The Government has awarded a contract worth around £250m to engineering giant BAE Systems to progress the design and development of a new multibillion-pound UK fighter jet.

The signing of the agreement marks the start of the Tempest programme, which is being delivered by a consortium of firms including BAE Systems, the Ministry of Defence (MoD), Leonardo UK, MBDA UK, and Rolls-Royce.

The consortium will work with international partners to develop the so-called ‘Future Combat Air System’, which will be used by the Royal Air Force to “stay ahead of evolving threats”.

The project will support an average of 21,000 jobs a year, according to a recent report by PwC, with 70% of the value generated in the North West, South West and East of England. In the South West alone, the project is expected to create 2,000 jobs a year.

The latest funding will see the partners develop a range of digital concepts, embedding new tools and techniques to shape the final design and capability requirements of Tempest.

Ben Wallace, UK Secretary of State for Defence, said: “[The] news is a momentous step towards designing and building a new combat air system which will boost our already world-leading industry and ultimately keep us safe for the rest of the century.”

The Government is investing £2bn investment over four years into the project. Across the UK as a whole, combat air activities of the Team Tempest partners are expected to contribute £100.1bn to the UK economy and support 62,000 jobs a year between 2021 and 2050.

Mr Wallace added: “We will now be getting to work with our partners to get the concept right and get this incredibly exciting and ambitious project off the ground. Make no mistake: we are remaining at the top table when it comes to combat air.”

According to Rolls-Royce, Tempest will involve the development of new technologies, including those assisted by artificial intelligence, machine learning and autonomous systems that will be used in future conflicts.

Phil Townley, director future programmes at Rolls-Royce Defence, said the funding marked a “critical step forward” for the project.

“Tempest represents an exciting period of history across the defence industry, particularly for our people and the next generation of talent who will be at the forefront of this programme for decades to come,” he added.

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