OPINION: The UK has a massive opportunity in space
When they think about the modern space sector, most people likely imagine NASA’s missions to Mars or SpaceX’s reverse-landing rockets. They don’t think of the Scottish islands or Newquay airport. Yet there’s a nascent industry here that presents a massive opportunity for the UK, and especially its investment community.
Not many Brits recognise the UK’s significant competitive advantages when it comes to space: its excellent academic and research credentials, its first-class capabilities in AI and data science, world-leading manufacturers in satellite hardware (Scotland alone produces more satellites than any country in Europe) and – just as important – its excellent location for launching into the great beyond. As a set of islands at a high latitude, the UK can safely launch its kit into highly useful ‘sun-synchronous’ polar orbits (where satellites always pass over the same point at the same time, helping with Earth Observation). It’s unsurprising that at least seven spaceports are in development, from Richard Branson’s plans at Cornwall Airport Newquay, to the Shetland Space Centre with Lockheed Martin as a key supporter.
Space is a high-growth, high-reward sector, and the UK has big ambitions: it aims to capture 10% of the global market by 2030 (roughly doubling its share of a market expected to be at least 33% bigger by conservative estimates). This will require increasing the value of the UK space industry from its current value of about £15bn to around £40bn by the end of the decade, with huge opportunities for jobs, inward investment and trade.
Crucially, this sector is no longer the reserve of large companies or specialist government agencies. The UK is developing an ecosystem of firms that could unlock space for the wider economy. It’s getting easier and cheaper to launch and use satellite technologies, tapping into a wide range of new services. Amazon has launched ‘AWS Ground Station’, which gives its customers a one-stop-shop for controlling satellites and managing data without having to set up their own ‘mission control’. If you’re surprised to see a web services firm offering something like this, don’t be: the space industry is as much about data as it is about rockets.
It isn’t just giants like Amazon who are trying to open access to space services. At the smaller end, innovators like Alba Orbital in Glasgow are seeking to “democratise space” with 5cm micro-satellites called PocketQubes that dramatically cut the cost of deploying hardware in orbit. Hampshire-based In-Space Missions can manage space assets on behalf of non-specialist customers. Other innovators like Culham-based Reaction Engines are developing reusable engines for supersonic commercial flight and B2Space is building the technology for launching satellites from high-altitude balloons.
The UK will not rival the space superpowers when it comes to returning to the Moon or setting foot on Mars, but it can realistically expect to compete in satellite services, launch capabilities, data, in-orbit servicing and manufacturing. To fully exploit these advantages however, Government must combine a clear vision for the sector, sizeable public investment, and the leveraging of significant private capital. With a record pile of capital amassed during the pandemic, now is a rare chance to mobilise huge levels of inward investment.
The government’s vision for the sector is developing. The Space Growth Partnership, a coalition between industry, academia and Government, has set out a Prosperity from Space Strategy to inform progress over the next decade. It aims to create an ecosystem that attracts £3bn in inward investment in the UK space sector, as well as encouraging financing for UK space companies and infrastructure.
In terms of attracting private investment, the watchword is ‘confidence’.
On public investment, there’s still a sizeable gap. Exciting programmes like ARIA, a new body modelled on DARPA, the USA’s ‘high risk, high reward’ agency, will help. DARPA played a central role in America’s creation of GPS and the UK will benefit from such blue sky thinking that taps into its excellent scientific research base. But it also needs to improve its structural support for space innovation and get better at public sector procurement in space services. The trade body, UKSpace, recommends a figure around £400m per year for the next ten years. If the government wants to grow the industry by £25 billion in the same timeframe, it should heed that advice.
In terms of attracting private investment, the watchword is ‘confidence’. Industry watchers are keeping a keen eye out for a new National Space Strategy, expected within the next six months. The Government is also working on a clearer licensing regime for UK launches, which is now coming under the remit of the enthusiastic Transport Secretary, Grant Shapps, who is already working to allay industry concerns over the speed of regulatory development.
Government procurement can also diminish risk in the sector. NASA has successfully demonstrated the power of a long-term anchor customer, enabling industry growth through direct funding, building infrastructure and giving a stamp of approval that builds confidence amongst investors. To do something similar, the UK Government will need to commit funds beyond its usual spending horizons of 1-3 years.
The global space economy is expected to boom over the next few decades. Morgan Stanley and Goldman Sachs both predict that the industry will be worth over $1.1 trillion by 2040. Competition for attracting venture capital is fierce, as increasing numbers of countries look to develop their own industries. 2019 was the first year in which the number of non-U.S. space companies receiving investment exceeded the number of U.S. companies.
If the UK acts fast, it can mobilise its capital markets, research base and geographical advantages. Doing so will unlock an industry that can support not only much-needed economic recovery, but also address long-term policy challenges from security, to productivity, to climate change. The sky is no longer the limit – it’s time for the UK space sector to fly.
Rt Hon Charles Hendry CBE, Senior Adviser at Helmsley Partners
Jamie Horton, Analyst at Helmsley Partners