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The UK’s spending watchdog has questioned whether Britain’s investment in the European Space Agency is delivering value for money, after noting that the country received a lower return than France, Germany and Italy over most of the last decade.
The National Audit Office on Tuesday published a highly critical assessment of progress on implementing the UK’s national space strategy, unveiled in 2021 by the previous Conservative government. While directing space spending through the ESA “gives UK space companies and academics access to large-scale space programmes which would be challenging to replicate nationally,” the report said, “the UK does not yet receive contracts . . . proportionate to the value of the funding [it] provides.”
In addition to questioning the returns from ESA membership, the NAO said a lack of clarity and detail in the national space strategy was undermining the UK’s ambition to expand its space economy. Three years after unveiling the strategy, the UK Space Agency and the Department for Science, Innovation and Technology were still in the early stages of “identifying and developing the plans and capabilities needed to deliver the strategy’s ambitions”.
The NAO’s findings will rekindle a debate about the value of ESA membership after British companies were excluded from bidding for contracts on navigation service Galileo and the Copernicus earth observation project as a result of Brexit.
Although UK companies are again eligible for Copernicus contracts since January, many in the space sector have been lobbying for a strong national programme to accelerate growth in areas where the UK has expertise, such as earth observation and data analytics.
“We still do not have a big national project that industry can focus on,” said one veteran space industry executive.
ESA acts as the procurement agency for the EU, but is an independent intergovernmental organisation that pools investment in big scientific and public space programmes. Its 22 members include non-EU nations such as the UK, Canada and Norway.
Britain is the fourth largest contributor to ESA, accounting for about 9 per cent of its non-EU funding. Roughly three-quarters of the UKSA’s budget goes to ESA programmes and in 2022 the previous government pledged £1.84bn in funding between 2023 and 2027.
The ESA aims for member states to receive the equivalent of their funding pledges in contracts to industry and academia, minus a small deduction for overheads. A confidential report by the UKSA’s executive committee found that between the final quarter of 2015 and February 2023 the UK received 93p back in contracts for every £1 allocated to the ESA.
The NAO notes that the UKSA has made efforts to boost the returns, helping companies to identify opportunities and to submit applications. By the end of last year the return had improved to 96p on the pound, “but this means UK industry and academia are still not benefiting in terms of contract value from the full funding given to ESA by UKSA,” the NAO said.
“France, Germany and Italy achieved values between 0.99 and 1.02,” the report added.
David Parker, ESA’s Director of Human and Robotic Exploration until 2023, told the Financial Times that the UK received substantially more economic value from its ESA membership than was accounted for by contract awards. “The UK has had a larger share of the return on science programmes,” Parker said.
Parker said some of the deficit reflected a “change in the UK industrial landscape. Some of the capabilities have changed.” But work was being done to educate companies about the opportunities and procedures. “It will come back again,” he said.
The UKSA said it was working to improve the returns, with a target to reach parity by the end of this year. “We are making good progress,” the agency said.
Josef Aschbacher, director-general of the ESA, told an audience at the Farnborough air show that the agency was taking steps to “give more energy” to its UK based centre focused on satellite applications and telecommunications.
