Sunday, 17 November 2013

Lloyds boss likely to get £2.3m bonus

Antonio Horta-Osorio
Antonio Horta-Osorio, chief executive officer of Lloyds Banking Group Plc, poses for a photograph outside the company's headquarters. Photograph: Bloomberg/Bloomberg via Getty Images
The boss of Lloyds Banking Group is set to be handed what is in effect a £2.3m bonus next week, provided the share price remains above the level at which the taxpayer bailed out the bank for another three trading days.
The potential payout to António Horta-Osório, the Portuguese banker who has been at the helm for two and a half years, will only be made if the shares in the bank, which is 32% owned by the taxpayer, close above 73.6p on Monday, Tuesday and Wednesday next week.
If they do so, the award will be unleashed of just over 3m shares granted to Horta-Osório in March, when the bonus was worth £1.4m because of the share price at the time. But he will not be able to cash in the shares until 2018.
The bonus shares can only be handed to him if the share price remains above 73.6p for 30 trading days or if the government had sold off least a third of its holding at prices above 61p.
It was Horta-Osório's idea for his bonus to be tied to the share price and at the time the scheme was devised the shares were worth just 50p.
He is now in line to cash in even though the bank reported a loss for the third quarter of the year as a result of the on-going impact of the payment protection mis-selling scandal – because the shares have closed above the 73.6p level since 10 October.
They were perilously close to sliding through this price on November 7 but have yet to close below the key level.
The taxpayer ploughed £20bn into Lloyds – which rescued HBOS during the 2008 banking crisis – but has since raised £3bn from the sale in September of 15% of the government's stake. The shares were placed with major City investors at 75p a share – above the average price at which the taxpayer bailed out the bank.
This price was also above the 61p price that the government had stipulated be inserted into Horta-Osorio's bonus, which initially confused the City.
The 61p level is based on the stock market price of the Lloyds shares when the government bought them, which was lower than the actual price that the government paid.
The 61p price has been in the government's accounts since 2010 when the £65bn ploughed into both Lloyds and Royal Bank of Scotland was valued at £53.8bn. The government used the money raised from the share sale to cut the national debt by £586m.
"Antonio's bonus, which he won't receive until 2018, reflects the significant turnaround at Lloyds under his leadership – something that has enabled taxpayers to start getting back their money at a profit," a Lloyds spokesman said.
A further share sale is expected before the May 2015 election and Chancellor George Osborne has said that this might include an offering of the shares to retail investors. Horta-Osório said last month that another tranche of shares could be sold off in 2014.
The shares have been rallying this year – they started 2013 at 48p – as the bank has increased its revenue faster than expected, accelerated a reduction in its bad debts and also rebuilt its capital position, even though it reported a loss in the third quarter.
Ian Gordon, banks analyst at Investec, said: "Lloyds isn't making any money but the share price is all in the future, not in the past."
Horta-Osório, who took time off in 2011 after he did not sleep for five days, has indicated that the bank might be able to resume dividends in the coming months after being forced to put the payouts to shareholders on hold under the terms of its bailout.
He has promised the bank will be a high dividend-paying stock in the future, in the hope it could prove attractive to big City investors seeking out income stocks.
The bank made a loss in the third quarter of 2013 of £440m, largely because of a surprise £750m provision for PPI mis-selling, which took the total bill for Lloyds to more than £8bn. It made a profit over the nine months of the year.

