Orbex was certainly ambitious. It was one of two companies backed by the British government with plans to develop a domestic space industry.
At its peak in 2022, the business was valued at $220 million. It planned to create a commercial rocket that would be launched from its base in Scotland.
If it could have made it work, and brought it to completion on budget, it could potentially have been one of the leaders of the European space industry.
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But last week the government decided not to take part in the latest funding round, despite putting in £26 million in two earlier rounds, and the company had no choice but to call in the administrators.
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It is not the first space project backed by the British government to fail. An earlier investment in OneWeb, a satellite start-up to rival Starlink, was made under Boris Johnson’s government.
But that also came to nothing and it had to be merged into France’s Eutelsat. It is not an inspiring record. The government keeps pumping money into research and development, only to watch its investments fail.
The space industry is throwing up some serous opportunities
Yet space is turning into one of the most important industries of the 21st century. The global space industry is already worth an estimated £500 billion a year and it is growing all the time. Elon Musk’s SpaceX is expected to list its shares later this year with a value of $1 trillion or more.
Rivals such as Amazon founder Jeff Bezos’s Blue Origin are growing just as quickly.
From internet connections, to orbital data centres, to mining for raw materials, lots of commercial applications are opening up. It has become clear that space is a serious commercial opportunity, and one where lots of money will be made.
Britain should want to be a part of that. The UK economy is hardly in great shape, but if it is to start growing again then it needs to find a way of building new, high-tech industries that generate plenty of wealth and well-paid, high-skill jobs.
Space is a perfect candidate, especially considering we have a deep heritage in aerospace and engineering, and that we also have the venture-capital firms to back them once they become established. There should be plenty of British entrepreneurs building new companies in the sector.
Yet we have taken completely the wrong approach. We are relying on the traditional policy of state-led investment, even though it has failed countless times in the past.
The government tries to identify a company with a promising technology and gives it a little bit of money, then everyone crosses their fingers and hopes it turns into a success, or at least manages to find a buyer with deeper pockets. More often than not, it doesn’t work. The “winner” turns out not to be very good after all, the technology doesn’t quite work as planned, the schedule slips and the government loses interest. The start-up closes or is sold off. Rinse and repeat.
Britain should do something different. We should radically deregulate to allow innovation. Of course, the industry needs proper safety standards. Nobody wants to see rockets blowing up on the launch pad, especially if it risks lives.
But there is still plenty we could be doing to make the UK the most competitive country in the world to start and build a space company.
Put a rocket under Britain's space industry
To start with, we could make space profits free of corporation tax. If Britain had a zero rate for operations off-planet, that would be very attractive for firms around the world. Next, offer a 10% capital gains tax rate if a space business is listed or sold.
Again, that would make the UK the world’s best place to invest in new space businesses.
Finally, relax the technical regulations. The industry is inherently risky. SpaceX has suffered an explosion, but that has not stopped it from growing. If there are no humans on board, it does not really matter if a spacecraft does not work quite as planned.
We should recognise that we can’t apply the same standards we would to a car or a toaster, and relax the rules accordingly.
It is the one sector where it will pay to be a little less cautious. Let entrepreneurs experiment with what works and what doesn’t. That’s the way the UK could become a world leader in the space industry.
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