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Baroness Anelay of St Johns
That the Bill be now read a second time.
Baroness Anelay of St Johns (Con)
My Lords, I am grateful for the opportunity to present this Bill to the House today. It was guided through the House of Commons by John Grady MP, whom I congratulate for his work, and it received cross-party support.
The Bill seeks to amend the 2018 Space Industry Act in a way that should strengthen investment in the UK’s space sector. This is important for both the economic growth and defence of the United Kingdom. The nub of the matter is that under the 2018 Act, anyone carrying out spaceflight activities must indemnify the Government or a list of bodies included in that Act. The uncertainty faced by potential investors is that the Act states that an operator licence “may” specify a limit on the amount of the licensee’s liability. That leaves potential investors not knowing whether there will be a cap to that. I understand that investors remain unwilling to invest in companies that hold unlimited liability. Changing that “may” to “must” is at the heart of today’s Bill.
The Bill would amend Sections 12 and 36 of the Space Industry Act 2018 to provide legal certainty that all spaceflight operator licences must include a limit on the amount of an operator’s liability—under Section 36—thereby ensuring that operators are not exposed to unlimited liability. As a result of much hard work by my colleagues in Conservative Governments over recent years, and now Labour’s Government, and that of organisations such as the UK Space Agency, there is now agreement that we have a firm foundation for the development of the space industry.
There are currently two operational spaceports in the UK: Spaceport SaxaVord, in the Shetland Islands, which is licensed for vertical launches, and Spaceport Cornwall, which is licensed for horizontal satellite launch services. It is based on a site adjoining RAF St Mawgan near Newquay. The Spaceport Cornwall team is working closely with schools, colleges and higher education institutions across the region to build the skills base to meet the needs of the space industry. The Bill before us today should help to create economic growth, jobs and prosperity for decades to come across the UK, from Cornwall to Shetland.
The 2018 Act was introduced to enable space activities from UK spaceports, such as satellite launches and suborbital spaceflight. These activities require a spaceflight operator licence. International law places the responsibility for activities in outer space on states, not individuals. Launch states are liable for any damage caused on earth or to aircraft in flight. Damage caused by spaceflight activities could therefore result in claims against the UK Government. To alleviate that eventuality, Section 36 of the 2018 Act provides for spaceflight operators to indemnify the Government in certain circumstances, but the risk currently facing spaceflight operators is that the 2018 legislation does not require the Government to cap the operator’s liability. The policy of Conservative Governments and the current Labour Government was and is that licensees’ liability to indemnify government will be capped, but that commitment is in a policy document. It does not give the certainty of a provision included in statute law.
This is a long-standing unresolved issue. I understand that during consultation exercises and discussions with those involved in the space industry, a key request from the industry has been that there should be legislative certainty that spaceflight operators will not face unlimited liability when operating from the UK. It is not possible for that uncertainty to be removed via the regulation-making power, as there simply is not such a power in 2018 Act. In Section 12(2) of that Act there is no power to have a regulation on this matter. Therefore, the way forward is in the Bill before us today. It would introduce certainty by amending the Space Industry Act 2018 as follows: Clause 1(a) would change “may” to “must” in Section 12(2) of the 2018 Act, and Clause 1(b) would change “any” to “the” in Section 36 of the 2018 Act. Clause 2 simply deals with the extent, commencement and short title of the Bill, consistent with the terms of the 2018 Act. I should note that the Delegated Powers and Regulatory Reform Committee of this House reported on 18 July that there is nothing in this Private Member’s Bill that it would wish to draw to the attention of the House.
The Bill has a bit of a black back story. It was passed by the House of Commons early last year, when the sponsor was my then MP and friend, Jonathan Lord, who secured cross-party support for the Bill. He is still very much a friend, though sadly not a Member of Parliament. The Bill made its way here, and I was the sponsor. However, very shortly after the Bill received its First Reading in May, my right honourable friend Rishi Sunak decided to call the general election a little earlier, perhaps, than some of us were expecting, so the Bill was lost for lack of time.
Today, we have the opportunity to breathe life into the Bill. I hope the House will seize that opportunity, and I look forward to hearing the contributions from noble Lords today. I beg to move.
Viscount Stansgate (Lab)
My Lords, it gives me great pleasure to follow the noble Baroness, Lady Anelay, and to congratulate her on having outlined so clearly the purpose of the Bill, and for the skill with which she did so. She did it so well that I hope it has given the House every reason to know that we should give the Bill our unanimous consent. I speak on behalf of the massed ranks of the Government Back Benches.
I pay tribute to those Members in another place who played their part in getting the Bill to this stage, including former Member for Woking, Jonathan Lord, and the current Member for Glasgow East, John Grady. I look forward to the contribution of my noble friend the Minister. I have had the pleasure of being driven by him in a double-decker bus, and I want to know whether, in his transport capacity, he might in future be able to steer satellites.