JP Morgan to pay £2.8bn to settle claims by investors


 JP Morgan Chase &
JP Morgan Chase headquarters in New York. Photograph: Emmanuel Dunand/AFP/Getty Images
JP Morgan said on Friday it has agreed to pay $4.5bn (£2.8bn) to settle claims by investors who lost money on mortgage-backed securities before the collapse of the US housing market.
The bank reached the agreement with 21 institutional investors in 330 residential mortgage-backed securities (RMBS) trusts issued by JP Morgan and Bear Stearns, which it took over during the financial crisis, according to the bank and lawyers for the investors.
The deal still has to be accepted by seven trustees overseeing the securities holdings, the parties said.
The settlement does not include trusts issued by Washington Mutual, which JP Morgan also acquired.
The deal is separate from the preliminary $13bn settlement JP Morgan has reached with the US government that would resolve a raft of actions over mortgage-backed securities.
"This settlement is another important step in JP Morgan's efforts to resolve legacy related RMBS matters," the bank said in a statement.
The bank said it believes reserves it has built will cover the expense of "this and any remaining" mortgage securities litigation.
The 21 investors include BlackRock, Metlife, Allianz SE's Pacific investment management company , the TCW Group and Bayerische Landesbank.
Under the agreement, trustees have until 15 January to accept the offer, which may be extended for another 60 days, according to JP Morgan and Gibbs & Bruns, the Houston law firm that represented the institutional investors.
Kathy Patrick of Gibbs & Bruns called the deal "an important milestone" in a three-year effort by the group of 21 bondholders.
The seven trustees over the bonds include Bank of New York Mellon. Kevin Heine, a spokesman for the Bank of New York Mellon, said the bank would "evaluate the proposed settlement along with the other trustees".
If accepted, the deal would resolve claims that JP Morgan and Bear Stearns misrepresented the mortgages underlying the securities, JP Morgan said.
The settlement also would resolve servicing claims on all trusts issued by the bank and Bear Stearns between 2005 and 2008.
JP Morgan is the third bank to strike a deal with investors over shoddy mortgage-backed securities issued in the runup to the financial crisis.
Bank of America struck an $8.5bn settlement in June 2011 with 22 institutional investors. That deal is still awaiting court approval.
In 2012, bondholders in trusts issued by Ally Financial's bankrupt former mortgage lending arm, Residential Capital, won an agreement to bring an $8.7bn claim, although that was later reduced to $7.3bn.

James Murdoch aims to stay in the picture at BSkyB

James Murdoch
James Murdoch: back in Blighty for BSkyB bunfight. Photograph: Peter Macdiarmid/Getty Images
During the 2010 general election, the Independent newspaper ran an ad under the tagline: "Rupert Murdoch won't decide this election – you will."
That may have been true then (although it probably wasn't) but at this time of year the sentiment traditionally appears to be total cobblers, as portions of the City begin the annual futility of opposing the re-election ofJames Murdoch to the BSkyB board.
We'll take a wild punt here and assume that 39% of Sky shares, held by the old man's 21st Century Fox, have already been voted in support of young James. So shareholders will merely be watching for the level of dissent when the pay-TV group holds its annual general meeting this week.
However, there are a few more reasons to tune into the show this season. Firstly, the AGM has been moved to Edinburgh, so it may attract a different crowd. Second, the hacking trial is continuing in London – so the trip will allow Murdoch fils a chance to catch a re-run of a sensational tale he managed to miss when it was first broadcast right in front of him, as boss of News of the World owner, News International (now News UK).
And third, after years of being the unopposed king of UK pay television, BSkyB is suddenly having its dominance challenged by a richer rival inBT. Worth watching.

Blame game rumbles on at Co-op Bank

The Treasury select committee tried to blame Peter Marks, the former boss of the Co-operative Group, for the near collapse of its bank. Marks tried to pin it all on the old Co-op Bank boss, Neville Richardson, and his pal David Anderson, the erstwhile chief exec of Co-operative Financial Services. That pair had supposedly hatched the Co-op's disastrous plan to buy the Britannia building society – then run by Richardson – while dining together at a Chinese restaurant in Wilmslow, Cheshire.
This week we might find out if someone else altogether was actually to blame, as Anderson becomes the latest Co-op exec to be called in front of the committee to explain himself.
The members should be thankful he's found the time to appear. While Marks, Richardson and Anderson all stepped down from their Co-op roles, Anderson is still on the board of John Lewis, a non-executive director of NFU Mutual, chairman of the thinktank Mutuo and chairman of the Reclaim Fund. That would be the same Reclaim Fund owned by the, er, Co-operative Banking Group, and based in its swanky new offices opened last week by the Queen.

