Parliament And Space: Multi-Year Funding ‘Necessary’ For Growth16th Nov 2022
The UK boasts almost 1,300 space organisations and companies, and while this number reflects the nation’s growth in orbit, the House of Commons argues more support is needed to sustain these businesses. In a new report where Parliament and space intersect in a review of the health of the space industry, the Commons expects short-term funding to turn into multi-year investments, and SMEs to receive more support to grow into larger franchises.
Commons released the report on 4th November in collaboration with the Science and Technology Committee. It is a culmination of findings from its inquiry into the UK space strategy and satellite infrastructure ecosystem. The inquiry began in April 2021, and the House of Commons has now set numerous recommendations for the government to respond to. Parliament and space could, as a result, continually intersect when it comes to funding.
Calls for longer-term funding
While large pots of funding have driven space companies to success, the Commons report found that the industry would benefit from more multi-year investment settlements (minimum of three years). Space companies often rely on funding from the government at the start-up stage before reeling in capital from customers. However, with the “late arrival” of government budgets in recent years that have damaged the progress of R&D, and small investments running out too quickly, the report asserted funding should be ongoing to sustain businesses.
“Stakeholders said that funding for multi-year space programmes was necessary for effective project planning, technology development, attracting private investment and recruiting and training employees,” the Commons report stated. “The lack of funding for R&D being carried out at low Technology Readiness Levels (TRLs) was also recognised. This was attributed to the lack of long-term funding agreements; short-term funding was often provided to high-TRL levels, where commercially valuable outputs were more likely to occur quickly.”
This issue has been widely discussed in the industry and becomes more pressing as time goes on. At a recent conference at the Royal Aeronautical Society (RaeS) about the ‘New Space’ sector, Mike Lawton, founder of Oxford Space Systems, stressed the importance of longer-term investments. “We’re great at a broad vision, however, where we fall down is a multi-year strategy that allows companies to see where the funding might be coming from in years two, three, four, and five. At the moment, it’s pretty much a piecemeal approach from one grant opportunity to another grant opportunity”, Lawton said.
Oxford Space Systems as an example
Oxford Space Systems was founded upon a £100,000 investment from the government that would remain if the company could raise the same amount of money from private investors within a year. While Lawton bagged the money in six weeks, the company has had to move away from just space applications as it has become too difficult to understand the UK’s vision in orbit without the guarantee of a multi-year investment.
Nonetheless, the government has taken action to address this issue recently. In May, the Department for Business, Energy, and Industrial Strategy (BEIS) announced £39.8 billion of funding into R&D for 2022 to 2025. This is a positive step, as some projects or fundamental research can be time-consuming and require more long-term funding. “The Government should reflect on the consequences of the recent one-year settlements on the space sector and provide a commitment to deliver at least three-year budget settlements to facilitate a more strategic approach to the allocation of public support for these technologies of the future,” the Commons said.
SME’s need more support
The Parliament and space report highlighted that while larger businesses grow and early-stage organisations receive funding, SMEs struggle to grow. In the 2020 Size & Health of the UK space industry survey that was released in 2021, the nation is dominated by a few large companies, and only 13 of them account for about 82% of the sector’s total income. Small satellite company, AAC Clyde Space, based in Glasgow, said this was due to current funding rounds that predominately support small or large companies.
While there are many solutions, such as investor partnerships where grants are matched with private investment and innovation loans, according to UK Research and Innovation, there is more that could be done, such as the government becoming a customer to encourage ongoing service, which has been considered previously. However, contrary to that idea, Professor Iain Woodhouse, Professor of Applied Earth Observation at the University of Edinburgh, said that small companies would not bid for government contracts because they would rather keep all of the IP. “Start-up companies are not going to give you all their IP, so they have to look elsewhere. If you can change the procurement system so that these companies can get more clients and customers, that is how you will grow,” said Woodhouse.
The report concluded that the government should “further consider” its procurement procedures to increase private investment for SME’s.
While the report applauded the government for continuing to support the space industry, it emphasised the importance of distributing it across all of England, as most of the activity is concentrated in the Southeast and Scotland.
Parliament and space will remain a topic for Orbital Today, and we will continue to follow the government’s handling of the industry.