I am sorry that we do not have time to debate—the advisory time limit is four minutes—but we do have until 3 pm. The thing about this Bill is the change it will make to Section 12(2) from “may” to “must”, and there is nothing else to discuss. We can therefore leave the Bill to one side, which frees us up in this debate to talk about what I hope many of us will want to: extolling the huge potential of the UK’s future in space.
Here, I declare an interest—and what a wonderful interest to declare. I am a member of the special committee set up by the House earlier this year, UK Engagement with Space. I am, at the moment, gazing across the Chamber at the other members, my noble friends—I can call them that, because we all are on the committee—who will be participating in today’s debate. Our inquiry is nearing its end. Often, you have to wait ages for parliamentary time to debate a committee report but we are in the position now of debating a subject before the report has even been published.
This Bill is all about unlocking the potential of future investment in space by providing a more certain climate. I want to highlight some of the areas in brief. One is economic opportunity. The Explanatory Notes for the Bill helpfully set out the fact that space is not just big but a very big business. The figures in the House of Lords Library briefing indicate the sheer scale of the market for space satellites, estimated to be $50 billion by 2033, and the value of the sector to the UK.
Sovereign launch capacity is a point that may be raised by others in this debate. Everyone knows that there are civil and military uses to space, and we may not always be able to rely on the United States for launch capacity in future. There is an argument to be made about our launch capacity. The noble Baroness mentioned SaxaVord. I do not want to pre-empt what our committee may say; I know that there are other potential sites available, and we may hear Sutherland mentioned in this debate. It is a point worth making.
We have unique geographic advantages. Forgive me if the House already knows this, but, unlike some countries, such as Germany, which is what is called “space-locked”, we have the capacity to launch from places in the Shetlands, which is ideal for polar orbit. The more important the Arctic gets, for all kinds of reasons, the more important it is to have a position where you can launch satellites in that orbit.
Then there is space debris. The one thing you need to know about the space above our earth is that it is anything but empty. Most Members might be staggered at the amount of space debris we think there now is. Our committee was told there might be 30,000 tracked objects but that there could be up to 1 million others, untracked. Some of them could be really tiny but, if they punch a hole in your satellite or spacecraft, they could ruin it. Even now, the International Space Station has had to manoeuvre itself to avoid known risks of collisions.
In our committee, we had a wonderful example of a space satellite brought into the committee room. It has a little arm that will reach out and grab a satellite, at 24,000 miles an hour, then slow down considerably and release it so that it will fall to earth. One of the things that most impressed itself on my mind is that we are moving to a stage where, between pollution on the earth and in the sea, and pollution in space, the earth is experiencing a pollution sandwich.
Heavens, my time has already run out—the Whip is looking at me. I do not have time even to mention farming, insurance services and some of the other major areas of our engagement with space. I hope very much that the House will give the Bill unanimous support. We look forward to it progressing with no amendments, so that it can safely reach the statute book in the course of this Session.
Baroness Stowell of Beeston (Con)
My Lords, the topic of space makes us think about rockets, astronauts and faraway places, but one of the great things about being a Member of your Lordships’ space committee has been learning that there is a UK space economy. It is vital to so many industries on earth and, so good are we at developing the relevant science and technology, our UK space industry has the potential to grow.
As with any sector, especially a high-tech one such as space, growth requires investment. This Bill, sponsored and ably introduced by my noble friend Lady Anelay, addresses a small but important gap around insurance indemnities, which are a disincentive to investment, as my noble friend has explained. Indeed, this Bill serves to remind us that small things matter, and I hope, like the noble Viscount, Lord Stansgate, that it is passed without amendment and put on the statute books without delay, because it is important.
On its own, the Bill will not address the bigger challenge facing the UK space industry: getting the investment needed to scale UK businesses so they are globally competitive and stay here in the UK. Noble Lords will recall we had a debate in June on the scale-up challenge for the UK AI and creative tech sectors, to which most of us speaking today contributed, so I am certainly not going to repeat what I said then. However, I want to highlight that the scale-up challenge also applies to the UK space industry, where it is arguably harder, because so much of it relies on patient capital.
To paint a picture, there are 1,700 space firms in the UK. That sounds great, but only 25 of them have an annual income of over £50 million. That is what needs to change. During our inquiry, to which the noble Viscount referred, we heard from Mark Boggett of Seraphim Space, a VC firm specialising in this sector. He told us that, while the UK ranks highly in total private investment—third in the world—it is 17th in the world and 10th in Europe when you look at the average deal size. He said this shows that the UK is identifying the right entrepreneurs and backing them in the earlier stages, but consistently underfunding those businesses, which does not enable them to grow on the global stage.
