Boris Johnson’s bid to take a taxpayer stake in a collapsed satellite company is the first part of a broader strategy in which the government will invest in “high risk, high pay-off” science projects.
The prime minister is expected to give more details of his science policy in a speech on Britain’s post Covid-19 recovery plan next week, just days after he pledged about £500m to invest in the satellite operator OneWeb.
The satellite venture, which could help to deliver high speed wireless internet to remote UK communities, comes as Mr Johnson draws up plans to support seven “industries of the future”: life sciences, clean energy, space, design, computing, robotics and artificial intelligence.
The policy is being driven by Dominic Cummings, Mr Johnson’s chief adviser, who is fascinated by the potential of science to drive future economic growth.
He wants to see 2.4 per cent of UK gross domestic product spent on research and development. In 2017 Britain spent 1.7 per cent, ranking 11th in the EU.
The Conservatives’ 2019 general election manifesto committed to “the fastest ever increase in domestic public R&D spending”, some of which would be diverted into Mr Cummings’ favourite project: a new agency to promote frontier technology.
The body, modelled on the US Advanced Research Projects Agency, would operate at arm’s length from government and invest in what the manifesto called “high risk, high pay-off” research.
Mr Cummings’s WhatsApp profile says simply: “Get Brexit Done, then ARPA.”
Greg Clark, Tory chair of the House of Commons science select committee, said there were inevitably risks involved in the government investing in private sector projects, but added: “The idea that public sector projects are risk-free doesn’t exactly stand up to scrutiny.”
Mr Clark said that if the OneWeb investment turned out to be an alternative to a promise by the then prime minister Theresa May to build a British alternative to the EU Galileo satellite navigation system — expected to cost more than £5bn — then it might turn out to be “cost effective”.
Chancellor Rishi Sunak was said by allies to “welcome” the OneWeb bid, confirming he is willing to break with Treasury orthodoxy which traditionally eschews public sector entanglement in private companies.
Mr Sunak personally drew up the Future Fund, a coronavirus support programme for vulnerable start-ups, in which the state could end up taking equity stakes in a number of fast-growth technology companies.
The Treasury said on Tuesday that £236m had been lent through the fund to 252 companies, which means that it was close to its original £250m allocation target. The fund, which is expected to be increased in size, provides loans which can convert to equity.
Mr Johnson’s decision to invest in UK-based OneWeb — as part of a wider private sector consortium bid — confirms the government is willing to take taxpayer stakes in leading industries.
If the bid is successful, the British state could end up with more than a 20 per cent stake in OneWeb, which originally launched in 2015 as a vehicle to bring affordable high speed wireless internet services to remote parts of the world.
OneWeb’s global constellation of satellites could be used to deliver Mr Johnson’s promise to connect “every home in the land” to high-speed broadband by 2025, said several supporters of the bid.