Andy Burnham. More recently the Government agreed to establish MCAs in the East Midlands, and North Yorkshire. A list of established and upcoming MCAs can be found here.

LEPs, MCAs and local authorities offer various types of types of support for business and innovation, including capital funding, R&D grants, and business advice. Many local programmes are supported by the £2.6bn UK Shared Prosperity Fund, which is delivered in England by Mayoral Combined Authorities and the Greater London Authority, and lower tier or unitary authorities elsewhere.

LEPs and MCAs in the East Midlands, Northeast, Northwest, West Midlands, West of England, and Yorkshire and the Humber also provide Made Smarter adoption support. This provides grants and specialist advice for SME manufacturers to adopt digital technologies.

The Regional Aerospace Alliances offer support for businesses in aerospace, aviation, and adjacent sectors. They can support businesses in accessing funding sources and tend to have a geographical focus on helping businesses based in or looking to move to their home region. These include:

• Midlands Aerospace Alliance
• Northwest aerospace alliance
• West of England aerospace forum
• Farnborough aerospace consortium
• Aerospace Wales

UK Research and Innovation (UKRI) is the primary national funding agency investing in science and research in the UK. Operating across the whole of the UK with a combined budget of more than £6 billion, UKRI brings together the 9 Research Councils, Innovate UK and Research England.

UKRI’s funding finder provides an overview of open competitions.

A part of UKRI, Innovate UK is the national innovation agency, specialising in providing innovation funding for industrial research across all sectors, technologies and regions. Innovate UK helps businesses grow through the development and commercialisation of new products, processes, and services.

For aerospace this is achieved primarily through a mix of challenges and funding programmes focussed on different areas of aerospace innovation and R&D. Innovate UK also offers Innovation loans and late-stage commercialisation grants.

The Catapult Network consists of nine Catapult centres across 50 locations. The centres are designed to accelerate the application of research into specific fields of science and technology. They provide businesses of all sizes with access to facilities and expertise which enables them to test, demonstrate and improve their ideas and products. By encouraging collaboration between industry, government, research organisations and academia, the Catapults create innovation environments in key sectors.

Each Catapult offers different facilities, programmes, support and often also options to smaller businesses.

For aerospace companies, some of the more relevant Catapults are:

• High Value Manufacturing (HVMC) with its seven centres, including the Advanced Manufacturing Research Centre (AMRC), the Centre for Process Innovation (CPI), the Manufacturing Technologies Centre (MTC), National Composites Centre (NCC), the National Manufacturing Institute Scotland (NMIS), the Nuclear AMRC and Warwick Manufacturing Group (WMG). While the HVMC does not offer grants or direct financial support, it can help develop funding proposals and support with introductions to investors.
• Connected Places Catapult (CPC), runs the Future of Air Mobility Accelerator in partnership with the Future Flight Challenge and Industry partners, and recently launched the Future of Freight Innovation Fund, one of a number of Accelerator Programmes CPC deliver throughout the year. CPC also partners with the Department for Transport’s (DfT) Transport Research and Innovation Grants (TRIG) to fully fund proof-of-concept research projects aiming to improve the transport system. The TRIG is open to SMEs, universities, and large businesses. In addition, CPC is an Innovation Partner of the DfT.
• Digital Catapult, with a mission of accelerating the adoption of advanced digital technologies to solve industry challenges in a variety of sectors including aerospace and manufacturing. Funding opportunities for digital adoption projects include Made Smarter Innovation | Digital Supply Chain Hub, which is looking to address small and medium-size enterprises (SMEs) supply chain challenges with funding of up to £100,000.

The Engineering and Physical Sciences Research Council (EPSRC) is one of UKRI’s nine Research Councils, and the main funding body for research and training in engineering and the physical sciences. EPSRC invests more than £850 million a year in a broad range of subjects – from mathematics to materials science, and from information technology to structural engineering. EPSRC funding is aimed at fundamental research and low TRL academic projects. EPSRC also funds the Faraday Institution, which works on early-stage battery research.

The Faraday Battery Challenge was designed to invest into research and innovation projects and drive growth in the UK battery business. The programme had a budget of £541 million and ran from 2017 to 2022. A recent extension grant will support the programme until 2025. The programme is delivered in partnership with Innovate UK and you can view projects funded to date here.