Just like our AI start-ups and spin-outs, which have the potential to grow and be hugely successful and deliver massively for our wider economy, the worry is that UK-based space firms will be bought out, or will move operations to other countries where raising capital is easier. We heard from Joshua Western of Space Forge, an aerospace company based in Wales, who told us that he was continually inundated with offers from Europe, the Middle East and America to shift its HQ to another country.
I know that the noble Lord, Lord Hendy, is a Minister for Transport, but what can he tell us to give us some confidence that the Government will make the necessary changes to incentivise growth capital investment in our space sector? There is much by way of recommendations the Government could adopt. We have had many reports from previous committees, and I have chaired one of them. In the debate in June, there were further recommendations that the Government could adopt.
Sadly, I feel that we are not getting the right signals from Government to incentivise the investment that is needed. I know that all attention today will be on the resignation of Angela Rayner as Deputy Prime Minister, but I was very sorry to hear earlier this morning that the noble Baroness, Lady Gustafsson, has also decided to leave the Government. As the Investment Minister and someone who has come into government having scaled up a tech business, losing her from the Government is something we should be concerned to see.
I was a bit confused by the Government’s decision to abolish the UK Space Agency. I hope the Minister can give some explanation of the Government’s thinking on that, and maybe my noble friend Lord Willetts might have something to say when he follows me. I am pleased to support my noble friend’s Bill and I hope that its passage through this House is swift.
Lord Willetts (Con)
My Lords, I very much welcome this Bill, which has already received support from across the House. Looking around at noble Lords here this afternoon, I welcome the House of Lords UK Engagement with Space Committee investigation. We should listen to the wise advice we are already getting from members of the committee, and I look forward to its report. I declare an interest as chair of the UK Space Agency and chair of the Regulatory Innovation Office. In light of that, I will make some quick comments.
First, space launch is undoubtedly a fantastic UK opportunity. We have already heard about our spaceports in Newquay in Cornwall and up in Scotland in the Shetlands, SaxaVord—two fantastic opportunities for us. We were right to get legislation on the statute book early on to provide a regulatory regime for space launch; I remember the debates in your Lordships’ House in 2016-17 as that Bill went through, and it has been an advantage for us to have the legislation in place.
However, there is this defect. It was understood at the time when we were debating this, but it is possible that some bean-counters in the Treasury thought they might be able to avoid an extremely speculative long-term liability without putting a clear obligation on government in the Bill. That defect is now widely recognised and is tackled in this Bill. I strongly support it. Moving from “may” to “must” is very important; it is a big difference, as every parent knows.
I will briefly comment on some other aspects of space, in particular the reports of the abolition of the UK Space Agency. I assure the House that reports of our abolition are rather exaggerated. Although the ultimate decision is for the Ministers to whom we are accountable, I will explain what is going on as I understand it. The UK Space Agency was an arm’s-length body. What grew up, over quite a few years, was one group of people sitting in the UK Space Agency doing our stuff, and another group sitting in the relevant department for the last couple of years, DSIT, monitoring what we were doing. It was clear that an awful lot of effort was going into one group of people in the UK Space Agency reporting to another group of people in DSIT, with emails going back and forth, when our activities should be outward looking and focused on business and the science community. Bringing these two activities together has great potential to deliver a more efficient and higher-quality space agency.
Ministers have already decided and announced that the new entity bringing together the existing space agency and DSIT officials will be called the UK Space Agency. There is still a lot of work to be done on exactly how it functions, and Ministers will be deciding on that in the coming months. I very much hope that at the end of this we will see less time spent on internal reporting processes and more time devoted to strengthening the UK space industry and serving the interests of space science. I therefore hope that the recommendations from the Lords UK Engagement with Space Committee reflect that ambition behind the changes that have just been announced.
Baroness Mobarik (Con)
My Lords, I commend the noble Baroness, Lady Anelay, and the honourable John Grady in the other place for introducing this Private Member’s Bill. I welcome the Bill, which is short in text but highly significant in impact. It addresses a crucial point of clarity; by changing one word from “may” to “must”, it makes certain that every spaceflight operator licence, including those for launch activities, will include a liability cap. This seemingly small adjustment is fundamental because, without legal certainty over liability, insurers are reluctant and investors hold back. By guaranteeing a clear liability framework, we send a strong signal that the UK is open for business in the space sector.
Under international space law, particularly the outer space treaty and the liability convention, the United Kingdom is ultimately responsible for damage caused by space objects launched under its jurisdiction. The Space Industry Act 2018 gave us the framework to license launches but left indemnity caps to the discretion of the regulator. This Bill removes that uncertainty and brings us in line with other leading spacefaring nations that already provide operators with capped liability.
