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Cash boost for technology with potential to transform areas ranging from industrial materials to communications security

The UK is to invest more than £500mn in emerging technology based on quantum physics that experts say has the potential to transform economic and national security. 

The government’s support will be welcomed following questions about what would replace an ambitious Conservative pledge in 2023 to invest £2.5bn over 10 years and project Britain as a world leader in quantum technology. 

The quantum industry’s backers say it will potentially transform areas ranging from the discovery of advanced industrial materials to the imaging of the human body. Quantum computers offer a route to improved communications security and one day may be able to break traditional encryption methods.

“Making sovereign quantum computing capacity is important for both national security and economic resilience,” said Gerald Mullally, interim chief executive of Oxford Quantum Circuits, a quantum computing company.

The government’s four-year investment in quantum computing is due to be announced on Monday as part of the broader industrial strategy, according to people familiar with the matter. That announcement is likely to be followed by news of further money for quantum technologies, adding to initiatives such as the £100mn announced last year for five new research hubs. The backing dovetails with the launch last year of a National Quantum Computing Centre to host machines “designed to push the boundaries of what is possible with the technology”.

Quantum was one of several science and technology strategies announced late in the last Conservative government that Labour has reviewed since taking office last July, partly to examine if funding was available. 

Quantum technologies exploit how the behaviour of matter at the scale of atoms and their constituent particles can differ sharply from the physics of everyday objects we experience.  

Quantum sensing has been tested as a possible method to more accurately locate London Underground trains. Quantum imaging is being developed to scan brain health, including for early signs of dementia.

Tom Grinyer, chief executive of the Institute of Physics, said quantum technologies would be “as much of a game-changer for humanity as artificial intelligence or the internet”.

“We cannot afford to let [the UK’s] advantage slip and the government must recognise quantum as the national priority it is, just like AI, data and green energy,” Grinyer said. “If we don’t invest, others will — and we risk being left behind in the post-quantum world.”

Another driver of government interest is the sales of British quantum-focused businesses to US companies. The acquisitions of Oxford Ionics and the quantum computing arm of Oxford Instruments have both been announced this month. 

Lord Patrick Vallance, science minister, has spoken previously about the importance of supporting innovative UK science and tech companies to scale up independently. 

UK official funding for quantum technologies was crucial because maintaining sovereignty in the sector had “never been more pertinent”, said Richard Murray, co-founder and chief executive of Orca Computing, which develops quantum machines.

“The global race for quantum computing is reaching prime time and we’ve seen several other countries put in sizeable commitments to make sure that they seize a share in this future market,” Murray said.

Revolut chief in line for Musk-style payday at $150bn valuation

Nik Storonsky struck deal before SoftBank funding round that awards him more shares if valuation clears set hurdles

Revolut’s chief executive Nik Storonsky is in line for a multibillion-dollar windfall if he steers the fintech’s valuation to about $150bn, under a long-standing Elon Musk-style pay package. 

Storonsky, who founded the $45bn start-up in 2015, has an outsized incentive deal that would increase his stake in Revolut by several percentage points if the valuation more than triples from its current level, according to people familiar with the matter. 

The total amount of shares on offer could be worth as much as 10 per cent of the company if all the targets are hit, one of the people said.

However, the package was structured such that it would pay out in stages when the valuation cleared set thresholds, the person said.

Some of the people likened Storonsky’s deal to the bumper pay deal that Musk negotiated with Tesla in 2018. That award, which was the largest in US history, has led to a years-long legal battle.

Storonsky’s deal predates the company’s blockbuster fundraising in 2021, in which an investment round led by SoftBank handed the company a valuation of $33bn.

The chief executive’s direct and indirect holdings in Revolut shares topped 25 per cent in April this year after a reorganisation of its ownership structure, according to the company’s latest annual report.

Before that, no one had more than 25 per cent of the shares in issue, although Storonsky was nonetheless deemed a person with significant control.

The Revolut scheme underscores how investors seek to motivate top executives to reach ambitious growth targets. 

If Revolut reaches a $150bn valuation, it would also deliver outsized returns for the company’s early venture capital backers including Index Ventures and Balderton Capital. 

Storonsky guided the company to its $45bn valuation last year, when employees and early investors were allowed to cash in some of their shares. He sold hundreds of millions of dollars’ worth of his own stock in the transaction, the Financial Times previously reported. 

