Space Industry (Indemnities) Bill

Mark Garnier Excerpts

2nd reading
Friday 23rd February 2024 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I rise to speak in support of the Bill in my capacity as chair of the all-party parliamentary group for space. Before I get to the thrust of my speech, I draw the House’s attention to my entry in the Register of Members’ Financial Interests. My interests are both financial and non-financial, and I have a number of outside roles that are relevant to the UK space industry.

I congratulate my hon. Friend the Member for Woking (Mr Lord) on introducing a Bill that appears extraordinarily simple but, as we heard from his well thought through and well delivered speech, would actually have a profound impact on a lot of technical areas in the space sector. It shows a great deal of skill on his part that he can do something quite so complex in such a straightforward, intelligent and elegant way.

As my hon. Friend said, the Bill seeks to enhance the UK’s position in the space industry by making changes to liability for spaceflight risks. That is a wholly pragmatic and welcome change. The Bill’s purpose is to make the UK an even better place to operate space businesses from, and it follows on from the space strategy published two or three years ago.

The Bill seeks to resolve some technical anomalies in the insurance sector in a goo and sensible way. Importantly, it clarifies aspects of risk in a way that should provide comfort to those financial wizards supporting our superb space innovators, many of whom I have met. I am delighted to say that many came to Parliament for one of the regular space sector showcases run by the all-party parliamentary group for space. The next one, which will be in the Attlee Suite on the morning of 19 March, is on the sustainability and future of space activities. All Members and Members’ staff are welcome to come along to hear about that fascinating area.

The space sector is incredibly important. People do not realise that every time they use a cashpoint, their transaction is confirmed through positioning, navigation and timing that comes from navigation satellites passing overhead. We can do an amazing number of things. We can analyse a country’s economic activity through heat sensors from Earth observation satellites, which can tell us whether a city, a port or a railway station is busy. We can look at any number of different things. We can predict the use of crop fertiliser, planting and distressed crops through Earth observation satellites.

I am delighted to say that I chair the advisory board of the Space Energy Initiative—this is a non-financial interest—and we are looking at whether beaming energy from space can be part of the future of a secure and safe planet. What we can do is absolutely extraordinary. In 1969, we first landed a man on the moon, and we are doing an enormous number of brilliant things. I am delighted to say that a number of UK space industries are now looking to get involved in the Artemis programme, whereby NASA is looking to take astronauts back to the moon, possibly as early as next year. This is a very exciting time for space in a wide range of areas.

We can go wrong by focusing specifically on the space sector itself; I would suggest that there is an increased benefit to the UK that go further than the space industry. The space industry is important for a number of reasons, one of which is that, because of the high value of this type of activity, it addresses exactly what Adam Smith proposed in his 1776 book “The Wealth of Nations”: nations should try to create greater wealth by having greater productivity. This country has had a productivity conundrum for a number of years, and concentrating on the space sector could increase our productivity and therefore benefit the whole of the country.

The Bill also talks about the service sector—the insurance industry. Members will be aware that before coming to Parliament, I was in financial services—investment banking and small investment fund management—so when I look at the opportunities presented by something such as the space sector, I tend to look at the many UK opportunities, in the context not just of the direct beneficiary but of how the sector helps the wider economy. The UK has one of the best—certainly the oldest—wholesale insurance markets, located in the City of London. It must be the aim of the whole of Government to ensure not just that spaceflights and operations are controlled from the UK but that all involved in the space industry come to London to seek insurance and other financial services from our financial services experts.

I have argued for some time that the UK should do more to align the interests of our space industry with the interests of the UK financial markets. I take inspiration from a former Chancellor of the Exchequer. When he was newly appointed Chancellor after the 1997 general election, many years ago, the former Member for Kirkcaldy and Cowdenbeath recognised the UK’s good but small film industry. He chose to make a small intervention in the tax system to incentivise investment into UK films. As a direct result, he helped to rebuild the UK film industry into the vibrant and innovative industry that it is today.