Recently, a growing amount of government funding has been made available for net zero related projects and initiatives. The government’s Net Zero Innovation Portfolio is a £1 billion fund to accelerate the commercialisation of low-carbon technologies, systems and business models in power, buildings, and industry. The portfolio is made up of a number of different funds and schemes which are summarised on the government’s Net Zero Innovation Portfolio page.

For aerospace-specific funding, ATI funding is the UK’s primary funding source, supporting the aerospace community across the country in developing cutting-edge technologies between TRL 3-6. The programme supports the sector in securing economic competitiveness and environmental sustainability, focusing on three technology roadmaps outlined in the sector strategy Destination Zero: ultra-efficient, zero carbon, and cross-cutting enabling technologies. ATI’s biggest funding programme is the strategic programme, with projects varying in size from £1m to around £50m. An average project can have a duration of around 3 years and is usually made up of a consortium of industry and academic partners.

To be eligible for this funding stream, a project must:

• focus on aerospace technology development.
• align with the ATI’s Technology Strategy.
• be undertaken in the UK by UK-registered companies.
• provide economic benefits to the UK.

Assessing progress against the technology strategy, the ATI has recently identified areas key to achieving Net Zero 2050 and securing UK competitiveness which require investment in upcoming funding batches. View primary funding opportunities here.

For more information on ATI funding please visit our dedicated funding page.

Supporting development of new classes of electric, hydrogen and autonomous air vehicles, the Future Flight challenge aims to transform how to connect people, deliver goods and provide services. The programme has a budget of £125 million and is scheduled to finish in 2024, with no further funding rounds announced. 

Horizon Europe is Europe’s the €95b science and innovation programme aimed at tackling global societal goals, including climate change and boosting the EU’s competitiveness and growth.

The UK is associating to the full Horizon Europe programme, with the only exception of the EIC Fund (which is the loan/equity instrument of the EIC, see below). The scope of association includes the European Research Council (ERC), the Marie Skłodowska-Curie Actions, the six ‘Global Challenges’ clusters and Missions, the partnerships, the European Institute of Innovation and Technology, and many others.

UK organisations can apply to most Horizon Europe funding opportunities on the same terms as EU-based applicants through the Horizon Europe Guarantee. 

To be eligible you must:

• be based in the UK
• have been successful at applying for a Horizon Europe grant with final submission deadlines on or before 30 June 2023
• have been included on the initial grant proposal as a ‘beneficiary’ with an assigned budget.

The UK Government is currently formalising access to Horizon Europe. In the event the UK is unable to participate in Horizon Europe projects on equal terms as members states (called association status), the UK Government has committed to providing funding for organisations who successfully apply into projects as a ‘third country partner’ under an extension of its ‘Horizon Europe Guarantee’ scheme until 2025.

For more information please refer to UKRI – Horizon Europe: help for UK applicants – UKRI, or the European Commission Q&A on the UK’s participation in Horizon Europe.

The Clean Aviation Joint Undertaking (JU) is the EU’s leading research and innovation programme developing technology for aircraft that will be critical in the transformation towards climate neutrality totalling €4.1b. The Clean Aviation programme is built on three key funding areas:

• Hybrid-electric regional aircraft
• Ultra-efficient short and medium range aircraft
• Disruptive technologies to enable hydrogen-powered aircraft.

The European Partnership for Hydrogen Technologies, whilst not solely focussed on aerospace, has grant funding support for businesses of any size with activities related to the creation of cutting-edge hydrogen technologies. For more information, please refer to Clean Hydrogen Partnership.

For further detail information on private funding, including different types of debt and equity funding, please take a look at our report on Funding Growth in Aerospace, co-published with PwC to highlight funding needs and opportunities in the UK aerospace sector.

The British Business Bank is a government-owned business development bank dedicated to making finance markets work better for smaller businesses. It aims to offer finance by way of loans to start-ups and businesses that need help to grow to the next level or stay ahead of the competition.

The UK Infrastructure Bank provides financing tools including loans, credit enhancement and equity investment. In 2023 they announced an intent to focus on Net-Zero and transport projects including funding for a multi-billion pound green metro system for Clyde, Scotland, and the decarbonisation of the Welsh bus fleet.

More detail on government backed financing schemes, including loans, can be found on the government’s business finance support page.