The London-based start-up’s profits more than doubled to £1bn last year as it surpassed 50mn customers, which boosted the fees it makes from card payments and the interest it earns on deposit.

Revolut also benefited from a resurgence of crypto trading, which increased revenues nearly fourfold at its wealth business comprising stock and digital assets trading.

Last year, the fintech received a banking licence in its home market after a years-long process. The award from the Bank of England represented a milestone for the company, with executives now hoping it will help it secure licences in other markets.

The company has also begun to pay out cash bonuses to staff as part of an overhaul of its remuneration policy, a shift from a previous system that only granted bonuses in equity. The move comes ahead of a potential bumper initial public offering for Revolut.

Revolut declined to comment. 

UK lobbies South Korea to switch to Rolls-Royce for new fighter jet programme

Britain seeks closer ties with Asian nation’s booming arms sector to help rebuild its own defence industrial base

UK officials are lobbying for Rolls-Royce to replace US rival GE Aerospace as the main engine partner on South Korea’s fighter jet programme, as Britain seeks closer ties with the Asian nation’s booming arms sector to help rebuild its own defence industrial base.

South Korean defence group Hanwha Aerospace produces current-generation engines on the KF-21 fighter jet under licence from GE. But US export restrictions over national security concerns have frustrated Seoul’s ambitions to sell the jet to potential buyers such as the United Arab Emirates and Indonesia.

As an alternative, South Korea has been looking to develop its own engines, with Hanwha and local rival Doosan Enerbility pitching for a role in the next generation of the KF-21, which is due to enter production in the mid-2030s.

But with some defence experts expressing scepticism about their capabilities within the timeframe, UK officials have been pressing the case for co-production with a foreign partner as an intermediary step, according to several people familiar with the discussions.

“Rolls-Royce’s involvement would de-risk the project and accelerate the timeline,” said a British official. “This is not about simply selling engines to South Korea. It is about developing a new engine together and seeing that relationship through to the end of the engine’s life.”

Rolls-Royce declined to comment, but one person familiar with the situation said the company, which is hoping to work with India on its indigenous jet engine programme, had made no secret of its interest in opportunities to help other countries develop their own combat capabilities.

UK officials acknowledged their campaign on behalf of Rolls-Royce was part of a wider effort to forge closer defence procurement ties with South Korea, one of the world’s top 10 arms exporters.

But analysts said the efforts could be complicated by Seoul’s decades-long security alliance with the US. Hanwha was pushing for shipbuilding contracts with the US Navy, as well as engine maintenance and repair contracts for US fighter jets based in Asia, said a person close to the company.

Seoul sees defence procurement as a way to meet Washington’s demands to reduce South Korea’s $55bn trade surplus with the US. GE is also interested in continuing its involvement in the KF-21 programme, according to a person familiar with the company’s thinking.

Rolls-Royce supplies gas turbine engines for South Korean naval frigates, while the KF-21’s ejector seat is produced by Uxbridge-based Martin-Baker and its missile system was supplied by MBDA, a European consortium jointly owned by BAE Systems, Airbus and Leonardo.

Hanwha has talked to British officials about partnering with BAE to build munitions factories in the UK, according to people familiar with the discussions, as European countries seek to boost their weapons production capacity following Russia’s full-scale invasion of Ukraine and signs of wavering US commitment to the continent’s defence.

The UK Strategic Defence Review this month recommended the creation of an “always on” munitions production capacity that could be “scaled up at speed if needed”.

BAE this month announced a partnership with Hanwha Systems, the South Korean conglomerate’s radar and software subsidiary, to co-develop an advanced satellite system for intelligence gathering, surveillance and reconnaissance. Hanwha already supplies BAE with “modular charge systems” for its Nato-standard 155mm artillery rounds.

A UK defence ministry spokesperson said: “The Republic of Korea is an important industrial partner and we continue to scope future collaboration opportunities together.”

GE declined to comment on its future involvement in the programme, but a spokesperson said: “GE Aerospace is proud to be a trusted partner in Korea for more than 60 years. We remain committed to supporting Korea’s defence industry and contributing to future programmes with proven expertise and a strong track record.”

South Korea’s defence procurement agency said: “No decision has been made yet on whether we will co-develop the engines with foreign engine makers or with which foreign company to partner with.”

BAE and Hanwha declined to comment.