Royal Mail float is no black-and-white issue

As you will all know, Postman Pat and the Record Breaking Day is an episode of the children's telly programme that involves a bunch of young innocents being given a record-breaking lesson in mathematics. For the episode where a bunch of innocent ministers get schooled in the mathematics of privatisations, you need to tune into the select committee hearings this week, when MPs will start grilling the banks on how Pat's company, Royal Mail, was floated so cheaply.
Wednesday's hearing might become known as Postman Pat and the Ball Breaking Day, but a more subtle theme may emerge: namely, how the City is guessing each time it values a flotation.
For example, Royal Mail's numbers show it has been spending heavily on "transformation costs". You might take the view that the long-running transformation might be completed soon. Or you might think it will continue for years, as online shopping and delivery evolves. Or, even, a combination of the two.
The only thing everybody agrees on is that nobody really knows how long the transformation will run for. However, that one guess can alter your calculation of Royal Mail's value by about £100m. So it's far from child's play. At least that will be the case for the defence.

Growth of 3,000%? Meet Britain's top tech startups

Apple iPhones on display
Number four in the fast-growing British tech startup list, phone contract provider Mobile Account Solutions has grown 3,332% in five years. Photograph: Justin Sullivan/Getty Images
British technology firms continue to grow at a rapid pace despite the uncertain economic environment, pushing into areas from television and media to payment processing and internet dating.
Now consultancy firm Deloitte has published its Technology Fast 50, which charts the 50 most rapidly growing tech companies in the UK. Their combined annual revenue is a relatively modest £672m but the average five-year growth rate is 1,382% – a number any bricks-and-mortar company would die for. Here's the top 10:

1. Infectious Media

Given Google's astonishing growth, it is no surprise that a firm linked to internet advertising comes out on top. Based in London, with offices in Paris and Hamburg, Infectious Media was founded in 2008 and has achieved a stellar growth rate of 9,774%. It specialises in real-time bidding for website advertising, processing more than 40bn advert decisions per month.

2. Avecto

The second-fastest growing company has capitalised on the flipside of technology – the growing problem of cyber-security. Based in Manchester, Avecto is a Windows security specialist and has posted a growth rate of 4,731% over the last five years.

3. AlertMe

The third-placed company has benefited from the booming demand for energy meters, which monitor power use in homes and are at the forefront of attempts to drive down bills. Based in Cambridgeshire's Silicon Fen, AlertMe specialises in cloud-based services that allow consumers to control and monitor their homes. Partnering with companies such as British Gas, with massive customer bases, AlertMe has grown 3,393% since 2008.

4. Mobile Account Solutions

Can't tell the difference between an iPhone 5S and an iPhone 5C, or worried whether BlackBerry will be around next year? Hertfordshire-based Mobile Account Solutions answers those questions by providing and managing mobiles for businesses – and has grown by 3,332% since 2008. It keeps up with rapid changes in mobile technology, replacing handsets within 24 hours if needed.

5. Lovestruck.com

Given the success of online dating sites, it is inevitable that one would make the top 10. The dating company for busy people, Lovestruck aims to "help you find other gorgeous singles who live, work – or simply are – near you". It accomplishes this through geo-targeting, or matching you to people close by. Operating in London and the home counties, Lovestruck's growth rate has been 2,658%.

6. Monitise

Online payment has made billionaires of entrepreneurs like Elon Musk, co-founder of PayPal, but it is a field that is still breaking new ground.Monitise is a company that helps make banking, paying and buying with a mobile device possible. Based in London, it has grown by 2,319% over the last five years.

