Space Industry Bill [HL]

Lord Moynihan Excerpts

2nd reading (Hansard): House of Lords
Wednesday 12th July 2017 Lords Chamber

[Lord Moynihan (Con)]

My Lords, I declare two interests. First, I am a member of the Delegated Powers and Regulatory Reform Committee. As the Minister said, its involvement with this legislation began early. It was invited to comment on the draft spaceflight Bill at the request of the House of Commons Science and Technology Committee towards the end of the previous Parliament, a contribution which was welcome as a precedent and which, in turn, led to substantial changes from what was, in effect, a skeletal Bill to one where the number of regulations subject to the affirmative procedure has increased from four to 13.

My second declaration is that I live in Prestwick, having moved to Scotland in December last year. I take an active interest in the area, not least because the office I occupy overlooks Prestwick Airport. I am a strong believer that Scotland and south Ayrshire, in particular, can significantly benefit from being designated and licensed as one of the first airports to enable commercial spaceflight activities—not vertical-launch rockets, but the horizontal launch of modified 747s to include satellites, scientific experimentation and suborbital spaceplanes. This part of Scotland is already a hub for high-tech engineering and experts in the aviation industry. It is also home to a wide range of entrepreneurially minded individuals from Buzzworks, with its nationally achieved award-winning restaurants across Ayrshire, to the remarkable business acumen and philanthropism of Tom and Marion Hunter. This is an area ready to take on the challenge as a home for high-tech companies as well as being one of the most beautiful areas of the United Kingdom. However, despite that paean of praise, I have no commercial interest in the subject of the Bill. My views are personal and underline my belief that south Ayrshire can become a thriving business centre for the supply and service sector to support spaceport activities.

In his excellent speech, the Minister referred to the way in which links with schools can provide the vital local benefit of preparing young people for careers in aviation technology and the spaceflight industry. The area can become a thriving economic zone lifting it to the forefront of technical expertise with training programmes, a visitor centre and some 880 acres of land for aerospace-related development adjoining Prestwick Airport. Prestwick Aerospace already employs more than 3,000 highly skilled employees. It is the largest aerospace cluster in Scotland. If other sites are licensed in Scotland, the aerospace cluster at Prestwick will be able to service their development and act as the hub for technical and supply activities, bringing significant jobs to the local communities.

The educational links are perhaps the most exciting for the area. Ayr College, Strathclyde University, Glasgow University, UWS and the Astronomy Technology Centre at Edinburgh University can all be significant beneficiaries. Prestwick Airport is well located and has the best surface links of any Scottish airport. Its local weather microclimate is recognised as the best in the UK. It is not looking to become a Cape Canaveral with vertical launches—more remote locations would fit that bill—but it would focus on horizontal flights.

Of course, this Bill is not just about Prestwick. As the Minister stated, there are many opportunities throughout the United Kingdom, and it is my firm opinion that it will be necessary to license at least two spaceports in the UK to develop and deliver a sustainable and effective solution for launch operations, including, most importantly, diversionary runway capabilities.

Addressing the whole of the UK, the regulatory environment has the potential to support companies in their bid to help government,

“capture 10% of the global space market”,

by 2030. The most immediate beneficiary of this Bill will be the opportunity to deliver a significant proportion of the estimated 3,500 to 10,000 satellites that are due to be launched by 2025. It will also facilitate the building of bigger and more technologically advanced satellites and remove the need for UK companies to use test facilities located abroad.

Today is the first step in the parliamentary process to create the legal framework to enable exciting new technologies to operate safely from the UK. It is a welcome clear signal of the UK’s commitment to enable commercial spaceflight to be carried out from UK spaceports, including the launching of small satellites into orbit, and permitting manned suborbital operations for scientific experiments and space tourism. It is essential that through the legislation before us we create a regulatory process which is internationally competitive for the billions of dollars of investment income which can boost the economy, British business, engineering and science by making the UK the most attractive place in Europe for commercial spaceflight and competitive with any regulatory system in the world. That is a significant challenge, but the most important objective is to provide a comprehensive and proportionate regulatory framework to manage risk, ensuring that commercial spaceflight and everyone working in the sector remain safe. The measures in the Bill to promote public safety by providing a regulatory framework to cover operational insurance, indemnity and liability are important in this respect.

