A battle between two of the world’s leading aerospace and defence groups to build the next generation of satellites for the British armed forces has become an early test of Labour’s stance on military sovereignty. The contract for the new Sky Net satellites, estimated to be worth up to £2bn, has pitted European aerospace group Airbus, which has overseen Sky Net for decades, against a rival bid from Lockheed Martin of the US. Ministers who have pledged to “buy British” are being lobbied to stick with the European company, whose presence has helped make the UK a centre for military satellite communications.
But they must also navigate an increasingly unpredictable relationship with Donald Trump’s administration in Washington. The FT reported this year that officials had questioned whether the UK should be entrusting such a key military capability to a US company. The decision on Sky Net will be one of the first big-spending choices taken by Wes Streeting, appointed defence secretary by Prime Minister Andy Burnham in July, at a time when the UK has promised to bolster its military capabilities.
It comes as the war in Ukraine has underlined European nations’ reliance on space-based communications, with Kyiv leaning heavily on satellites to provide intelligence to repel Russia’s armed forces. Douglas Barrie, senior fellow at the International Institute for Strategic Studies think-tank, said the government would face criticism either way. “Go with the US and your defence industrial policy looks like it’s getting off on the wrong foot. Go with the incumbent Airbus, and you need to minimise any blowback from the White House,” he said.
Sky Net is the UK’s military satellite communications system that has been in operation since the 1960s. The Ministry of Defence is upgrading the network through its Sky Net 6 programme, with the contract worth up to £2bn covering two geostationary satellites that will provide secure communications into the 2040s and beyond. Final offers submitted late last year are due to expire in the middle of November, according to two people familiar with the situation, and a decision is due in the next few weeks.
Airbus’s work designing and building satellites helps to support about 2,500 jobs at its sites in Stevenage and Portsmouth and a further 18,000 in the wider supply chain. Some 650 Airbus employees work directly on Sky Net. Supporters of Airbus, which has been involved in Sky Net since 1974, have urged the UK to award the contract to the European group.
Sharon Graham, general secretary of the Unite union, said the government needed to “ensure that it makes good on its promise to invest in British industry and buy British in defence”. Kevin Bonavia, Labour MP for Stevenage, said Sky Net 6 was vital to retaining “the skills, expertise, supply chains and freedom of action that underpin a genuinely sovereign UK space capability”. Failure to win the contract could also put up to £10bn worth of potential Airbus exports at risk, according to people familiar with the situation.
The competition is being fought against the backdrop of wider European consolidation in space. Airbus is in talks with France’s Thales and Leonardo of Italy to create a pan-European space champion capable of taking on Elon Musk’s Space X as well as rivals from China and Russia. The companies are discussing where to locate different centres of excellence.
Airbus’s site in Stevenage. The group supports about 2,500 jobs there and at a second site in Portsmouth.
Source: Financial Times Companies · Summarized by HeadlinesBriefing