7. Sixteen South

Belfast-based Sixteen South specialises in children's TV programmes and its hits include Pajanimals and Driftwood Bay. The latter uses software that replicates stop-motion animation, bringing Ray Harryhausen into the 21st century. It has grown 2,214% since being founded in 2008.

8. FreeAgent

FreeAgent exists to banish that bugbear of every freelancer and small business: the tax return. The Edinburgh-based accounting software service allows users to send invoices and manage expenses, and has grown by 2,128%.

9. Equal Experts UK

Like a digital version of Savile Row, London-based Equal Expertsemploys a network of freelance developers to produce bespoke software. Clients include O2 and the British government, helping the business achieve growth of just over 2,000%.

10. Backbone Connect

Backbone Connect specialises in data centres, offering services ranging from cloud storage to internet connections and virtual private networks. It has grown 1,810%.

Whose recovery is this? And who will reap the benefits?

Bank of England Governor Mark Carney lea
Mark Carney, the Bank of England governor, has a difficult balancing act on his hands. Photograph: Afp/AFP/Getty Images
Mark Carney, governor of the Bank of England, gave his blessing to the recovery last week, proclaiming that it had "taken hold" in the wider economy. He didn't, and couldn't, take a similar stance on what's likely to happen to the living standards of low- and middle-income Britain, where there are still few signs of an upturn.
What the recovery will mean for living standards is the issue of our times. Will we see a return to the type of barren growth that fails to translate into steadily rising real wages and incomes, as occurred in the years preceding the crash? Or might we see the reappearance of the benign growth that characterised the mid-1990s to the early 2000s, when prosperity rose rapidly for the great majority?
This is obviously a pressing question for the millions of households who have been on the end of the biggest fall in incomes since the war. It also hangs over Westminster; the answer will play no small part in determining the outcome of the next election.
It's been given further impetus after another week of good economic headlines that sit uneasily with voter sentiment. The labour market figures were positive – strongly so. At the same time, polls show that the recovery is far more reported than experienced: for the overwhelming majority it's happening somewhere else, to someone else. How long this disjuncture between an improving national economic story and personal experience remains is all-important.
That will depend upon whether the structural break in the link between growth and household gain that occurred from 2003 until the crash represents a blip or the new normal. Until growth was restored this was viewed as a largely academic question. No longer. The recovery is strengthening and, according to nearly all forecasters, is set to accelerate next year. The question is: who gains?
To get a clue we need to look at what really happened during the downturn. The headline is that average wages have fallen every month for four years; the pay of the typical worker has dropped back to around the level it was at the turn of the millennium.
Yet these statistics cloak many diverse tales: the bad years have played out very differently across Britain. Young people have fared terribly, with those in their 20s seeing their incomes fall by more than 12% on average since the crisis, while those in their 60s have typically enjoyed steady gains. London performed well, further detaching itself from the rest of the country. Relatively high-paying sectors such as business services boomed through the downturn (adding 460,000 jobs). Low-paying sectors such as hospitality and care also grew markedly. Manufacturing and public administration took a battering.
The immediate past is, of course, a highly imperfect guide to the future. But whatever surprises are in store, there are already familiar headwinds affecting the UK economy that make it less likely the recovery will rapidly reach low- and middle-income households. The jobs market still has plenty of slack, austerity has years to run, the eurozone looks precarious, business is sitting on cash rather than investing it, and millions of stretched homeowners are badly exposed to the risk of higherinterest rates.