I suspect that when we look at some great films, a direct thread can be traced: between that intervention by the former right hon. Member for Kirkcaldy and Cowdenbeath back in the late 1990s and, for example, the success of the “Harry Potter” franchise right here in the UK. Harry Potter is a brilliant export, and was always going to be a great film success, but I am certain that without that intervention, the heroes of the Harry Potters may well have cast their spells with American accents. I think we can look to that, dare I say, great former Labour Chancellor, for the huge amount he did for the British film industries. It may be the only time that the House hears me say “great” and “Labour Chancellor” in the same sentence, but he did an important job, and we should recognise that. Of course, there was a little bit of abuse of the system by one or two people enjoying it, but notwithstanding that, the intervention has been important.

A similar intervention can be made to support not just the space industry but our world-class wholesale financial markets. It is important that the City of London does not just think about what it does today and whether it does markets well; it should be completely innovating the whole time to seek opportunities that come in the future. We should not think about any industry only in terms of what we can offer it; we must think about our ambitions in any sector with a view to how it can enhance wider service sectors.

In the case of financial services, investment bankers raising capital investment and insurance services securing risk cover for innovators or helping investors to find a way to maximise their opportunities in the sector, we should be thinking how a fiscal intervention might benefit all concerned. After all, our brilliant innovators, research institutions, network of catapult accelerators and universities, and all the rest of it, already attract a great deal of international business to the UK. That is a very good thing. We also need to appreciate that we need the best space industry financiers in the world to come to the UK and locate their expertise right here in the City of London, and the best insurance experts and the best space lawyers. We need to seek to achieve, in the space industry and the wider economy, the UK being the best place to come for everything needed to support space ambitions.

I believe the Government are enthusiastic about this private Member’s Bill, and I thank my hon. Friend the Member for Woking for bringing it forward. It is a truly innovative Bill. The City of London, as I think I have mentioned, needs to remain relevant. The City of London is an incredible jewel in the crown of this country. It has had its problems, but none the less, it pays through taxation for an awful lot of hospitals, police officers and schools. A lot of good things come out of the City of London, but it needs to be relevant the whole time for the future. We need to be making sure, as we develop something like the space industry or AI or any of these other industries, that we help the City of London to focus and be a part of that, so that there is a symbiotic relationship between the financial services sector and these other sectors that will benefit our economy. I am delighted to support the Bill; it is fantastic.

[Cherilyn Mackrory (Truro and Falmouth) (Con)]

I congratulate my hon. Friend the Member for Woking (Mr Lord) on bringing forward this private Member’s Bill, which I rise in support of. Following my hon. Friend the Member for Wyre Forest (Mark Garnier), I will take us from the City of London, on which he made some brilliant and valid points, to the space sector—we are almost in danger of having some joined-up thinking in this place today!

One would not be surprised to see a Cornish MP rising on these Benches when we are speaking about space. We have a lot to say in Cornwall about the space sector. Cornwall is in fact at the forefront of the UK’s developing space economy and is playing an increasingly important role in the national space programme to ensure that as many people as possible contribute to and benefit from the economic growth. Cornwall’s data, space and aerospace strategy ambitions include: mitigating and reversing environmental degradation; restoring nature and seeking to protect businesses and communities from the impact of climate change, both locally and globally; working with the Government to grow the UK space economy as a whole; and, growing the Cornwall and Isles of Scilly economy to deliver jobs and international investment, while offering an outstanding quality of life for its people.

Cornwall and Isles of Scilly local enterprise partnership made space one of its main priorities some time ago. If the House will indulge me, I would like to pay tribute to one of the key players, Mark Duddridge, who we lost suddenly last year. Mark used to be chair of the local enterprise partnership. Sadly, a matter of hours after I was in a Zoom meeting with him from this place, he tragically and suddenly died. Mark has left a hole in the industry and business community in Cornwall, and is very fondly remembered. New MPs look for the people they can trust, with knowledge in all these things, so that we can gain our own knowledge and learn about them, and Mark was certainly one of those people for me.

Mark said of the space industry:

“We’ve backed Cornwall’s spaceport bid from day one because we saw the potential for Cornwall to play a vital role in the UK’s space economy ambitions and create high value jobs.

The global space industry could triple in value to more than $1 trillion by 2040 and what’s driving that is climate change, security and telecoms. The facilities we are helping to fund at Spaceport Cornwall are already having a catalytic effect and attracting new space companies to Cornwall.”

One of those is international space logistics company D-Orbit, which will establish a satellite assembly, integration and testing facility at Spaceport Cornwall’s Centre for Space Technologies, with support from the European Space Agency. Mark played a key role in that, and others are continuing his work. He was a talented and passionate advocate for Cornwall, and has left a large hole.