For the UK to complete globally, our framework must be both robust and commercially attractive. The UK space sector is already thriving, contributing nearly £19 billion to our economy and supporting tens of thousands of highly skilled jobs.
I wish to make a few remarks about Scotland, which plays a leading role, with Glasgow building more small satellites than any other city in Europe and Scotland accounting for almost 18% of UK space jobs. The noble Viscount, Lord Stansgate, pre-empted that the word “Sutherland” may be mentioned—he was right. For the highlands, Space Hub Sutherland, on the A’ Mhòine peninsula, illustrates the opportunity for regional regeneration. The project has planning consent, with a limited number of launches per year for vertical launch to polar and sun synchronous orbits, ideal for earth observation and climate services. Although development is currently on hold, the site remains a strategic option with strong community involvement. When investors assess whether to restart or scale projects such as Sutherland, they look first for regulator certainty, and this Bill provides it.
Alongside Sutherland, the UK is building out a broader launch ecosystem in Scotland. SaxaVord in the Shetlands now holds the UK’s licence for a vertical spaceport and range operation, with launch operator licences granted and first missions preparing. However, we should think in terms not of a single site but of a plurality of sides, of national capability, launch, in-orbit operations and downstream data, so that the whole of Scotland, from Glasgow to the north—and indeed beyond, to Cornwall and across the UK—can share in the opportunity.
Legislation is not the only factor, but it is foundational. The Bill will put a mandatory cap into every operator licence, ending uncertainty. It will support our space insurance regime so that cover is available and affordable, and signal to global investors that the UK intends to be a stable, bankable place to build rockets, spaceports, satellites and the businesses that follow.
This is a practical, pro-investment measure. It strengthens our competitiveness, supports high-value jobs from Glasgow to the highlands and across the UK, and underpins a sector vital to our economy and security. I am pleased to support the Bill.
Lord Ranger of Northwood (Con)
My Lords, I support the Bill and the efforts of the noble Baroness, Lady Anelay, and others in bringing it forward. This legislation is not simply about the space sector and risk management; it is also about our national ability to participate fully in the next wave of technological progress. As such, I note my registered interests and my various roles in the technology sector.
Not a day goes by when we do not find ourselves discussing the possibilities of frontier technologies: artificial intelligence, advanced connectivity networks such as 5G and even 6G, and the extraordinary opportunities presented by big data. But we must be clear: these are not stand-alone innovations. They are increasingly interdependent, and at the heart of this interdependence lies the space industry.
Every AI-driven service that requires vast streams of real-time data relies on satellites to collect and transmit it. Our connectivity networks, which underpin modern-day commerce, defence and education, are strengthened by satellite constellations ensuring global coverage. The ability to process and analyse big data on climate, agriculture, transport and health is fundamentally reliant on earth observation from space.
Let me give some practical examples. In agriculture, AI models use satellite imagery to guide farmers on how to reduce fertiliser and water using increasing yields and reducing costs and emissions. In disaster response, rapid satellite data allows emergency services to direct help where it is needed most, with AI helping to interpret the images in near real time. Even our ambitions for autonomous vehicles will be inseparable from satellite-driven positioning systems and resilient connectivity networks.
The Bill addresses a critical barrier to unlocking the future because, without it, the risks created by indemnity and insurance requirements threaten to become a handbrake on growth. Consider a UK satellite launch operator required to take on unlimited indemnity for third-party liability. The result is predictable: either it cannot secure affordable insurance or investors will simply take their capital to countries where the rules are clearer and the risks more proportionate. That means lost investment, lost innovation and lost jobs for the UK. Take the example of a start-up developing a new earth observation service. If it faces uncertain liability rules for even a minor satellite collision or debris incident, the chilling effect on venture funding is immediate. We are all well aware that, in an ever-competitive global economy, capital and talent are mobile. Unless we create a framework that provides confidence, those opportunities will pass us by very quickly.
The Bill’s “may” to “must” amendment brings balance. It ensures that liability is proportionate, that operators can secure insurance on a rational basis and that the UK can send a clear message, as the noble Baroness mentioned, that we want to be the best place in the world to build, launch and operate in space. Without this, the UK’s ability to leverage AI, connectivity and big data—those frontier technologies that will define the coming decade and beyond—will be constrained by something as mundane, but as fundamental, as an unbalanced indemnity regime.
Supporting the Bill is about more than space; it is about ensuring that Britain has the confidence, the regulatory framework and the vision to lead in the industries of tomorrow. I support the Bill.
Lord Evans of Guisborough (Con)
My Lords, it gives me great pleasure to follow my noble friend Lord Ranger. We have become used to playing tag team on Friday debates; he followed me last time round, so it is my turn to go second today. I also thank the noble Baroness, Lady Anelay, for bringing the Bill before the House and for the time she spent with me when she heard that I was going to contribute to the debate, explaining how the Bill works and what it is intended to achieve.