The standout question is what will happen to wages and unemployment in the recovery. And here economists are divided. Some, like the Bank of England, expect productivity to bounce back and with it pay: companies will get more out of their existing workforce as demand picks up, enabling wages to climb while unemployment gently falls.
Others see it differently. They point out that, despite the recovery, productivity remains on the floor and with it wages. Leading economists such as Professors Paul Gregg and Steve Machin suggest we can trace a key part of the explanation for what has recently happened to wages to the stagnation of the early 2000s. It was around this time that a given level of unemployment started to have a more powerful, chilling effect on earnings than was the case in the past.
There were probably several reasons for this – from "active" welfare policies that made the workless a better substitute for those in work, to the cumulative impact of declining collective bargaining. But whatever the cause, the consequence is that unemployment may now have to fall further than many expect before steady pay increases return (especially in the bottom half of the jobs market). Prepare for a prolonged wage-poor, job-rich recovery.
This debate is of direct consequence to when interest rates rise – itself of massive importance to the stability of the recovery – not to mention the outcome of the next election. If unemployment falls below the Bank's 7% threshold sooner than expected, while house prices accelerate, there will be strong pressure for pre-election rises in interest rates. This isn't just an alarming prospect for struggling families – if mortgage rates look like they will go up significantly before wages have sparked back to life then we should all be afraid. They certainly will be in Downing Street.
What of the politics of this? As of now, Labour is on a roll. It has shown renewed vigour in its push on the "cost of living" whereas the Conservatives have looked unsure of themselves, dismissing Ed Miliband for being gimmicky at the same time as they've felt moved to compete on his ground.
But dangers abound for both leaderships. For Labour, which has thrown everything at this issue, the risk is that momentum dissipates as the economic outlook improves. No one knows exactly when wages will stop falling but at some point they certainly will – we're not going to get permanently poorer, even if subsequent wage-growth is anaemic. Crucially, the end of the fall is quite likely to happen before 2015. If Labour inadvertently gives the impression they are betting against this eventuality they risk being seriously wrong-footed.
It would also be folly to imagine that today's focus on living standards is going to squeeze out a massive election battle over fiscal choices and the deficit. The fact that there is nearly £40bn of further fiscal tightening to take place after 2015 is the central fact of the next parliament – and it is one that the Tories look far more at ease with than their opponents.
For the Conservatives there are also some flashing red lights. If it turns out that 18 months of growth fails to generate meaningful gains for households, David Cameron will be incredibly exposed. Promises of better times ahead would ring hollow, just as the inevitable boasts about rising GDP would boomerang. His discomfort would be compounded by any premature interest rate increases, spooking mortgage holders and choking off consumer optimism in the runup to the election. Elections tend to come down to narratives about the future: endless austerity twinned with flatlining living standards is unlikely to lift the spirits.
By contrast, if it turns out that the Conservatives are able to point to nearly two years of growth plus some steady, even if modest, increases in wages and incomes, they will feel confident making their electoral pitch: "Stick with us and bigger gains will find their way into your pocket while we finish the job on the deficit." For many it would be a potent message.
Fully restoring the link between economic growth and living standards won't be achieved through one policy, nor necessarily in one parliament. It will require structural change in our economy. Achieving this amid spending cuts and tax rises, and in a nation of debt-drenched households, only adds to the task. This is the unenviable challenge facing our next prime minister.
Gavin Kelly is chief executive of the Resolution Foundation thinktank