I thank my hon. Friend the Member for Woking for bringing clarity to the industry as a whole. As he has mentioned, where we had a “may” we will now have a “must”. That is always important so that industry knows what it is doing. Members may not know that Cornwall has more than 150 business involved in the space industry, and 35 local and national partners. In 2023, 1,300 people in Cornwall were employed in the space industry, which was worth about £88 million; by 2030, we expect more than 3,000 people to be employed in it, with a potential value of £1 billion.

My hon. Friends have mentioned some of the businesses and services employed by the space industry. Let me add to that list the marine protection areas that we are deploying not just around UK waters but globally, because that is done via satellite. How do we know how bad climate change is in different parts of the world? Satellites do that for us.

When I was a Cornwall councillor, we had interesting debates about the benefits of the spaceport in Cornwall. Some of our environmentalists were concerned that we were sending huge great jumbo jets off into space and that it would cause a lot of pollution, but my belief— and that of a lot of my constituents—is that the good outweighs the bad given the amount of information that we can now get, and that surely we in Cornwall want to provide the jobs and infrastructure to allow that information to come back to Earth.

So what else is Cornwall doing in the space industry? There is artificial intelligence and professional services—we have space lawyers in Cornwall. This legislation will be of great interest to them and how they can help their clients, and they are abreast of it all. Foot Anstey is one such firm providing those services.

We recently had drone tests over the bay of Falmouth by a company called Open Skies Cornwall. I pay tribute to the Falmouth harbour commissioner, Miles Carden, for spearheading that project. When huge tankers are ashore in the bay of Falmouth, or if in high seas it is too dangerous even for pilot boats, drones can take out medical supplies and bits for the boats. That could save lives, and could certainly save a lot of money for those companies, so they are a great investment.

Another tech company, Farfields, operates at Mylor boat harbour with Mylor Boat Hire. It is testing electric eco-launches using a low-cost satellite network rather than wireless systems so that checks on the battery voltage of a boat’s electric motor can be done via GPS. Checks can be done on bilge pumps and all sorts of other things on boats. All that is happening as part of the space industry, which is not just about launching rockets into space, and it is vital.

My hon. Friend the Member for Woking mentioned the Newquay spaceport. That was 10 years of work. I again pay tribute to Melissa Quinn, who spearheaded much of that project. Despite what people have said in the press, the Newquay spaceport was a huge success; everything that Newquay and Cornwall did worked perfectly. Cosmic Girl ran into issues—sadly, the mission was unsuccessful—but Newquay proved that we could have a spaceport in the UK. That is what mattered to Cornwall.

[Mark Garnier]

To reinforce that point, it is a rather peculiar thing about the British that we tend to look at failure as a problem. Exactly this type of thing happened with the launch of the SpaceX Starship. The minute it cleared the pad, the mission had been entirely successful. When that enormous rocket—bigger than a Saturn V rocket—went spiralling out of control and blew up, the SpaceX team let out a cheer, because they had got it right. We sometimes get it wrong in the UK. As my hon. Friend mentions, there was a problem with the rocket itself, but the UK got it absolutely bang on the money in every single way. The licensing and everything went perfectly right. The fact that a second-stage fuel filter went wrong has nothing to do with Newquay or the Government. The spaceport is a real success story.

[Cherilyn Mackrory]

I thank my hon. Friend for his intervention, and I will pass on his regards to the good people of Cornwall. He is absolutely right: it was a brilliant project from start to finish. We had engagement locally and nationally, and the local MP, my hon. Friend the Member for St Austell and Newquay (Steve Double), worked with the project from start to finish.

Let me explain what it meant to the people of Cornwall. It has inspired a whole generation of children in the county. I actually feel sorry for colleagues who go into schools to talk about mining and renewables, and who try to inspire children to go into such careers, because Melissa Quinn went in and absolutely wiped the floor with them. She has inspired a whole generation to go into space careers. A lot of kids and families in Cornwall think, “Because we live in Cornwall, this isn’t for us,” but it absolutely is for us and our children.

Because of the project, we have seen investment go into Truro and Penwith College, which now has the facilities to train engineers and to do virtual welding and all sorts of things. I have no idea what goes on there, but the facilities are very shiny and fabulous. Martin Tucker, the principal, has been fully engaged with this project and others to ensure that the kids who were inspired in primary school at the beginning of it can carry out their training in Cornwall and go into careers in the county. Cornish MPs have been fighting for this for a decade or more, and it is starting to happen now, thanks to that project.