Unlike many other noble Lords who have spoken today, I am not a member of the space committee, but I know a good thing when I see one—and so I believe that this is an excellent Bill. It encourages investment in a growing new industry; it looks to the future; it lifts a burden from business; and it does it all without increasing the volume of statute by as much as a single word. I am delighted to lend it my support.
We have rightly heard much about Scotland and the contribution that it makes to the space industry; my noble friend Lady Mobarik eloquently put the case for Scotland, and I understand that Glasgow now rivals California as a base for satellite technology—and no doubt in many other ways, too. However, as a recovering deputy mayor of London, I always like to put in a word for our City and for the consequences of our legislation on it. We may not provide a platform for space launching in London—our skies are already pretty full, as the Minister will be aware from his time at Transport for London; the expansion of Heathrow Airport attracts vocal opposition, so I am sure the Minister would not wish to venture down the road of launching rockets from London—but we are well placed to provide innovation to the UK space race. Our universities in London are gearing up to play a leading part, with Imperial and City University both hosting centres of excellence in this field. There will be a boost for our financial sector from the Bill, because, even though there is competition from around the world, I believe that London is second to none still for raising capital for innovative projects.
The UK regulatory framework, which my noble friend Lord Willetts referred to, is, by the admission of the Minister in the other place, the most advanced and trusted in the world, which is a great base to start from. It is good news for London’s legal sector—people who are never far from our thoughts in this House. The insurance market will benefit from the certainty that this Bill brings. It is impossible for the sector to insure against unlimited risk, so the proposal to cap risks for each of these projects is welcome and will enable the industry to play its part.
In my short time in the House, I have become used to Friday mornings being an excellent time to see debate on all sorts of subjects, and this morning has been no exception. We started early with voting arrangements in Scotland and moved on to discussions of countryside issues, which were very interesting and well informed, and we have climaxed with a scene in space—rather like one of those Bond films from the 1970s starring Roger Moore. Some noble Lords will remember those films; there was always an amusing closing quip from Bond, maybe a double entendre, so I look forward to the Minister’s response to the debate.
Lord Clement-Jones (LD)
My Lords, given the strong connection between AI and space technology, I declare an interest as an adviser to DLA Piper on AI regulation and policy. I congratulate the noble Baroness, Lady Anelay, on bringing this Bill forward and the original sponsor, John Grady MP, on taking it through the House of Commons. As we have heard, many of us are enthusiastic about being members of the UK Engagement with Space Committee and it has been a great pleasure to hear some preliminary thoughts from members of the committee. No doubt, we will deliver a report, hopefully later this year, that we will debate in this House.
This Bill addresses a fundamental barrier that has been repeatedly raised with the Government over many years, with cross-departmental consultations and reports dating back to 2020 and 2021 consistently highlighting it as a critical unresolved issue. As we have also heard, under the current Space Industry Act 2018, operators face uncapped or unlimited liability when indemnifying the Government against claims arising from spaceflight activities.
As we have heard, this situation has meant that investors have been reluctant to back British space ventures when faced with potentially catastrophic financial exposure. We also know that UK-based venture capitalists tend to have a lower risk tolerance compared to their US counterparts, making this barrier even more significant in the UK context. This has directly put the UK at a serious competitive disadvantage as our competitor nations limit liabilities or provide a state guarantee for launch activities, driving companies to choose other locations with more favourable regulatory regimes. The noble Baroness, Lady Stowell, mentioned the scale-up challenges that this has presented.
Many noble Lords—it has been a pleasure to hear them—have talked about the potential for our space sector. We have seen the historical orbit launch attempts from UK soil, such as through Virgin Orbit at Spaceport Cornwall, which, though ultimately unsuccessful, demonstrated our national intent and capability. The noble Baroness, Lady Anelay, is clearly a spaceport fan. More recently, with vertical launch licences for SaxaVord, which the noble Baroness, Lady Mobarik, mentioned, the UK is positioned to become Europe’s leading destination for commercial space launches. It was a pleasure to hear about the position of the noble Lord, Lord Willetts, and his enthusiasm for the space sector.
The UK’s expertise in legal services and the City of London, with its insurance underwriting capacity, offer a significant opportunity for the UK to become a global centre for space law and arbitration and to influence international regulation and standards. The noble Lord, Lord Evans, made the case extremely well, particularly for our London universities. Having recently chaired the council of Queen Mary, I know that our London universities have considerable expertise in that respect. When the noble Lord, Lord Ranger, talked about the relationship between data and satellite technology, including the potential for artificial intelligence, he made a very good case.
