Britain needs a national drone company

Forget GB Railways and GB Energy... how about GB Drones?

POD! On this week’s YIMBY Pod, we talk to Michael Hill from Britain Remade about Manchester’s theory of growth, and what ‘Manchesterism’ should be. And Martin and I look into three new energy storage projects, and try to coin the nickname ‘The Electric Arsehole’ for one of them… Listen here, or wherever you get your pods.

---

A brand new essay post will be landing later this week (hopefully tomorrow). In the meantime, I thought I’d liberate another paid post from behind the paywall, given that today the government is expected to announce significant new spending on drones.

This was originally published in March 2025. Some of the specific reference may be a little dated now, but the core point is still a good one, I think.

If you enjoy reading it, please consider taking out a paid subscription to get more like this direct to your inbox every week.

---

Finally, Europe has woken up to the new reality.

Like it or not, Britain and our European allies are now participants in a new Cold War – and this time around, we can’t be certain that America will always be on our side.

However, it isn’t just the prospect of Donald Trump withdrawing support for Ukraine that keeps me awake at night – it’s China doing the same.

Obviously, Beijing is not on our side in this fight. Ideologically, China is a part of the emerging authoritarian axis, and in practical terms it is by some distance our most powerful strategic adversary. If Xi Jinping ever sends his troops into Taiwan, it will make events in Ukraine look like little more than a minor skirmish.

But since the beginning of Putin’s full-scale invasion, China hasn’t been entirely helpful to Russia. Instead, it has followed the classic Iran-Iraq war playbook of effectively selling its most valuable weapons to both sides: drones.

I say “effectively”, because on paper, Beijing has imposed restrictions that prevent Chinese companies like DJI, the world’s largest drone maker, selling their gear for use in war. But in practice, both Ukraine and Russia have continued to acquire drones through third-party and grey-market channels.

That’s why today Chinese drones are utterly dominant on the battlefield. For example, in 2023, Ukraine reportedly bought 60% of DJI’s entire global supply of its flagship Mavic drones, and though hard numbers are hard to find, there are clearly thousands in use on the frontlines today.

And this is why I worry. The reliance on Chinese drones puts Ukraine, and the rest of Europe, in a precarious position.

It means that if China were to choose to clamp down on grey-market drone sales to Ukraine, or were to impose broader restrictions on sales to Europe – as it has reportedly tried to do – then Ukraine will lose access to this critical battlefield technology.

And what makes this situation worse is that even if drones can be sourced from other countries, then we might still be at a disadvantage – because China, and DJI specifically, make arguably the best drones in the world.

So what can we do about it?

I think it is time for Britain to take the drone gap seriously, just as we would if we didn’t have the best fighter jets or missiles. That’s why we should establish a new company in the mold of the forthcoming state-backed Great British Railways and Great British Energy.

It’s time for us to create Great British Drones.

The drone paradigm

It’s hard to overstate the impact drones have had on how wars are fought. Crucially, this is not just large “military” drones that look like small planes and are designed to fire missiles or drop bombs. As Ukraine has demonstrated over the last three years small, commercial-grade drones have also proven decisive, for several reasons.

Most obviously, there’s reconnaissance – sending a drone up gives a squad of soldiers better visibility of their surroundings, and helps them spot the enemy. Combined with a technology like Starlink,¹ drones can stream live video back to base – giving senior officers the live intelligence they need to make real-time tactical decisions.²

But just as importantly there is the difference these small drones are making to the actual fighting.

For example, drones are extremely useful when paired with artillery, as Ukraine discovered in the early days of the war. The way an artillery gun works is that a shot is taken – and then subsequent shots are ‘corrected’ for accuracy, so that munitions land closer to the target. And unsurprisingly, it turns out that having an extra pair of eyes in the sky makes this trial-and-error process much quicker.

However, this is just the beginning. Now we’re three years in, drone tactics have evolved significantly.

Here’s a video showing what appears to be a deactivated drone lying on the ground. But when the Russian troops in the video find it, it springs to life and attacks them.