Cosmic Girl ran into problems. Newquay was only ever supposed to have one or two launches a year. Are we going to get another one? Yes, I absolutely hope that we are, but it is not just about working towards launches. The project means that we have the know-how, the supply chains and the knowledge to support other launches around the country and across the world. It is fantastic that the spaceport is still there, and we should keep it going. I know that the Cornwall and Isles of Scilly local enterprise partnership and Cornwall Council are still very enthusiastic about ensuring that we harness the expertise and do not let any of it go.

The other large company that Members may or may not have heard of—I am sure my hon. Friend the Member for Woking has heard of it—is Goonhilly Earth Station. When people drive right down into the west of Cornwall and the constituency of my hon. Friend the Member for St Ives (Derek Thomas), they will look across the moorland, see huge satellite dishes and think, “My goodness! What on earth are they doing there?” Goonhilly is fantastic—the world’s first private deep space communications network. It provides additional capacity to the NASA and European Space Agency networks. Any deep space mission that Members have heard of will have been supported by Goonhilly and the team there.

I do not know whether Members have seen the Australian movie “The Dish”, in which the characters have a small amount of time when they are the only ones on Earth supporting whatever deep space mission or moon landing mission is taking place. Goonhilly started a bit like that, but it has developed so much more. I cannot remember the figures off the top of my head, but the capacity for the amount of data that can be stored at the facility is phenomenal. Ian Jones, who runs the facility, is always looking for people to go and see what brilliant things they are doing, such as radio astronomy, supported by cryogenically cooled 30-metre antennas. It is a part of the global space communications network.

On our ambitions, we hope that by 2030 Cornwall and the Isles of Scilly will be a leader in the national space programme, exploiting the physical, digital and intellectual assets of the area, and using satellite data to overcome local and global challenges, such as the impact of climate change, which we have heard about. By 2030, data, space and aerospace will have contributed an additional £1 billion to the economic value of Cornwall and the Isles and Scilly through increased productivity and jobs turnover, creating twice the average gross value added per capita of £45,000 or more.

To facilitate those strategic ambitions, we have identified local and national strategic leads to support us in maintaining awareness of the priorities. That is vital following the aftermath of what happened at Newquay. As I say, this is still very much part of Cornwall and the Isles of Scilly LEP’s priorities. It is interlinked with all the other industries we are trying to promote in Cornwall, such as renewables and the resurgence of critical minerals. Critical minerals will need to come out of the ground in Cornwall to ensure that we have all these satellites.

As I mentioned earlier, 150 companies are doing all sorts of amazing things. Satellites that are only the size of a Ford Fiesta can now be built and go up into space. We were going to launch a satellite—hopefully this is still a reality—that takes a deep-dive look from space at Cornwall’s landscape and at what we are and are not doing. For example, we have slightly different graded agricultural land. Grade 3b land, which is vulnerable to proposals for solar farms, is actually the most fertile land we have in Cornwall. We are learning all that because of satellites. I could go on and on.

The change my hon. Friend the Member for Woking is introducing today may look like a small change, but it is huge. It will bring clarity to all the companies in the City of London that my hon. Friend the Member for Wyre Forest talked about, and to every single company I have mentioned and more, to ensure that there is a level playing field for everybody, that everything is clear and that they can continue to build and build and build. This is a very exciting future for our country and for Cornwall. I thank my hon. Friend the Member for Woking for introducing the Bill.

--- Later in debate ---

[Anthony Browne]

Absolutely. I thank my hon. Friend for that point, which was very well made. The Odysseus robot went to the south pole of the moon because that is where the supply of water is. Water is obviously not a critical mineral, but it is a source material for energy and oxygen. We can get hydrogen out of it, but the reason why commercial companies and, indeed, Governments are interested in the moon and Mars is exactly that: critical minerals. We have a limited supply of those minerals on Earth, but we may be able to find them in other places.