I believe that this Bill will unleash opportunities in the insurance market. It will facilitate activities such as listings on the London Stock Exchange, bond issues and corporate finance, further strengthening the City’s role as a financier of innovation and trade. It is a concerning fact that around 85% of satellites are not insured once they have been launched, making a stable and clear insurance framework even more vital.
However, beyond the immediate impact, this Bill underpins the growth of an extraordinarily important economic sector. Public investment in space yields high economic returns, supporting advanced manufacturing and delivering a strong multiplier effect. This Bill is a strategic piece of legislation that will help cement the UK’s position in space technology and the space economy.
I heard what the noble Lord, Lord Willetts, had to say about the relocation, if you like, of the UK Space Agency—putting it no higher than that—but I would very much like to hear from the Minister how he believes the repositioning of the UKSA will help our space effort and our capacity in the space sector. Seen from the outside, many of us are rather dubious about whether this is purely a cost-cutting exercise.
Although welcomed by the industry, this Bill highlights concerning delays in our legislative response to sectoral needs. We have heard that this is all about going from “may” to “must”, but it has taken seven years from identifying the original problem to effecting a solution, with six years passing since the space sector first identified the problem. We cannot afford such delays when competing internationally. Our regulatory frameworks must evolve at the pace of technological advancement and not that of Westminster’s traditional timeline.
Moreover, while this Bill addresses one crucial issue, broader regulatory challenges persist. The space economy is evolving rapidly, with new business models such as in-orbit servicing and manufacturing—the noble Viscount, Lord Stansgate, mentioned space debris—which will push the boundaries of the existing regulatory framework. So, while the Bill is welcome, it should be seen not as concluding regulatory evolution but, rather, as one essential step in ensuring that Britain remains competitive.
Lord Moylan (Con)
My Lords, I thank my noble friend for introducing this Bill, which, although a Private Member’s Bill, received the support of the previous Conservative Government; I understand that it has the support of the current Government as well.
I do not want to sound the slightest bit grinchy in the midst of such enthusiasm for space travel as has been expressed in this debate, but it falls to me, I think, to ask a few practical questions about how this measure is going to operate and what the justification is for transferring this liability to the taxpayer, who has not been mentioned so far by any of the speakers in the debate. We on these Benches obviously welcome the prospect of space travel originating in the United Kingdom. As Conservatives, we particularly welcome the fact that private investors are expected to be the driving force behind this programme. That is right and proper, for the large rewards that may flow to private investors are earned because of the risk they assume, but, if too much of that risk is transferred to the taxpayer, the balance is lost.
This leaves me with some questions for my noble friend and the Minister. First, it is implicit in the current arrangements that insurers are providing, and available to provide, only capped cover for damage caused by operators. Is that correct? Is that insurance available even on a capped basis and is it the norm for current operators?
Secondly, the Government will in future, as a result of this Bill, be obliged to bear the liability above an agreed cap, but we have no indication of how that cap will be determined. How will the Government ensure that they are not accepting an excessive or indeed unnecessary amount of risk on behalf of the taxpayer? Will the Government charge a fee or a premium for the unlimited risk that they are taking on? After all, the arrangement proposed is not unusual. I have it in respect of my own motor car: I have an excess that I have to pay myself, then an unlimited liability passes to the insurer in the event that I cause any damage. But I have to pay quite a chunky premium for that. Will the beneficiaries of this arrangement have to make a payment akin to an insurance premium?
Thirdly, if an operator can obtain free or nearly free top-up cover from the Government, what incentive will he have to maximise cover from the insurance sector? Surely the incentive would be to minimise expensive private insurance and maximise the Government’s indemnity.
Fourthly, risk affects not only balance sheets but behaviour. Someone whose potential loss is fully covered may act more recklessly than someone who has more skin in the game, to use that rather horrible phrase. Are the Government confident that transferring a higher level of risk to the taxpayer will not encourage a more insouciant attitude to safety on the part of operators? I say this with no disrespect to the CAA as the regulator, but it cannot inspect what is going on inside boardroom heads.
On a point of some detail which I am genuinely curious about, I draw attention to Section 4(1) of the Space Industry Act 2018, which provides:
“A person does not require an operator licence to carry out spaceflight activities in respect of which it is certified by Order in Council that arrangements have been made between the United Kingdom and another country to secure compliance with the international obligations of the United Kingdom”.
It follows from this that at least theoretically and in certain circumstances there will be operators operating from the United Kingdom who will not have a licence, because they do not require an operator licence under Section 4(1).
The Bill before us today seeks to moderate the current arrangements through the means of the wording of the operator licence. But in circumstances where there is no licence, it is clear that this Bill is going to have no effect. My question is whether such arrangements already exist and whether there are examples of such arrangements that have been certified by Order in Council. What liability arrangements does the Minister envisage in those circumstances and will he confirm that those liability arrangements are going to remain unchanged?
