In 1936 a private company known as Power Jets Ltd was formed to enable Flight Lieutenant Whittle (later Air Commodore Sir Frank Whittle) to develop his gas turbine aero-engine and exploit his earlier patents. This company, which had been financed through an investment banking concern, started with an authorised capital of £20,000. It had no buildings of its own and all work took place at the premises of the British Thomson-Houston Co until a disused foundry, known as Ladywood Works, could be rented from BTH.
Work started on the original engine (the WU) in 1936, and in 1937, after testing and evaluation, Air Commodore Whittle decided to re-design the unit. The reconstructed engine broke down during a running test in May 1938, and it was decided not to rebuild it. A radical re-design took place and by April 1939 an engine with ten combustion chambers (as against the original one) was undergoing running tests, and achieving a good degree of success.
During these early years of experimental design, Power Jets had encountered financial difficulties when the shareholders became reluctant to subscribe further investment, and the Air Ministry was doubtful about giving financial assistance because of uncertainty over the practical application of Air Commodore Whittle's particular design. However, the Air Ministry paid the additional expense required for manufacture of the third unit, and by the summer of 1939 the Ministry was sufficiently impressed by its performance to go ahead with plans for construction of an airframe for the purposes of flight testing.
Air Commodore Whittle then proposed another engine, the W1, which was a lightened version of his experimental WU unit, and later in the year another engine, the W2. In 1940 the Treasury granted the first capital assistance of £24,000 to Power Jets, which provided finance for much-needed buildings, tools and equipment. The following year the Ministry of Aircraft Production sponsored a small factory near Leicester which became Power Jets headquarters in 1943.
On 15 May 1941, the E28/39 Gloster aircraft made its first historic flight, powered by the W1 pure jet engine. The MAP now became concerned with further development of airframe and engine units, and this resulted in a total of eleven firms (including Power Jets) becoming engaged in work in one form or another. With so many firms involved in what could now be called the "gas turbine industry", the MAP set up the Gas Turbine Collaboration Committee to promote co-operation between the various firms involved, and to ensure that progress was not impaired by the normal peace-time barriers of patents and secret technology.
The W2 engine, first proposed in 1939, had, by the spring of 1940, reached the stage where it became sufficiently advanced to be considered as a starting point for plans for an operational aircraft. The firms of Rover and BTH received Air Ministry contracts for the construction of W2 units, which were destined for use in the Gloster F9/40 prototype. The Rover Co was manufacturing most of the W2B engines until 1943, when, at the instigation of the MAP, Rolls Royce took over the production of the W2B and another unit, the W2/500. De Havillands had also been developing a jet propulsion unit, (the H1) based on a Whittle principle, and two of these engines were fitted in an F9/40 prototype which first flew in March 1943.
By directive of the Prime Minister, orders were placed for 300 Meteors Mk I and II to go into production and by the summer of 1944 the Meteor Mk I, fitted with the W2B/23 engine was the only jet fighter in existence, and it became operational in July 1944. By the end of 1944 production of the Meteor Mk III (powered by the W2B/37 engine) was under way and several other types of aircraft were being evolved to take engines developed from Whittle's design.
During 1944 the Government acquired the assets of Power Jets and formed a new company known as Power Jets (Research Development) Ltd amalgamating it with the gas turbine section of the Royal Aircraft Establishment, Farnborough. In January 1946 Power Jets (Research Development) was informed that the company was to become a Government Research Establishment, and this resulted in the formation of the National Gas Turbine Establishment at Pyestock, Hants. This decision led to the resignation of Air Commodore Whittle and the majority of his team of engineers, although Dr Roxbee Cox, the Chairman of Power Jets (Research Development), remained as director of the new establishment.