THE £874,000 QUESTION

The governor of the Bank of England earns an annual salary of £874,000 but even the most penny-pinching of pundits will admit that with that price tag comes a heavy responsibility.
In August, Mark Carney said the Bank would not consider raising interest rates until the jobless rate had fallen to 7% or below, requiring the creation of 750,000 jobs. That "forward guidance" was expected to provide reassurance that interest rates would not go up for about three years. Last week that guidance appeared rather less reassuring. Carney admitted that the chances of unemployment falling to a key 7% threshold before 2016 have increased.
The governor has some wriggle room. Carney has only promised to look at interest rates, not necessarily raise them, when the unemployment rate improves. But, with improving economic forecasts coming in, the way in which Carney will fall on the interest rate question will be a big dinner party topic in around 12 months.
Also on Carney's to-do list is to answer to Andrew Tyrie MP, chairman of the treasury select committee, on how the Bank is going to avert a housing price bubble. Carney is responsible for overseeing the government's "Help to Buy" scheme, in which buyers with deposits as low as 5% are being helped to get a mortgage through the government guaranteeing 15% of the lender's liability. It will be his call to step in and close the scheme if things look like they are getting out of control. Daniel Boffey

Britain's booming space industry looks to Mars and beyond

Dr Ralph Cordey at Astrium, Stevenage
Overcoming obstacles … Dr Ralph Cordey with a rover prototype at Astrium in Stevenage. Photograph: Graham Turner
Millions of miles above Earth, freezing temperatures, ferocious dust storms and a massive dose of radiation await robots charged with finding signs of life on Mars.
And those are just the known risks. If and when the ExoMars rover mission, led by the European Space Agency (ESA) and planned for launch in 2018, successfully lands on the red planet, it will battle a hugely hostile environment and unknown obstacles as it attempts to drill down into the surface.
Back on Earth, on the outskirts of Stevenage, a 1950s block is the unlikely backdrop for crucial research into this high-risk mission. Here, scientists are carrying out some of the most complex and advanced work in Britain.
It is home to Astrium, the space division of European aerospace groupEADS, and a £1bn business in the UK. The company has created a "Mars Yard" at Stevenage, where rover prototypes tackle some of the potential obstacles the real thing can expect to meet. The attempt at recreating some of the conditions on Mars involves large and small rocks scattered on imported sand designed to mimic as closely as possible the properties of Martian sand.
"The surface of Mars is a horrible place. It's bombarded by the solar wind from the sun. It's not like the Earth – the Earth has a wonderful magnetosphere, which protects us from gunk out in the solar system," says Dr Ralph Cordey, head of business development for science and exploration at Astrium.
The rover will have to fend for itself on Mars. It will need to be smart enough to map its course, and understand which obstacles it can overcome and which it cannot.
American rovers have already landed on Mars, but this programme is different, according to Cordey. "We want to do more than just land somewhere and have a look around," he says. "If we can drill down, we may find the remains of things which perhaps were living there several billion years ago, when conditions were much more benign."
As with all such missions, there is no guarantee of success, and the launch date has already been delayed several times. Yet it signals intent from the ESA, Europe's "gateway to space", which has 20 member states, including Britain. It is an opportunity to prove that Europe can successfully send a rover to Mars.
Britain's own ambitions in space are also accelerating. The industry is worth about £9bn annually to the UK economy, and employs almost 30,000 people. The target, outlined by trade body UKspace, is to increase that to £19bn by 2020 and £40bn by 2030, potentially creating more than 100,000 skilled jobs over that period.
