Space Industry Bill [HL]

Debate between Lord McNally and Lord Willetts

Committee: 1st sitting (Hansard): House of Lords
Monday 16th October 2017 Lords Chamber

[Lord McNally]

Yes, I know that every Minister wishes that was there.

I thought that the opening from the noble Lord, Lord Tunnicliffe, was sobering for us all. On the one hand is the tremendous enthusiasm and real excitement about the prospects of the industry, yet we know from history that there are dangers. I live in St Albans, down the road from where the de Havilland Comet was developed, launched and flown with a design fault. I saw a very moving documentary a few weeks ago about the Space Shuttle. Its final conclusion was that, from beginning to end, the Space Shuttle was never safe. They knew it, but because of the pioneering nature of what they were doing they took the risk. That is not open to us when we are legislating like this, so it is a matter of getting it right between risk and cover.

I tabled my amendment simply because we have been approached by the industry with concerns about the way UK law treats the licensing and insurance of small and nano-satellites. Current law makes it difficult and expensive to launch small satellites because of long licensing processes and large insurance costs. Licensing of individual satellites can dramatically increase operator liability. This amendment would allow would-be operators to feed in their concerns and work towards a proportionate but effective insurance regime. I beg to move.

[Lord Willetts]

I will add one comment to that. I thank the Minister, who has already given a full and lucid account of the Government’s intentions, which itself is very helpful. Another issue we should add, which the noble Lord, Lord McNally, touched on, is that historically we have been thinking about very large satellites and the risks associated with them. That is not really the issue for a UK space launch capability. It is much more likely to be constellations of small satellites, some of them meeting real UK requirements. Imagine there was a trouble spot in which UK troops were involved or a natural disaster affecting us—let us think of what happened in the British Virgin Islands recently—where you wanted to get a satellite over the scene urgently; small satellites are very likely to be used in those situations. They are often launched in constellations, and one other issue on which, again, I hope at some point we will have guidance from the Minister is whether each individual small satellite in a constellation has to be separately insured and licensed or whether, as we appear to be heading for constellations of small satellites, there could be significant flexibility in the regime so that constellations of satellites could have a single launch permission and a single insurance arrangement. If not today, I hope that during the passage of the Bill that is also made clear.

[Lord Callanan]

My Lords, I can answer the noble Lord, Lord Willetts, directly: a constellation can be launched with one licence.

Amendment 16 is a further amendment to Clause 11(2). It requires the Secretary of State to hold a consultation within 12 months of Royal Assent on whether an operator licence should specify a limit on a licensee’s liability to indemnify government, and what an appropriate limit would be. By imposing that a mandatory consultation takes place within a set period, the amendment prioritises the consideration of the power to limit the operator’s liability to indemnify the Government, thereby eroding the discretion to introduce a limit only if this is considered necessary and appropriate.

I accept that consultation is a critical part of policy-making. It allows stakeholders to contribute their views on new policy that affects them. We have in fact already listened to industry views extensively—I did it only on Friday, in the latest round—and an unlimited liability to indemnify government could make it difficult to raise finance and obtain insurance. We have already had an extensive debate on that with the previous amendment, and that is why we have taken the power in this subsection. However, we need to ensure that we take a balanced approach between attracting operators to the UK by making it commercially attractive to carry out space flight activities and limiting the Government’s exposure to claims arising from such space flight activities. Our policy is for space flight activities to be conducted on a commercial basis but we have taken a power to intervene and cap the liability to indemnify government if this becomes necessary.

As I set out in the previous debate, we are already assessing the availability and cost of insurance to cover the liabilities under the Bill. This work will inform any policy on limiting the level of the liability to indemnify government. If a limit is deemed appropriate, the Government need to consider the level of such a limit and the consequences of bearing the contingent liability. We may conclude that a limit on this indemnity for UK launch activities is not appropriate in all circumstances. The Government have an obligation to use public funds appropriately. It is therefore not right that they should be bound to consult on setting such limits before the need to do so is established and accepted.

Furthermore, the current power also allows the Government to deal with each licence application on a case-by-case basis. The regulator will need the flexibility to decide whether a limit is appropriate, as well as what that limit should be, depending on the risks associated with each mission. Because of the variety of spaceflight activities that may be conducted from the UK and the individual circumstances of each operator, it may not be possible to have a specific limit or a methodology that works in every case for all missions. A flexible approach to setting a limit is good for both government and industry and, in our view, a legal requirement to consult on what an appropriate limit might be may restrict this. I assure noble Lords that we will consult on this matter once we have conducted our detailed analysis and have established the need to set a limit, and assessed the consequences of so doing. I therefore ask the noble Lord to withdraw his amendment.