Joanne Wheeler, Managing Partner at Alden Legal, and Chair of the Satellite Finance Network, says a united and strategic approach across Government, featuring decisive leadership and accessible funding, is critical for the UK space sector to get back on its feet, as the Coronavirus crisis continues to batter businesses of all sizes.
Seven weeks into lockdown it seems that it may have been easier to shut down businesses rather than maintain them through this period and re-open them.
The SFN Surgeries have borne witness to the level of financial issues that companies are facing and their difficulty in raising finance, especially if pre-revenue. The copious questionnaires being completed do not portray the level of economic harm COVID has caused and the very human issues it is leaving in its wake; all too apparent during the Surgery sessions.
There are two simple principles that I’d urge the Government and companies to consider carefully at this time.
1. The “something will turn up” principle
We need decisive leadership from Government on how to end lockdown, so that the economy can start functioning efficiently as soon as possible. We need to understand the Government’s proposed mechanism to ease workers back into the workforce, without creating even more unemployment – and a second surge of infections. This size of this task should not be underestimated.
We cannot continue to have the attitude of Mr Micawber and assume “something will turn up” between the acrobatic balancing of public health considerations and economic objectives. That’s not good enough.
We did not come this far, through the Case for Space, the Innovation and Growth Strategy, the IGS Restack, the Space Growth Partnership (SGP) (and its reboot), and through the huge effort we all contributed and our belief in the UK space sector – and, let’s be clear, the huge success we achieved – to now stop abruptly.
We need clarity and well-thought through decisive leadership.
We also need clear, decisive leadership from the UK Space Agency (UKSA) (who held our hands through the IGS and still support us through the SGP), BEIS and Treasury. Unfortunately, the COVID pandemic resulted in the suspension of the consultation on the sub-ordinate legislation to the Space Industry Act; just at the time that many businesses needed to make investment decisions based on such regulations. That sub-ordinate legislation offers some needed clarity on the obligations that businesses must factor into business plans and raise investment for.
The UK space industry also needs a clear strategic focus from the UKSA, BEIS and the Department for International Trade; a unified approach agreed and implemented across all Government departments and the UK. That unity of approach has been lacking to the detriment of UK companies and UK assets.
I am positive (but not in a Micawbeish way) – as now, more than ever, I am witnessing cross-government engagement and collaboration strengthen.
2. Protect cash-flow and budget – and help companies achieve this
As Micawber stated, “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
At this time of COVID derailment, companies are well advised to budget carefully. The Surgery advisers are seeing signs of “misery” for pre-revenue small and start-up companies in the space industry; struggling to protect cash flow and raise funds, and failing to meet the eligibility criteria for Government funding programmes. We have spent years creating the environment in the UK to nurture these companies, and now the Government seems not to recognise that most models of financing support do not work for such companies – and will lead to misery.
Be sure that other countries previously just waking up to the fact that the space industry offers growth and employment will be seeking to leverage the work they had already put in place – and seek to be even more competitive post-COVID.
The “we are all in it together” speeches often seem trite. Some solidarity in the space industry itself, however, would help ease some of the pressures on businesses. I have seen complete supply chains agree to a 30-day extension on payment terms, for example, knowing that when we do come out of the crisis, that supply chain needs to be in place and be as robust as ever to protect the companies within it. Such solidarity and collaboration is welcome – and serves many interests. As Micawber stated after all, “Mutual confidence will sustain us to the end!”