Business Secretary Overrode Strong Warning About £400m Investment in Bankrupt Firm

By Holly Brockwell on at

Business Secretary Alok Sharma formally overrode a letter strongly warning the government that investing £400m in the bankrupt satellite company OneWeb was a huge risk and could result in losing all the money.

Civil servants who feel particularly strongly about something can register their views using a letter for ministerial direction, which is what Sam Beckett, the acting permanent secretary (is that not a contradiction?) at the Department for Business, Energy and Industrial Strategy (BEIS) did, writing:

"While in one scenario we could get a 20% return, the central case is marginal and there are significant downside risks, including that venture capital investments of this sort can fail, with the consequence that all the value of the equity can be lost."

The investment is part of the giant fustercluck that is Brexit, because as we previously reported, the idea was to replace the Galileo GPS system that we've lost access to after leaving the EU. OneWeb doesn't do navigation, and according to a space policy expert's comment on the situation, in investing in OneWeb "we've bought the wrong satellites."

Still, it's only £400m, who needs that when the country is facing a recession in the middle of a pandemic? Ho ho.

BEIS committee chief Darren Jones puts it succinctly: "using nearly half a billion pounds of taxpayer money to gamble on a 'commercial opportunity' whilst still failing to support manufacturing jobs with a sector deal is both troubling and concerning," and that the news that the government intentionally overrode strong concerns to do the deal anyway "prompts further questions about how the government… came to plump for this largely US-based bankrupt satellite company."

The letter pointed out that while the permanent secretary understood the "potential long-term geopolitical advantages for foreign policy and soft power that would come with sovereign ownership of a fleet of satellites," Sharma should be mindful that the UK Space Agency believed OneWeb had "substantial technical and operational hurdles" to becoming a "viable and profitable business," meaning taxpayers would likely have to bail them out of trouble.

According to the BBC, "most experts believe a further $3bn at least is needed to bring the full constellation [of OneWeb satellites] into use."

Sharma responded that Chancellor Rishi Sunak said it was OK to proceed. So that's fine, then. [BBC]

Featured image: Roscosmos