Is the UK Government Spending Irresponsibly Amid Brexit Economic Downturn?

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Ever since the British public took to the polls on the matter of the continuing membership of the European Union, the country has been in disarray. With only a narrow margin of victory for the Leave campaign, the country has been divided along Brexit lines for nearly three years now.

The lack of certainty regarding the outcome of the Brexit deal with the EU has certainly had an economic impact. The Bank of England estimates that households are an average of £900 per year worse off than forecasts prior to the vote. Furthermore, growth has stagnated, with the 2019 outlook at its lowest in years.

With so much economic uncertainty and no deal for leaving the EU yet agreed, it would seem prudent for the UK government to take a cautious approach to spending. Unfortunately, this isn’t the case.

At the beginning of the year, the government was caught up in controversy over its decision to award a contract worth £13.8 million to a company called Seabourne Freight. The agreement was for cross-channel ferry services in the event of a no-deal Brexit. The only problem? Seabourne Freight had never actually operated a ferry service before.

By February, the contract had been canceled, but the PR damage was already done. The opposition called for the sacking of Transport Secretary Chris Grayling over his mishandling of the situation. It’s perhaps a testament to the current state of UK politics that despite the blunder, he remains in his post months later.

 

Another Irresponsible Spending Spree?

Particularly in a politically precarious situation such as Brexit, it’s invariably necessary for the governments to make some wise investments in an effort to boost the economy and prepare for the worst. However, the current UK government appears to be taking a less than judicious approach.

Most British citizens, whether pro-Leave or pro-Remain, would struggle to understand why spending on a space program may be a current priority. Particularly so when homelessness and poverty are on the rise, and the healthcare and education systems are on their knees due to a lack of funding.

However, despite all that, the Government has decided to allocate nearly $30 million of funding to space development between two companies, Lockheed Martin and Orbex. While Lockheed Martin has existing UK operations, the government grant isn’t intended to bolster current activities. The grant is for the development of a new vertical launchpad in Sutherland, Scotland.

It gets worse. At the time the grant was allocated, the other beneficiary, Orbex, had been flying firmly under the radar. This is unusual for a company in space development, which by its nature involves dramatic and often much-publicized launches.

A cursory search of Companies House appears to corroborate this. Much like Seabourne Freight, nobody had heard of Orbex until the UK government decided to start throwing money at it.

Now, it’s received all the investment it needs to launch its Prime Rocket Discovery, using the facilities in Sutherland. However, the manufacturing of the Prime Rocket appears to be barely happening on British soil. So, despite having most of its production operations based on the continent, the UK government awarded Orbex £5.5 million. To launch a rocket built outside of the EU from a British launchpad, which is yet to be established.

 

Incompetence at Best?

It was the UK Space Industry Act that has enabled the government to create these funds and allocate them. Ostensibly, the goals of the act are to boost the UK economy and create regional jobs. However, closer analysis of the spending figures shows that in January alone, around $16m of the UKSA $20m expenditure went outside the UK to the European Space Agency.

None of this is to say that having an active space program isn’t a worthwhile endeavor for the UK as a whole. Such a program can, if managed appropriately, bring in jobs and attract research investment from abroad.

However, the UK isn’t currently in a “normal” situation – economically, socially or politically. Such a period of turmoil requires a different approach to government spending. Unfortunately, the current leadership doesn’t appear to recognize this. At worst, awarding millions in contracts to unknown and outside firms could indicate nepotism or corruption. Even taken in the best light, it’s downright incompetent.

The question is, with UK politicians firmly focused on Brexit and its myriad potential outcomes, who’s taking any notice of the fact that taxpayer money is leaking away on this kind of irresponsible spending?

 

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