Labour accused of torpedoing British rocket start-up’s rescue

Matthew Field

Mon, February 23, 2026 at 6:47 PM GMT+9 3 min read

Orbex had been hoping to launch a home-made rocket from UK soil this year - MICHAL WACHUCIK/AFP via Getty Images

Labour ministers have been accused of scuppering a rescue deal for British rocket company Orbex.

Graham Leadbitter, the SNP MP for Moray West, where Orbex is based, accused Labour of “sabotaging” the rocket company’s future after refusing to release tens of millions of pounds in funds that had previously been awarded to the business.

Government officials are understood to have denied a request for taxpayer funding that had been allocated to the UK company. It was made by The Exploration Company (TEC), a German space business that was in sale talks to rescue Orbex.

The company, which had a rocket factory in Scotland employing 160 people, collapsed into administration last week after bailout talks fell apart.

The space business had been hoping to launch a home-made rocket from UK soil this year, raising more than £138m.

Orbex was also handed a role on the European Launcher Challenge last year, a programme backed by the European Space Agency worth nearly £800m. This included £125m from the UK to support two businesses, including Orbex.

But nearly all of that cash was withheld by the Government as Orbex hunted for new backers. It is understood that unlocking the main tranche of funding was contingent on the company finding additional private investors.

Orbex later put itself up for sale, agreeing a deal with Germany’s TEC, which hoped it could continue to make use of the government funds.

Despite weeks of talks, including with Baroness Lloyd of Effra, the space minister, sources told The Telegraph that government officials rebuffed TEC’s request for the funds. The company abandoned the rescue deal days later.

A spokesman for TEC said: “We respect the UK decision-making process.” It declined to comment further.

One source claimed the ministers had “backed out” of the deal, forcing Orbex to file for administration. A government spokesman said it had not “supported or opposed” any deal.

Mr Leadbitter said: “The UK Government has long talked up the need to develop sovereign launch capabilities but has yet to match their rhetoric with action.”

Orbex had intended to use the cash from the European Space Agency, of which the UK is a member, to develop Proxima, a rocket that could compete with SpaceX’s Falcon 9.

It is understood that TEC, which has raised $230m, wanted to use the funding to support work on an alternative rocket design in significant departure from Orbex’s original business plan.

Orbex received a £26m government loan signed off by Peter Kyle, the Business Secretary, last year. At the time, Mr Kyle hailed the rocket business as a “unique” investment.

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The company has been forced to repeatedly delay the launch of its rocket as it scrambled for cash. The Telegraph previously revealed that Orbex was left in crisis after the National Wealth Fund, the UK’s £28bn sovereign wealth fund that is backed by the Treasury, pulled out of talks to invest in the business in November.

Orbex has now appointed administrators from FRP to try to salvage its assets. Nearly all its staff have been laid off. Skyrora, a rival Scottish space start-up, has confirmed it is considering buying up the remains of the company.

A government spokesman said it had a responsibility to “carefully assess all proposals” to ensure “value for money for the taxpayer”.

They said: “The UK allocated the maximum possible amount of funding to Orbex as per European Space Agency rules and selection criteria. To access further funding the company needed to secure a matched level of private investment, which it was unable to do.

“The Government has at no point supported or opposed any proposals to take over Orbex.”

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