Is The UK Government Recklessly Spending in Times Like Brexit?

Brexit has opened up a can of worms for the UK on topics that wouldn’t otherwise be under the spotlight.  While the decision about how Brexit will occur has been postponed yet again, there is no doubt that it will negatively impact the economy of the UK – the question is only how much and how fast it will take to recover.

 

2019 began with news of Seaborne Freight, a ferry company that owns no ships and has never run Channel service, receiving a £13.8m government-funded contract for an event of a no-deal Brexit. While since then the company was stripped of the contract, the U.K. government is caught recklessly spending again.  The government lacks accountability and internal controls to properly assess what projects are good and what are just pork barrels.  Or perhaps they know very well these projects are no good and simply sink money into projects earmarked for investment by their good friends.

 

For a government £13.8m may sound like chump change but remember during times of crisis every penny counts.  The average salary in the UK is £ 27,600 which means that’s 500 jobs that could have been added to the UK economy.  It’s often good to use such an analogy to keep big numbers in perspective. 

 

Then there is the question about the UK Space Agency.  In space there is a vacuum or for the laymen it’s a state of ‘nothingness’ but it seems the agency also has a vacuum in their budget.

 

In July 2018 Lockheed Martin received a £23.5m grant from the U.K. Space Agency (UKSA), under the Space Industry Act, to establish vertical launch operations in Sutherland, Scotland and develop innovative technologies in Reading, Berkshire.

 

In addition, Orbex were to build an innovative new rocket for launch from Sutherland, and received a £5.5 million grant for it. According to the official announcement, the Space Industry Act’s goal was “to create hundreds of new regional jobs and billions of revenue for British business across the country”.

 

However, it appears that is not the case in reality as most contracts were issued to non-UK entities, and the manufacturing mostly takes place in USA, Germany and Denmark. 

 

Take Orbex for example. At the stage of the Prime Rocket Discovery, not only did Orbex have no production facilities in the UK – but until this day it isn't even registered in the UK, at all. Before the July grant, it has been in stealth mode and nobody has heard of them. Within 8 months, it is fully funded, releases a prototype of a sophisticated 3D-printed rocket engine, and plans to launch their first rocket within 2 years.  At the stage of the Prime Rocket discovery, Orbex had no production facilities in the UK, at all.  Although this could appear as a “successful” grant or investment of the UKSA, its spending figures in January 2019 show otherwise. At the stage of the Prime Rocket discovery, Orbex had no production facilities in the UK – almost as if they’re pretending to be a UK company.  

 

The bulk of UKSA spending went to the EU Space Agency, and the remaining were mostly spent in London. Areas like Scotland, despite providing 18% of jobs in the industry, received only 0.9% of UK spending.

 

Britain is no stranger to thrift.  Through various periods in British history huge swaths of GDP were wiped out for a number of reasons.  But in all cases the budget was tightened and Britain recovered.

 

One would think that with such experiences deeply engrained in the British culture, that Britain wouldn’t so be spending money so wastefully during a time when every penny counts.   

 

The British government is struggling between a bad or worse outcome – everyone agrees on that.  Therefore, it is hard to grasp why would they be recklessly spending funds like that? 

 

Also consider that Space is being privatized.  Companies like Space X in the United States are commercializing the “Space Industry.” In fact, it was recently announced that a private SpaceX crew docked with the international space station, an event that even drew the attention of President Trump himself:

 

On Saturday, we reported about the “historic” launch of SpaceX’s Crew Dragon on the company’s Falcon 9 rocket. It was an event which NASA called “a big night for United States of America”. Now, the Crew Dragon’s subsequent task of docking with the International Space Station has also been a success, with Bloomberg’s Dana Hull calling the test flight a “smooth rendezvous”. The docking with the ISS marks the first time that Crew Dragon has ever flown and puts the pressure on SpaceX’s private company competition at Boeing, who also aims to work with NASA.

 

So given that Space is being privatized, and perhaps for a future profit, why should the UK spend its budget which is marginally insignificant, for something it will get only recognition for (not a monetary reward). 

 

Brexit has succeeded in one thing for sure. So far, two cases have been discovered where the UK government is caught allocating funds in a weird and questionable fashion. How many more spending of important tax income can we take? And how many did we not find out about yet?

 

If the UK Government continues to spend on wants like Pretending Orbex instead of needs like food, housing, logistics (sanitation) and other life necessary expenditures, it will make a hard Brexit that much harder.