[Mark Garnier]

While we are waiting to get to infinity and beyond, it is important to highlight other very innovative British companies that are looking at doing extraordinary things in the area of critical minerals. They are seeking to take the lunar regolith—moondust, which is a metal oxide—and use robots to create 3D printing powder, which could be used to print a moon base through additive printing. The by-product of the powder is oxygen. Keep in mind that it costs $1 million per kilogram to get a payload to the surface of the moon, and that we need not just breathing oxygen, but energy and oxidants for propulsion. It is extraordinary what British companies are doing to make it possible to not only get to the moon and occupy it, but use it as a launchpad to get to further places—such as Mars, speaking of Elon Musk’s ambition. The Americans need us; I think we should remember that.

[Anthony Browne]

My hon. Friend has expounded a very important point: we are critical to the space industry, and to space exploration more generally.

Coming back to the issue of regulation—coming down to Earth from our big visions, the Clangers and so on—the Government have been funding the industry. We put in place the Space Industry Act 2018, which my hon. Friend the Member for Woking talked about, and appointed the Civil Aviation Authority as a spaceflight regulator—that is why I am answering this debate, as a Transport Minister, rather than someone from the Department for Science, Innovation and Technology. Getting into space and orbit is a DFT responsibility. The civil aviation regulator—which has licensed SaxaVord, for example—enables the licensing of spaceflight activities from the UK, such as operating a satellite in orbit, and enabling a launch to orbit from UK spaceports for the first time.

The Government recognise that the issues of liability and insurance are of the utmost concern to the space sector, and they are obviously the entire point of the Bill. The industry made clear in its responses to the consultation on the then draft space industry regulations in 2020, and in response to the Government call for evidence to inform orbital liability and insurance policy in October 2021, that holding unlimited liability will have an adverse effect on the UK space flight industry. People sometimes object to private Members’ Bills because they are not based on consultation, but this issue has been endlessly consulted on and negotiated with industry, and the industry is calling for this Bill.

The industry has advised that it is impossible, not just difficult, to obtain insurance for an unlimited amount. Members might ask, “Why is that, if the chance of something happening is infinitesimally small?” The reason is that it is impossible for the actuaries to quantify it; with infinity over infinity, one could come up with any value. Also, insurers are required by regulation to show that they have the capital to meet any claim on them. Clearly, insurers cannot have unlimited capital, so it is regulatorily and legally impossible for insurance companies to insure to an unlimited amount. It is very difficult for the industry to say to investors, “Please give me money to fund the launch of a rocket, even though I may not be able to insure it.” We need liability limitations so that launch companies and other space operators can get insurance, and so can get the investment that they need.

If a spaceflight company cannot get unlimited insurance, it obviously cannot get full insurance. As a number of hon. Members have said, if the Government did not limit a spaceflight operator’s liability, spaceflight companies and investors would instead look to more favourable regulatory regimes in other countries, where Governments share the risks involved by limiting an operator’s liability and offering a state guarantee. The United States already does this, as does France with French Guiana.

As my hon. Friend the Member for Woking has explained, there are powers in the Space Industry Act that we can and do use to limit a spaceflight operator’s liability when carrying out spaceflight activities from the UK. Government policy is that the regulator should use those powers and specify limits on operator liability in the licence, so that no operator faces unlimited liability. However, the law sets out that the Government “may” do that, rather than “must”.

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. It will not, therefore, impose any additional liability or risk on UK taxpayers. My hon. Friend made that point. The Government also recognise the value that the industry places on legislative certainty on this matter. As I pointed out, if investors are to make an investment in a space company, they need to know that the company will be able to get insurance. The report by the Taskforce on Innovation, Growth and Regulatory Reform—the TIGRR report, for short—published in May 2021, expressed concerns from the space sector over the use of the word “may” in section 12(2) of the Space Industry Act. The Bill would replace that “may” with “must”.

I thank all hon. Members for their contributions. My hon. Friend the Member for Wyre Forest (Mark Garnier) explained his great interest in space, and mentioned financial services, which I want to come on to. The point was well made that before the UK was a spacefaring nation, we were a seafaring nation. London was the biggest port in the world for more than 200 years, which led to a whole maritime industry with insurance around it, including Lloyd’s of London, and lawyers. We have a huge maritime industry in London as a result of having a maritime fleet, and we now have the same opportunity with space. We can have space investors—I have met some of them—as well as space lawyers, space insurance companies, regulatory experts and so on. It is a huge opportunity. The Government and the regulators need to ensure that the industry has the right incentives.