An influential committee of MPs has launched an inquiry into the government’s £400m investment in the bankrupt satellite company OneWeb.
Ministers ploughed ahead with the high-stakes deal earlier this month despite the business department’s most senior civil servant warning against it.
In a letter to the business secretary Alok Sharma, the department’s then acting permanent secretary Sam Beckett warned that there was a possibility that the entirety of the investment would be lost.
“I cannot satisfy myself that this investment meets the requirements of Value for Money as set out in Managing Public Money,” Beckett stated in the letter, which was disclosed publicly this week.
The government acquired the stake in the company, which builds low-earth satellites that provide ultra-fast broadband connections, as part of a consortium including the Indian telecoms company Bharti Global.
Backed by the prime minister’s most senior aide, Dominic Cummings, and the National Security Strategic Investment Fund, it’s hoped the deal will provide a substitute for the EU’s Galileo satellite navigation system, boost the UK’s commercial space sector and even accelerate the roll-out of Britain’s 5G networks.
But in her letter, Beckett warned that a technical assessment conducted by the UK Space Agency (UKSA) highlighted “substantial technical and operational hurdles that OneWeb would need to overcome in order to become a viable and profitable business”.
“Taking that into account, UKSA consider that there is a high likelihood of further investment being required to complete the constellation and encourage user uptake of the services, increasing the risk that further HMG investment would be required in order to realise the potential benefits,” said Beckett. “As a result, UKSA’s judgement is that the independent technical assessment further illustrates the considerable uncertainties in the modelling done for HM Treasury.”
In response, Sharma contended that “even with substantial haircuts to OneWeb’s base case financial projections the investment would have a positive return”. He added: “lf OneWeb is successful, the UK would have a share in a global space platform, including through possible future research and development, and potentially bringing future manufacturing to the UK. There could be wider, less quantifiable benefits of signalling UK ambition and influence on the global stage.”
The Business, Energy and Industrial Strategy Committee is planning to host an evidence session investigating the deal in September. Darren Jones, a Labour MP and the chair of the committee, said in a statement: “The Secretary of State’s use of a Ministerial Direction to push through the purchase of a stake in OneWeb against the advice of his own Permanent Secretary heightens concerns around this investment and about the prospects of this delivering UK jobs and value for taxpayers’ money.
“It also prompts further questions about how the Government arrived at this decision and how it came to plump for this largely US-based bankrupt satellite company.”
Jones added: “Now more than ever, the Government needs to ensure that it’s spending tax-payers’ money as prudently and wisely as possible. Using nearly half a billion pounds of tax-payers’ money to gamble on a ‘commercial opportunity’ whilst still failing to support manufacturing jobs with a sector deal is both troubling and concerning.”