Committee stage will provide us with the opportunity to scrutinise the Bill in detail. When we do, there are a number of key issues which we need to consider, some requiring an important balance between regulation and the vital importance the private sector attributes to the Bill providing a competitive framework, with enthusiasm and backing from the Government and a level of funding support commensurate with commercial success. As my noble friend the Minister said, we are talking about intense international competition to attract inward investment. The Government will need to step up to the plate as much as the private sector and will need to do so quickly if we are to gain competitive advantage.

I urge my noble friend the Minister to ensure that we do not stifle this opportunity by overregulating, as other nations such as Spain, Portugal and Norway are preparing competing legislation and launch sites. I ask my noble friend to give the House his commitment that the final legislative framework will ensure that the Government recognise the reduced risks posed by small-scale microlaunchers and nanosat payloads, each exceptionally valuable new areas where Britain could lead the world with “soft touch” regulatory oversight, while always recognising that there is no room for manoeuvre when it comes to the paramount question of safety. To allow this industry to succeed in the long term, it is essential that licensing, insurance and range-tracking costs are appropriate to the level of risk, so that the UK can build a globally competitive national space launch capability for the UK. A burdensome regulatory requirement would negatively impact this opportunity, which will see a massive growth in satellites and an ultimate colonisation of space.

From the perspective of my work on the Delegated Powers and Regulatory Reform Committee, I believe the Government have already moved significantly to improve the Bill, which is very welcome. I was concerned that in the original draft Bill, the Government appeared to dispense spaceport operators from any statutory requirement in any Act of Parliament, without any parliamentary procedure whatever. Now, the Government have acknowledged, perhaps implicitly, the committee’s argument that a regulator’s job is to regulate compliance with the law not to dispense people from complying with the law.

It is also welcome to see that the Government have taken on board many of the committee’s recommendations. The number of regulations subject to the affirmative procedure has increased from four to 13, and two objectionable Henry VIII powers have been removed altogether. However, my one remaining concern in this area is the question of safety in a new, fast-moving and changing technology-driven sector. In the case of safety regulations under Clause 18, my noble friend justified making the first set of regulations affirmative, and subsequent regulations only negative, on the ground that the continuous updating of safety regulations should occur in a “nimble and proportionate” way—an unfortunate turn of phrase. No one would want safety regulations not to be updated because of the alleged difficulty of scheduling affirmative debates. I had ministerial responsibility for responding to both the Hillsborough tragedy and the Piper Alpha disaster, and the safety of the public must always be paramount. It sits as a priority alongside the safety of the nation. I very much hope that the Government will further reflect on the compromise solution on offer in Clause 18. I believe the issue of safety is sufficiently important to require the affirmative procedure whenever and wherever safety regulations are revised and updated, particularly in this new industry. It should be for the House to be proportionate and not the Government.

I also hope the Minister can respond to the excellent comments made by the noble Lord, Lord Hunt, about the international relationships we have in this sector. I hope he will give a commitment today that we should be working very closely with the FAA in the United States, looking to learn from its regulatory framework and seeking to agree a bilateral arrangement to submit export licences for approval. I hope urgent progress is being made on this front and that the question of what is US technology and how it will be controlled if not on US soil is resolved before we leave Committee. The FAA in the States had never seen spaceflight before. It had to work through the role with all interested parties, as we should. There was a need to determine the right balance between the roles and the responsibilities of each and every party. We need similar progress in the UK, and I hope that my noble friend can set out a timeline for the measures set out in the Bill until the first licences and approvals are granted.

My second request to the Government is that, notwithstanding which operator is appointed, the sector needs to be joined up. There is talk of the Space Agency investing a sum of £10 million. We need to recognise that this will not go far in a multibillion pound industry if we are to meet the Government’s objectives. The cost of a suborbital flight system is of the order of £120 million, and modifying a 747 as a carrier aircraft stationed in a UK airport—the type envisaged for airports such as Prestwick—is unlikely to cost much less than £700 million. Yet we have no real idea how the Space Agency is approaching the grant process and how it will reach decisions about which sites it backs and which operators at those sites. It has talked of £10 million being available, but it is not clear whether that will be per site or per operator. Not to put too fine a point on it, as I mentioned, £10 million is de minimis funding in the context of the space industry, especially if the UK wants to get behind it and establish a new, exciting growth industry as we approach Brexit.

My third and final observation is that we want to avoid regulatory mission creep. We must at all times maximise the participation of the private sector while providing a safe, secure, transparent and accountable regulatory framework, and there is no time to lose.