Would the matter be different if those arrangements were made with a private company? Imagine a circumstance where our obligations under NATO, which are international obligations and so would fall under Section 4(1), result in the United States launching satellites from the United Kingdom. I can understand that happening. What if the United States were to contract that to, say, Mr Musk’s operation—a very likely possibility? How does the liability work in those cases, and will that change as a result of the Bill? If so, how do the Government envisage that working?
I have other questions that I would like to ask, but I think that is enough for the Minister to be going on with. The enthusiasm that we have for space is tremendous and I encourage it. I myself do not expect to see the earth down there below me, not in my time, but no doubt there are younger Members of your Lordships’ House, some of them behind me, who have that prospect, and I wish them well in it. In the meantime, I would simply like to know that we have buttoned down exactly what it is that the Bill is leading to, and that the taxpayer is not going to be given a large liability that should more properly be borne by those who reap the financial and commercial benefits of space travel.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, I am delighted that this short but crucial Bill has come before your Lordships’ House, and I join all noble Lords in thanking the noble Baroness for bringing it forward. I am pleased to confirm that she has the full support of the Government. I thank all noble Lords for their comments in the debate and for their support. It was particularly pleasing to hear from so many noble Lords who are members of the space committee.
Before I outline why the Government are fully supportive of the Bill, I shall say a few words about the recent passing of Frank Strang MBE, the driving force behind SaxaVord spaceport in the Shetland Islands—the UK’s first fully licensed vertical spaceport—who died at the age of 67. He was a passionate supporter of the UK launch programme and a real force of nature. His loss is particularly poignant as we move ever closer to the UK’s first vertical launch from SaxaVord spaceport. On behalf of the Government, I acknowledge his significant contribution and pass on my deepest sympathies to his family and colleagues. He will be dearly missed.
As noble Lords will be aware, Glasgow builds more small satellites than anywhere else outside California, and the UK is now the second most attractive destination for commercial space investment after the United States. This Government have made it clear that growth is vital to rebuilding the UK and supporting high-tech jobs, which unlocks investment and improves living standards across the country. The space sector, as noble Lords have heard, is hugely valuable to the UK’s economy. It is worth over £18.9 billion and directly employs more than 52,000 people. It supports over 126,000 jobs across the supply chain, and at least £346 billion of UK GDP is supported by satellite services such as navigation, meteorology, communications and earth observation.
It is now possible to launch satellites from UK spaceports rather than relying solely on overseas spaceports to launch UK-built satellites into orbit. In January 2023, Virgin Orbit conducted a historic first launch from the UK from Spaceport Cornwall, and, as noble Lords have heard, in December 2024, SaxaVord spaceport in the Shetland Islands became the UK’s first licensed vertical launch spaceport.
This year we hope to witness the UK’s first vertical launch by German company Rocket Factory Augsburg, with more to follow. The Government are investing in new launch companies such as Orbex, which has built factories in Scotland, creating hundreds of new jobs, ready to take advantage of the new opportunities that the Government have created. Other launch operators such as Skyrora, a UK company based again in Glasgow, are also thriving. Skyrora has indicated that it will conduct its first suborbital launch from the UK in the near future.
The UK space industry already supports an industrial base of over 1,500 space companies. It provides high-skill, high-quality jobs across the UK, with over 77% of employees holding at least a primary degree. Building on the success of the UK space sector, the Government will continue to support business through a stable policy environment, strengthening our economic institutions and giving investors the certainty that they need to fuel growth. The Government recognise the important contribution that the space sector makes to ordinary people’s daily lives. It is important that the UK builds on the current successes of a thriving and dynamic space sector.
We will ensure, through the measures that this Government is taking to deliver growth, that the UK becomes a leading provider of commercial small satellite launch in Europe by 2030. To achieve our ambition, the Government continue to support spaceports and launch operators to grow new UK markets for small satellite launch and suborbital spaceflight.
The Government are committed to making improvements to the Space Industry Act 2018 and the Space Industry Regulations to ensure that our legal framework and regulations remain effective and internationally competitive, and the Government recognise that the question of liability and insurance is of utmost concern to the space sector.
I will turn to a number of points made by noble Lords in the debate, if I may. First, the noble Baroness, Lady Stowell of Beeston, asked about encouraging global investment in the space sector. We are exploring financial tools, incentives and market access schemes that promote sustainable activities and encourage self-investment and inward investment, and that support a level playing field for UK companies. She referred to the resignation of my noble friend Lady Gustafsson for family reasons; I or her successor will write further to the noble Baroness about the points she raised.
A number of noble Lords raised the regional benefits to the UK in respect of Scotland, Cornwall and London, in both academic and business terms. The Government strongly support development of the space industry for precisely those reasons. It has regional and national consequences.
