Quote
UK engineers have begun critical tests on a new engine technology designed to lift a spaceplane into orbit.

The proposed Skylon vehicle would operate like an airliner, taking off and landing at a conventional runway.

Its major innovation is the Sabre engine, which can breathe air like a jet at lower speeds but switch to a rocket mode in the high atmosphere.

Reaction Engines Limited (REL) believes the test campaign will prove the readiness of Sabre's key elements.

http://www.bbc.co.uk/news/science-environment-17864782

Original IIRC this was between British Aerospace and Rolls Royce. I would not be surprised if there is a strong link between the two.

More...
http://www.bbc.co.uk/news/science-environment-17864924
http://www.bbc.co.uk/news/science-environment-17874276

It's great engineering work, I have to wonder how long it will be before we see the type of intercontinental flight times they are talking about and whether those will be on concorde type aircraft only affordable to the rich.