The Bill is a welcome and important step in the right direction, and I very much hope that when the House moves into Committee, we will have the momentum towards further and accelerated progress and clarity for the future of an important sector in a safe working environment.

Equality Act 2010 (Work on Ships and Hovercraft) Regulations 2011

Lord Moynihan Excerpts

Monday 27th June 2011 Grand Committee

Addressing this issue was a conundrum, difficult to resolve to the total satisfaction of both the shipping industry and maritime trades unions. We have found the right balance in taking the minimum necessary measures to satisfy the European Commission’s concerns. The Government will remain vigilant as to any negative impact on the UK flag, the competitiveness of UK shipping and the wider maritime cluster. Should Parliament approve these regulations, the Government will watch developments in this area carefully. Even if no immediate impact ensues, the review clause within the regulations allows a suitable opportunity for the Government to reassess any impact. I look forward to noble Lords’ contributions to the debate. If I do not manage to address all the points raised, I shall do so in writing before the Motion to approve these regulations is considered by the House. I commend these regulations to the Committee.

[Lord Moynihan]

My Lords, I have a brief question for the Minister. I assume that Northern Ireland is making its own regulations in the context of this order. Can the Minister give us the background as to why this applies only to England, Scotland and Wales, and not Northern Ireland, yet the definition of “United Kingdom waters” is those waters adjacent to Great Britain or, under paragraph 3(c),

“the legal relationship of the seafarer’s employment is located within Great Britain or retains a sufficiently close link with Great Britain”?

What would “a sufficiently close link” mean in this context?

[Lord Higgins]

My Lords, it is a very long time indeed since I qualified as a member of the Institute of Chartered Shipbrokers. Since then, I have taken a strong interest in the industry, both as a Minister and Opposition spokesman on trade, in Select Committees and so on. This is an extremely important order. The Minister has set out clearly why it is before us: as a result of European legislation. However, I have always considered it important that the number of ships on the British register should be as large as possible. It has considerable advantages to the UK, not least because, generally speaking, if ships are registered here, the headquarters, operating offices and so on tend also to be in the UK; the Treasury, in particular, benefits as far as taxation and other things are concerned. In addition, it encourages other, related, industries such as insurance, which have traditionally been located in London.

That is very important, but there are other aspects such as the training of officers, which again builds up the link with the UK. We remain a major maritime nation. None the less, the size of the register has, for reasons such as taxation, varied over the years. However, we have always played an important role in the IMO and so on.

This proposal, the extremely helpful Explanatory Memorandum and the impact assessment really examine two possibilities. They rightly reject the idea that we could do nothing, because, as the Minister has pointed out, we are under considerable duress from the European Union to deal with the matter. So the alternatives are either to change the position on differential pay for employees from the European Union, the EEA and the designated states—the designated states are of course really quite expensive in this context—or simply to say that you cannot differentiate at all, regardless of where the employees come from. The Government have opted for the first of these options and, I believe, rightly so. I have received some assessments from the Chamber of Shipping, and the impact assessment also deals with these matters as far as both options are concerned. They say that if one were to do it for seafarers from the EEA and designated states, the average percentage increase in wage costs, which range between 6 per cent and 32 per cent, would impact on a ship’s overall running costs by up to 7.2 per cent. On the other hand, if one were to take the widespread option, the range would be an increase of 10 per cent to 130 per cent; it would depend, of course, on the type of ship and so on. The increase in the overall cost could be as high as 56 per cent.

The industry is highly competitive. If we are compelled to pay higher rates, as would be the case in the international market generally, that would obviously have a serious effect on our position and be likely to result in a considerable reduction in overseas earnings. While it appears that there is no choice but to go for the European option rather than the global one, that would seem to be the right solution. I hope that the Minister will give us an assurance that he is certainly not proposing to consider any further a wider option, which would have a very serious economic effect at a time when the British economy is obviously under considerable strain.

There is a provision in the order for a review after five years. I hope that the Minister will say that if it turns out to be the case that the percentage increase in wage costs that I have indicated under the provisions of the order is having a more serious effect than the one that we anticipate at the moment—which is already serious—a review might be carried out earlier to see whether, in the light of experience, some change ought to be made in the order. However, overall, this is probably the best compromise that can be effected. None the less, it will have an adverse effect on the British economy.