Noble Lords also raised the question of the merger of the UK Space Agency with DSIT’s space directorate from 1 April 2026. I am extraordinarily grateful to the noble Lord, Lord Willetts, for his very optimistic explanation of what seems to us to be an efficiency move to cut duplication without curtailing activities. As he says, bringing the activities together will be more efficient and get more done quicker and more easily. I thank him for his contribution in that respect, which was more elegant than the note I was given on the subject in the first place.
The noble Lord, Lord Moylan, raised a number of questions, not all of which I have the dexterity and speed to answer through technological means currently. One of the points he raised was on the transfer of risk and the possibility that, risk having been transferred, operators would behave in a negligent or non-compliant manner. The answer is that the cap will not apply if that is the case. The Government are comfortable that these arrangements are the right thing to do. In fact, the space industries have been asking for them for some time.
The noble Lord asked about operators certified by Order in Council, the public liability of such operators and so forth. Currently, there are no Orders in Council in place with third countries such as the US. Before such a future order were to be considered, we would want to assure ourselves that the country in question had a regulatory framework and licensing structure comparable to our own. Hypothetically, if the UK were to enter into such an arrangement, the other country in question would still be jointly and severally liable with the UK, under the UN liability convention, for any damage caused. We would therefore anticipate any arrangement between the UK and another country to make provision for financial liability. The UK legislation would still require the operator to indemnify the UK Government against any claim for damage or loss against the Government arising from the operator’s activities.
The industry has made it clear that holding unlimited liabilities will have an adverse effect on the UK spaceflight industry. It has advised that it is impossible to obtain insurance for an unlimited amount, and therefore impossible to obtain insurance that would provide full coverage of their liability to indemnify Government and their liability to uninvolved third parties.
Furthermore, potential liabilities of safe spaceflight are not easily quantifiable. If government did not limit a spaceflight operator’s liability, spaceflight companies and investors would look instead to more favourable regulatory regimes in other countries, where Governments share the risks involved by limiting an operator’s liability or by offering a state guarantee, such as in the US or France. As the noble Baroness has explained, there are powers in the Space Industry Act to limit a spaceflight operator’s liability when carrying out spaceflight activities from the UK.
The 2018 Act enables commercial spaceflight activities, which include launching a spaceflight—operating a satellite in orbit, for example—and other activities, such as the operation of a spaceport and management of a range to be carried out under a licence in the United Kingdom. The Act sets out the broad licensing and regulatory framework for carrying out such activities and is underpinned by more detailed provisions in the Space Industry Regulations 2021.
The 2018 Act currently provides powers to the regulator to specify a limit on the amount of the operator’s liability in their licence, but the Act does not make it mandatory. Currently, Section 12(2) of the Act provides that:
“An operator licence may specify a limit on the amount of the licensee’s liability under section 36”.
Current government policy is that regulators should use these powers and specify a limit on operator liability and the licence so that no operator will face unlimited liability.
The Government fully support the Bill for two key reasons. It is consistent with our policy that all spaceflight operator licences should have a limit on liability. Therefore, it will not impose any additional liability or risk on UK taxpayers compared with the current policy. The Government also recognise the value that industry places on having legislative certainty on this matter.
The space sector continually expresses its concerns about the use of the word “may” in Section 12(2) of the Space Industry Act. I am therefore grateful to the noble Baroness for the Bill, which, by amending Section 12(2) of the Space Industry Act, will meet a key request from the sector. We fully support the Bill.
Baroness Anelay of St Johns (Con)
My Lords, I am very grateful to all those who have participated today and for the way in which noble Lords have expressed cross-party support for the Bill. It is right not only to congratulate noble Lords on showing the way forward that the Bill could produce, which would mean a strengthening of investment within the space industry, but on giving us the opportunity to show that the UK is indeed intending to be a leader in the development of all the technological changes that are about to come.
My noble friend Lord Moylan was rather coy about his age, whereas he is but young in this House. I am not saying I am going to send him into space—I promise noble Lords that I will never do that to him—but I would say to him that we have the opportunity here to ensure that we support the development of technology. He was right to ask the questions that he did. I was intrigued by the question about Section 4 of the 2018 Act. I will check again, but I read the Hansard of this House for that Bill—I did not fully read the Commons Hansard—and I was not aware that there had been questioning regarding that. I thank my noble friend for asking that, because it is now on the record, and the Minister gave such a good answer. Me saying a Minister has given a good answer probably has not happened since last summer—I can change occasionally, but not often.
This is an opportunity for the Bill to go through this House, with, I hope, further support so that we are able to get the Bill through in a timely manner, so that those who are willing to invest in a very important industry feel that they have been given the ability to do so, still facing risk, but knowing where the risk lies.