It would take Britain's share of the global space market from 6.5% to 10% by 2030, building on work already being done in places like Stevenage. The UK currently exports about £2bn of space goods and services every year, with satellites sold around the world – this year to markets in Russia, South America and Canada, among others. But that could and should rise to £25bn, according to an updated space growth action plan, published last week.
In the plan, industry calls on the government to play a bigger role in delivering this long-term vision, by making the UK the best place for entrepreneurs and skilled engineers to grow and create space businesses, and to attract inward investment.
Andy Green, president of UKspace and former Logica chief executive, argues that while "the UK punches above its weight in the global space business", greater policy support is needed.
The government appears to be taking more notice than in the past of an industry that has been growing at an average annual rate of 7.5% since 2008-09, despite the financial crisis. It has created a UK Space Agency, falling under the umbrella of the Department for Business, Innovation and Skills, and is working with industry through the Space Leadership Council.
David Willetts, universities and science minister, increased Britain's budgetary contribution to the ESA last year, making the UK the fourth-biggest partner. "Where things are affordable and deliverable we will do our best to do them," he says, adding that the government will respond to the industry's calls in the new year.
"This is something that is rising up the agenda. When we talk about rebalancing the economy and not being dependent on financial services, we mean we've got to back the hi-tech industries of the future. Space is a classic example of that.
"My test for an industry that's a serious hi-tech growth industry is that they should be growing more rapidly than the Chinese economy. The space industry just about passes that test."
Yet the UK has never been considered a space heavyweight in the same league as the US, China, Russia, France and, increasingly, India. The latter launched a rocket bound for Mars this month.
"Much of the world would see the UK as a consumer and not a producer in the space industry," says Tom Captain, global head of aerospace and defence at Deloitte, who is based in the US.
David Parker, chief executive of the UK Space Agency, acknowledges the problem: "The UK was the third country to have space hardware in orbit in 1962, and has a 50-year history of outstanding achievements in space activities, but if you asked 99% of people in the street they'd be entirely unaware of it."
Largely that is because Britain is virtually absent from the more high-profile business of launching rockets and people into space. But the hopes of industry and the government rest on the ever-expanding list of space technology applications that inform everyday life. Opportunities for growth lie not only in telecoms satellites but in Earth observation, GPS, planetary exploration, weather forecasting, maritime intelligence, piracy monitoring, space tourism, precision agriculture, broadband and so on.
It is impossible to predict the future but one of the areas tipped for expansion is the business of space junk clearance. Last week the burned remnants of an ESA satellite plunged into the South Atlantic but Nasatracks more than 500,000 pieces of space debris, which are hurtling around the Earth at speeds up to 17,500mph. If such debris collides with functioning satellite equipment it can cause substantial damage.
"There's a lot of stuff up there and some of it has been there since the dawn of the space age, and every now and again comes back down again," Parker says. "Managing that more responsibly is itself a business opportunity."
The British astronaut Timothy Peake is preparing to take an ESA spaceflight in late 2015, carrying hopes that he will capture the imagination of a new generation of space enthusiasts.
In Stevenage, Astrium's Cordey says work is already under way on potential future missions to the Red Planet beyond ExoMars in 2018, but the possibility of a human journey is a leap too far for now.
"If you put a person on to Mars they could do the work very quickly but it's hugely expensive and we don't know how we would get someone back, so it's a bit of a one-way trip. I prefer robots right now for that."

