The Department believes the recent events with Airbus report to be fair and balanced. Since the report was produced, Airbus has continued to push ahead with implementing its Power 8 programme to reduce costs and increase productivity.

It has now received bids from interested parties to be a partner at the Filton site, and Airbus is keeping the Government informed throughout this process on the provision of the commercial rationale of the sale, how the associated composite investment programme will be arranged, and an insight into the long term plans for Filton. A decision on the site is expected this year.

Airbus and its parent company EADS have also begun to move towards a simplified management structure in accordance with corporate governance best practice. In July Tom Enders was appointed as CEO for Airbus and EADS created a single chair, Dr Ruediger Grube and a single CEO, Louis Gallois. In October, the EADS board will consider appointing four new independent non-executive directors. The Government welcomes these moves, however it continues to put pressure on EADS to take further steps to ensure proper director independence and allow free float shareholder representation.

One of the main issues for the UK is to develop further its capabilities in composite material technologies for aircraft components. The Government was, therefore, pleased that the UK was chosen as the Airbus centre of excellence for wing and pylon, and that the UK achieved 20% of the A350 XWB aircraft work share, with a commitment to work with partners to develop and produce major work packages in composite materials in the UK. The government has confidence in the UK aerospace industry abilities to step up to the challenges offered by higher levels of outsourcing on the A350 XWB and future programmes.

To support the development of composite materials, and ensure UK industry has the technology capabilities for the future replacement for single aisle aircraft, Airbus is leading a bid to the Technology Programme for a collaborative research and technology programme "Next Generation Composite Wing". The consortium includes Qinetiq, Bombardier, Messier Dowty, Goodrich, GKN and Spirit; and has bid for £25 million from the Technology Programme, and sought a further £25 million of funding from nine regional agencies. Industry will provide the matching £50 million. The Next Generation Composite Wing programme is proceeding through the Technology Programme's appraisal process, and progressing through the appraisal processes of the regional agencies. The Department is working to ensure the programme's national importance is recognised by all those undertaking appraisals and those appraisals proceed as speedily as possible. It is premature to speculate on the outcome of all those appraisals.

The Department is working with colleagues in Europe on setting high level goals and research needs through the Advisory Council for Aeronautics Research in Europe (ACARE). This ensures there is a coordinated approach to European Framework Programme funding for Airbus.

The next stage in the Boeing-Airbus trade dispute will see the WTO produce an interim report on the findings and conclusions in relation to the Boeing complaint against Airbus. But this is unlikely to happen before the end of the year. The counter complaint by Airbus against Boeing will follow, with the first oral hearings in late September 2007. The Government remains committed to negotiated settlement. The Government is aware of the favourable public support for the aerospace industry received by countries such as Japan and others and will continue to work with the UK aerospace industry and the European Commission to maintain a level playing field.

The Government has confidence in the EADS/Airbus management and that future decisions in relation to Power 8 and the work share on future programmes will be based on commercial grounds. In support of this the Government will remain in continuous contact with the companies.