And another major innovation has been the rise of first-person-view (FPV) drones, where the pilot wears a pair of VR glasses to fly the drone precisely towards a target, as you can see in this extremely grim video.³

They’re also often used in battle as “kamikaze” drones. Because drones are so comparatively cheap, it makes sense to sacrifice them in order to, for example, drop a grenade through the hatch on top of a tank, or ram into larger aircraft, to knock them out of the sky.

Then finally, the other reason drones have changed how wars are fought is that drone technology itself has been rapidly improving because of the war, just like how World War II accelerated the development of radar and jet planes.

For example, check out the video above, which shows a small military drone made by American firm Skydio. It has cameras on board that can automatically build 3D models of the environment it is operating in. And perhaps more importantly, it can navigate optically using just its cameras – which helps it get around GPS jamming, which has been a permanent feature of the frontlines in Ukraine.

So this is all to say that drones have changed the face of war, and any country that wants to defend itself needs a significant drone capability.

China’s drone advantage

This brings me to China.

It might be tempting to think – because it has been historically true – that the west will always continue to have the technological edge. But this hasn’t been true for some time.

Today, many Chinese-made products are not just on-par with what American and European companies produce – they are in many cases the best in the world. China is no longer just a workshop that churns out plastic widgets, or inferior copies of western technology. Chinese companies are today producing leading edge technology in a number of fields, such as phones, electric cars, and even humanoid robots.

And this is especially the case when it comes to drones.

For example, take a look at this video showing off the DJI Matrice 4. It replicates many of the capabilities of the American Skydio drone above.

I won’t run through a detailed breakdown comparing different makes and models – I’m not writing a buyer’s guide for any warlords reading – but suffice to say, on many dimensions the two companies (and thus, countries) have technological parity. Though Skydio appears to have an edge when it comes to current AI-powered capabilities – on some comparisons, DJI’s drones have better cameras, or can spend longer in the air.

And what’s also notable is that DJI is not just producing well-crafted flying machines. It has also built out a highly sophisticated range of accessories that can be bolted on to their drones. And there’s an entire ecosystem around their products – such as ground transmitters that extend range, and a software backend that makes it easy to process and review captured images and data.

So though the above video is focused on civilian uses – for emergency service uses – you don’t have to think too hard about how these same capabilities could be used during a war. And if we ever end up in a shooting war with China – these capabilities will be deployed against us.

This brings me to my final example of Chinese drone supremacy.

The above video – from China – is awesome. It’s incredibly cool to see thousands of drones perfectly synchronised together.⁴ But I also think that it should strike fear in us.

This is because the next generation of drone warfare is swarms – autonomous drones acting together, as a team, to take out targets.

Today, swarming technology is only at a very early stage. On the battlefield, there are only anecdotal reports of Ukraine testing swarms of between three and ten drones.

But it seems obvious to me that we’re only a few years away from swarm warfare changing everything about how wars are fought all over again.

For example, imagine if the thousands of drones in the display above did not just have LED lights, but carried explosives. And instead of swirling majestically in the sky, shaped like a dragon, if they were charging together, in formation against a target.

Given how cheap drones are to make, this is obviously where things are heading.

This will make drones even more difficult to defend against. As instead of needing to deflect one missile, or shoot down one plane, war becomes a game of numbers. Say a thousand drones are sent after a high value target – what are the odds of a 100% success rate in taking them out?

The good news for now is that no country or company appears to have yet mastered drone swarms. Despite the eye-catching vision of the future in the video, in reality light shows are much less sophisticated from a software perspective as drone performances are pre-programmed, and follow a fixed path.⁵

So to make swarms a reality, drones will need to be equipped with sensors to understand their environment, and there will need to be software capable of managing airspace and responding to unexpected events in real time.

But as things stand, China is arguably best placed to get to this place first. We can see from the DJI video above how China can manufacture advanced hardware at scale, and it already has an advanced drone software platform. And if China does get there first, it will be another ‘Sputnik’ moment for America and Europe.

The case for GB Drones

What we face then is a drone gap.

Even if America beats China to mastering drone swarms – which it might, as the Pentagon is reportedly working on it – it will still not be good news for Europe. Either drone supremacy will belong to our biggest strategic adversary – or our newly unreliable friend, who has been going through a very public breakdown.