UK spaceport is not science fiction

Rockets have never really taken off in Britain. Successive governments have left such costly endeavours to the likes of America and Russia and used foreign rockets to launch British satellites.
In the 1950s and 1960s the UK did dabble with the idea of developing its own rockets, but by the early 1970s government funding had stopped, on the basis that the huge expense did not represent value for the taxpayer.
But now, more than ever, there is a real possibility that countries not currently involved in the business of launching rockets might play a future role in the space industry. As Tom Captain, global head of aerospace and defence at Deloitte, says, participation "is not a God-given right" of those nations that currently hold all the cards.
The key shift could come from technological changes that are already under way, signalling a lower-cost launch model.
David Willetts, universities and science minister, says the UK stands to benefit from that shift.
"I think in the next 10 or 20 years the launch vehicle market is going to be commoditised," he says. "And when the costs of getting something into orbit fall dramatically, which is what will happen, the real prizes will be for people who are big in satellites and satellite services, and that is where Britain has a really strong position."
The potential does not end there, he says. As space tourism develops, there is no reason why the UK should not have its own spaceport.
"We're very well placed for the next generation of space activities. I want to see Virgin Galactic launch from a spaceport in Britain. I think we can be in the lead in the next generation. That's the kind of thing I'm keen to see."

Zoopla: attractive website, situated in desirable market, with potential

Taxi in Zoopla livery
Zoopla 'combines property search with property research', says its founder.
Britain has emerged from financial crisis and recession with its obsession for property wholly intact, so it seems only appropriate that one of the fastest-growing tech businesses in the country is bringing that mania into the internet age.
Launched five years ago, Zoopla has already become the country's No 2 property website, second only to Rightmove. It is the go-to site for nosy homeowners to check out how much their neighbours paid for their houses – or to watch their own property's value rise. But its founder, Alex Chesterman, has bigger ambitions. "No 2 is not good enough," he has said.
The serial entrepreneur had the same attitude when building up his previous enterprise, online DVD rental service ScreenSelect, which he built over three years and merged with LoveFilm in 2006. "I am very competitive," he says. "I will leave no stone unturned to be No 1. We got into the space to win, not to be the No 2 player."
The insight that would become Zoopla came from Chesterman's own experience of househunting, when he set up an Excel spreadsheet using Land Registry data to calculate the prices of comparable properties. When he later began initial research for Zoopla, just one in three adults knew that historical market transaction data – the foundation of the site's large and growing dataset – was freely available.
The result is a site – developed with co-founder Simon Kain, a software specialist who worked alongside Chesterman at ScreenSelect and Amazon – that is not only for househunters but also has the data to satisfy that endless curiosity among homeowners about the value of their and their neighbours' properties.
"What we do is combine property search with property research," he said. "We list historic sales prices, the current value of every home in the country… the internet made vast amounts of data readily and freely available, but it was all over the place.
"What we wanted to do was set up a one-stop shop where people can go and find out everything that is interesting and important in making the key decision about where they want to live."
It could be a winning formula with investors. The company recently hired Swiss bank Credit Suisse to explore growth opportunities, including the possibility of an initial public offering. At a possible valuation of £1.3bn, Chesterman's 9% stake would be worth more than £100m.
But Zoopla had an inauspicious start – just a few months after the website launched in January 2008, the property bubble burst. The size of the property-professionals sector shrank by a quarter, with estate agent branches closing nationwide. No stranger to adversity – his first venture, a late-90s chain of bagel shops with some backing from Marco Pierre White, failed to take off – Chesterman decided to push on.
Five years on, Zoopla has 40 million monthly users and claims to generate 2.5m leads per month for estate agents. Revenues are growing at 20% per year, and it is expected to rake in £65m for 2013 from subscription fees, display advertising and access to consumer data.
Just as with ScreenSelect/LoveFilm, Chesterman has bought his way to prominence. In 2009, the company purchased PropertyFinder from News International just weeks after acquiring thinkproperty.com from Guardian Media Group, owner of the Observer. Three years later, it paid an undisclosed sum to A&N Media, part of Daily Mail and General Trust, for Globrix.com. (DMGT, meanwhile, has taken a 50% stake in Zoopla.) And just this September, Zoopla bought Trinity Mirror's property arm for £3.3m, rounding out a portfolio of former newspaper property businesses.
In all, over the last four years, Zoopla has bought out 10 businesses, outpacing even ScreenSelect, which took over seven companies in its first three years.
Those acquisitions have put Zoopla neck-and-neck with Rightmove, a much older company founded in the first dotcom boom. Other than pointing out that, by measures such as number of property listings and measures of brand awareness the two are level, the competitive Chesterman doesn't much like talking about his rival.
"We are much more focused on our own business than our competitors', and we will continue investing in our brands and products until we achieve our mission of providing the most useful online resources for property consumers in the UK," he says.
Some of the sites Zoopla buys are absorbed, others retain their identity. "We normally just redirect [to the Zoopla site]," says Chesterman, "but some speciality sites we keep." To that end, SmartNewHomes and HomesOverseas, two of its acquisitions from Trinity Mirror, will continue operating; but the days are numbered for another Trinity acquisition, Zoomf.com.
Zoopla's competitors have now become its customers. "We power the property search on all the ISPs, all the national newspapers, and the regional newspapers," says Chesterman proudly.
In the immediate future, expansion will focus on seizing an ever-increasing share of the market for property adverts. Despite the success of Zoopla and Rightmove, digital still doesn't even account for half of property ad spending. Next year, it's expected to finally break that barrier as sellers chases the estimated 90% of buyers who visit a website before calling an estate agent.
And what about the temptation of that possible £1.3bn valuation? "In terms of what's on the horizon for us," Chesterman says, "we're not immediately looking to do anything… We really are focused on building out the business."