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UK Space Agency Absorption into DSIT - Is this Strategic Streamlining or Institutional Retreat?
- Callala Support Team
- Aug 22
- 4 min read
The announcement that the UK Space Agency (UKSA) will be absorbed into the Department for Science, Innovation and Technology (DSIT) by April 2026 has been presented as a measure to "cut duplication, reduce bureaucracy, and put public accountability at the heart of decision-making."¹
Perhaps beneath the notion of administrative efficiency lies a more complex question: does this restructuring represent strategic modernisation, or does it signal a fundamental misunderstanding of space as an enabling technology?
The timing of the decision is also curious. The overwhelming economic evidence supports dedicated space investment. Recent analysis demonstrates that every £1 of UK investment in the European Space Agency returns £7.49 to the economy in direct benefits alone,² whilst broader studies suggest returns of £9-16 per pound invested.³
For Earth observation specifically, the returns reach £2-4 direct plus £4-12 in spillover benefits, whilst telecommunications delivers £6-7 direct plus £6-14 spillover benefits.⁴
These figures represent relatively high returns on public investment across any technology sector. So why is exceptional performance here translated to institutional downgrading rather than strengthening?
Strategic Positioning
It is revealing is space technology is notably absent from the UK's five designated "critical technologies" - artificial intelligence, engineering biology, future telecommunications, semiconductors, and quantum technologies.⁵ This exclusion is stark if you consider that space underpins many of these priority areas, particularly telecommunications and navigation systems that are fundamental to modern economic infrastructure.
In the government's flagship "Invest 2035" industrial strategy, space appears only as a subsidiary capability within defence, loosely mentioned as emerging technology that "drives innovation through investment in research and development."⁶ This represents a significant demotion from treating space as foundational, cross-cutting infrastructure to positioning it as merely one among many defence applications.
The UK's repositioning contrasts sharply with international practice. Other major economies recognise space as fundamental infrastructure. The White House Office of Science and Technology Policy's 2024 critical technologies list explicitly includes space alongside AI, biotechnology, semiconductors, and quantum.⁷ The UK's divergent approach suggests either unique strategic insight or potential misalignment with global competitive realities.
Coordination & Institutional Fragmentation
The current restructuring aims to address coordination problems, but could these be made worse under the new arrangements? So some argue that the "UK space policy has always been an interdepartmental and Cabinet Office concern," with UKSA traditionally limited to "consultations on the regulatory and civil space research dimensions."⁸ Rather than resolving this fragmentation, DSIT absorption risks further dispersing space responsibilities across multiple agencies. Worse, bringing these closer to government may risks additional politicising of space, destabilising longer-term investment horizons required by the sector.
The existing pattern of institutional behaviour compounds this worry. The National Space Council, established to coordinate partnerships, was "abolished by the Truss government and reinstated during the Sunak government," with no announcements from the current administration regarding future meetings.⁹ This turbulence creates precisely the opposite of the long-term stability that space investment requires, given that benefits often materialise over 17-year median durations.¹⁰
International Competitiveness and Credibility
The absorption decision occurs against a backdrop of intensifying global space competition. Recent analysis shows the UK has "dropped out of the top 5 country rankings in eight technologies, declining from 44 last year to 36 now" in critical technology areas.¹¹ Meanwhile, other nations are strengthening their space institutional frameworks rather than weakening them.
The trend among similar economies has been towards establishing and empowering national space agencies rather than dissolving them. Countries previously without such institutions have recognised space's strategic importance sufficiently to create new agencies, understanding that fragmented approaches to space governance create competitive disadvantages in an increasingly space-dependent global economy.
The DSIT absorption risks undermining the UK's ability to engage effectively in international space forums where institutional counterparts expect to work with clearly identified space agencies. This could negatively impact bilateral agreements and participation in major international missions, possibly isolating the UK from collaborative opportunities that have historically strengthened both its space capabilities and international relationships. Let's wait and see what DSIT's plan is here.
Industry Development and Innovation Ecosystem
The space sector's unique characteristics present particular challenges for departmental absorption. Space technologies often span civilian and defence applications, requiring coordination across multiple government departments whilst maintaining operational security. The proposed structure may struggle to manage these dual-use aspect effectively.
Further, space industry development requires sustained engagement with a diverse ecosystem spanning large primes, innovative start-ups, and research institutions. Evidence suggests that "British space policy spreads out too little money in too many directions on small research projects rather than bold national infrastructural space programmes."¹² Without dedicated institutional advocacy, this fragmentation may worsen, particularly given the competing and dynamic nature of priorities within DSIT.
The regulatory implications also remain unclear. Space activities currently involve multiple licensing processes across different agencies, creating what industry describes as a "piecemeal, fragmented licensing approach" that needs streamlining.¹³ The absorption may exacerbate rather than resolve these regulatory complexities.
Transparency & Accountability
The announcement's emphasis on "cutting red tape" and improving efficiency raises questions about transparency and long-term accountability. Space activities inherently involve long development timescales and high-risk investments that may not align well with standard departmental performance metrics. The absorption may inadvertently reduce rather than enhance public accountability by making space activities less visible within broader departmental priorities.
Looking Forward
The government's stated intention to retain UKSA branding suggests recognition of the agency's value in international engagement and industry relations. That said, branding alone cannot substitute for institutional authority and strategic focus.
The success of this restructuring will ultimately depend on whether the new arrangements can deliver the coordination, international credibility, and strategic coherence that the space sector requires.
Given space technology's exceptional economic returns and foundational importance to multiple other critical technologies, the stakes extend far beyond administrative efficiency.
The challenge will be ensuring that institutional reorganisation enhances rather than diminishes the UK's ability to capture the substantial economic and strategic benefits that space investment demonstrably delivers.
⁹ Ibid.
*Graphic Design: Victoria Beall
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