Given the centrality of drones to the future of warfare, it’s strategically essential for Europe to have its own independent capability, so we are not at the mercy of China or America restricting drone sales, or even remotely triggering the “off” switch if we use them in a war they don’t like.

This is why I think there is a big opportunity for Britain.

At the moment, we have a small drone industry. Big weapons companies, like BAE Systems, sell a number of large, aircraft-like drones for long distance missions – the sorts of drones that replace fighter jets.

But there isn’t much on the smaller end – the commercial-grade quadcopters that are the workhorses in Ukraine. There are a few smaller British companies making them, but none of them are particularly substantial.

The same is true across Europe more broadly. The largest European drone company is Parrot, a French firm, which is of a similar size to Skydio, the American company above. In any case, both are miles behind DJI in terms of scale, revenue and capability.

So what can we do to change this and give Europe the technology it needs? As strange as it might sound to our modern, neoliberal ears – I think the answer could be state intervention.

That’s why we should establish GB Drones – a company that will build and scale small drones, so that Britain and our allies have access to the same capability as our biggest strategic rivals.

As this is only a back-of-the-envelope sketch, I admit that I haven’t got a fully worked out plan for exactly how the new company should be structured. I don’t think it needs to be nationalised, though the government could take an equity stake, like it does with the OneWeb satellite network.

Similarly, I don’t have a strong feeling on whether GB Drones should be started from scratch, or created by acquiring an existing firm, like the UK arm of American firm Anduril, which last week did a drone deal with the Ministry of Defence.⁶

But however it happens, what’s crucial is that GB Drones, as our “national champion”, should be heavily supported by the British government. It should receive tax breaks, grants, and regulators should treat it favourably – such as by massively liberalising our drones laws – so that it can build up the domestic drone business we need. The goal should be to create a company the size of DJI that sells to both friendly nations’ militaries, and commercially.⁷

Creating a national champion like this isn’t a new idea. We used to have several “national champion” companies during the twentieth century, until Thatcherism happened. And there are also plenty of examples from around the world.

For example, the reason Taiwan is home to TSMC, the company that makes the world’s most advanced semiconductors, is because Taiwan’s industrial policy in the 1980s was geared towards helping the company grow.

And the same goes for Huawei, the Chinese telecoms company. This is perhaps the best analogy for what I’m proposing.

In Huawei’s case, China decided that it was unacceptable to have foreign companies dominate the country’s telecoms – so it used state subsidies, tax breaks and grants to support the growth of the company. This gave Huawei the room it needed to grow and mature, in a way that may not have been viable in straightforward commercial terms. And as a result of these efforts, today Huawei equipment powers 5G networks around the world, and millions of people use Huawei phones – which conceivably gives China enormous leverage.⁸

And this is why I think we need GB Drones, and that the government should support such a company. Not because it necessarily makes commercial sense – because it wouldn’t in a pure free market where DJI can manufacture more cheaply and at a larger scale. But because we need it.

As Ukraine has demonstrated, the future of warfare is drones. Europe needs a powerful drone industry. So why can’t it be Britain that makes it happen?

1. This is another area where Europe is completely useless – Europe arguably has the OneWeb satellite network, which is a bit like Starlink on a smaller scale, but it definitely doesn’t have an independent space launch capability to rival SpaceX – to the point where OneWeb is launching its satellites… with SpaceX. But I’m sure in five years time the EU will publish a long report identifying the problem.

2. I’ve even heard about how a lot of this video ingestion is paired with AI, which can now automatically spot enemies, without a human needing to comb through the footage.

3. Seriously do not click that link unless you want to watch people die.

4. Since I’ve become the owner of cats, I am firmly of the opinion that we should ban fireworks now that we have a better option.

5. I actually wrote a feature for E&T magazine about drone show software a while back. It turns out that most are programmed in 3D animation software like Blender.

6. It’s slightly odd that this announcement characterised the company as “Anglo-American”, because Anduril has offices in Britain. Is McDonalds an “Anglo-American” company now?

7. Perhaps the new “National Wealth Fund” could make such an investment?

8. Though Huawei phones are pretty useless in the west, because of western restrictions on the company using Android and building Google’s services into its devices. That was a smart way for the west to respond.