Space Industry (Indemnities) Bill

Current Government policy and guidance is that all spaceflight operator licences will contain limits on the amount of the operator’s liability and the amount of insurance that they are required to hold, so that no operator will face unlimited liability. However, industry operators continue to lobby for legislative certainty and have raised that, for spaceflight activities in the UK to be commercially viable, there needs to be a clear mandatory cap on the amount of liability to indemnify under section 36 of the 2018 Act.

The Bill will provide legislative certainty by amending “may” to “must” in section 12(2) of the 2018 Act, so that an operator licence must specify a limit on the amount of the operator’s liability under section 36. The Bill makes a small amendment to section 36(3) of the 2018 Act. The proposed amendments to the 2018 Act will meet a key ask of the space sector on regulatory improvements to provide assurance to investors that limits on the amount of an operator’s liability will be included in licences. The Bill will also address a recommendation made by the Taskforce on Innovation, Growth and Regulatory Reform.

There has been parliamentary scrutiny. The Science and Technology Committee raised the question of operator certainty on liability caps in its second report of the 2022-23 Session, “UK space strategy and UK satellite infrastructure”, published on 4 November 2022. The Taskforce on Innovation, Growth and Regulatory Reform considered current requirements and viewed them

“as discouraging investment and making the UK uncompetitive”.

Recommendation 15.1 was to

“Amend the Space Industry Act 2018 to cap liability and indemnity requirements for licence applicants to launch and operate satellites from the UK.”

There has also been consultation. On 13 October 2020, the Government published a consultation on spaceflight liability insurance and charging. Respondents raised concerns about the wording of section 12(2) of the Space Industry Act 2018, under which a licence only “may” contain a limit of liability with respect to claims made under section 36 of the Act. On 5 March 2021, in response to the consultation, the Government said in their regulations and guidance on spaceport and spaceflight activities:

“If another suitable piece of primary legislation is brought forward, the Government may seek to amend the wording in section 12(2) from ‘may’ to ‘must’.”

We all benefit from the services provided by satellites. We might pay for our morning coffee using contactless payment, Google Pay or even cash withdrawn from an ATM; none of that would be possible without satellites. Satellites provide precise references for navigation, communication to remote places, and pictures of our changing planet, not to mention the support they provide to the defence and security of the United Kingdom. Satellite data, space technology and space applications are used to enhance our everyday life.

The space sector is hugely valuable to the UK’s economy. It is worth over £17.5 billion and directly employs more than 48,000 people. It supports over 126,000 jobs across the supply chain. The UK is already one of the world’s strongest centres of advanced satellite manufacturing. Thanks to this Government, it is now possible to launch satellites from UK spaceports, rather than relying solely on overseas spaceports to launch UK-built satellites into orbit. Last year, an historical first launch from UK soil was made by Virgin Orbit at Spaceport Cornwall. In December, SaxaVord spaceport in the Shetland Islands became the UK’s first licensed vertical launch spaceport, with more to follow. New launch companies such as Orbex and Skyrora have built factories in Scotland, creating hundreds of new jobs, ready to take advantage of the new opportunities that the Government have created.

In preparation for this debate, I have been asked questions by several Members, and I will address those now. I have been asked what effect the Bill will have on public expenditure, and I can assure the House that it will not entail any additional expenditure, as the amendment is in line with Government policy. I have been asked whether there are any transitional arrangements. There are not. Clause 2(3) provides that the Bill will come into force two months to the day on which it is passed. Transitional arrangements are not required because no licences have been granted that do not have a limit on liability specified in them, by virtue of the Government’s policy on limiting liability.

I have been asked whether I have ensured compatibility with the European convention on human rights. As this is a private Member’s Bill, no statement of compatibility is required. However, as recorded in the explanatory notes, the Department for Transport considers that the provisions of the Bill are compatible with the convention. I have been asked whether it is compatible with environmental law. Again, as it is a private Member’s Bill, no statement under section 20 of the Environment Act 2021 is required, but as the explanatory notes say, the Department for Transport is of the view that the Bill does not contain provisions that, if enacted, would be environmental law for the purposes of section 20.

This is a narrowly focused Bill addressing what the space sector has asked for. I hope that no further amendments will be tabled, as it would be a shame to be unable to progress or deliver this key ask from our increasingly important space industry because of amendments or additions.

Let me give a final summary of the purpose of the Bill, why I think it is important and how it will benefit our space industry. Before a company can operate a satellite in orbit or carry out a launch mission from the UK, it must first obtain a spaceflight operator licence under the Space Industry Act 2018. The licence process ensures that spaceflight activities are undertaken safely, securely and in accordance with the UK’s international obligations. Under United Nations space treaties, the state is ultimately liable for any damage or injury that may be caused by its space activities, even when undertaken by commercial space operators.

The Space Industry Act contains provisions to help mitigate potential costs to UK taxpayers arising from UK commercial spaceflight activities. That includes requirements for operators to hold insurance and, under section 36, to indemnify the UK Government and other named public bodies against any claims brought against the Government or body in respect of damage or loss. It is recognised, however, that unlimited liability on commercial space activities would be a barrier to their operating in the United Kingdom. Other space nations, such as France and the United States of America, limit liabilities, or provide a state guarantee for the launch activities that take place from their territory. The Space Industry Act contains powers to specify in a spaceflight operator’s licence a limit on the amount of an operator’s liability, in order to indemnify the Government and other public bodies. Government policy is that the regulator should use those powers to specify a limit on the amount of the operator’s liability in the licence, so that no operator will face unlimited liability. It is essentially a form of risk sharing between the commercial operator and Government. This policy is set out in guidance, and I understand that all spaceflight operator licences issued under the Space Industry Act to date contain a limit on the amount of an operator’s liability.

However, the industry has made it very clear, in response to consultation and in other fora, that it would welcome legal certainty that it will not face unlimited liability when launching or operating a satellite from the UK. Setting that clear requirement in law would provide UK industry and those looking to invest in the UK with greater certainty, and would carry more force than reliance on policy statements and guidance. This Bill will provide that legal certainty by amending section 12(2) of the Space Industry Act, so that spaceflight operator licences must specify a limit on the amount of the operator’s liability under section 36 of that Act. As such, the Bill will provide a vital further boost to our burgeoning UK space industry. I am particularly mindful of the benefits it will bring to growing and innovative companies such as Surrey Satellite Technology Ltd on the Surrey research park, many of whose past and current employees live in my constituency of Woking.

Our UK space industry is thriving, but this measure is vital to secure an equally exciting and dynamic future. It is companies such as Surrey Satellite Technology Ltd —just outside my constituency, and many of whose employees live in my constituency—that will benefit. Other firms, large, medium and small, will grow in the UK and come to the UK if this measure is passed. To ensure that exciting and dynamic future, I commend the Bill to the House.

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.

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.

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.

To monitor climate change, satellites will tell us how much heat is transferring out of wood in forests, so we know whether rainforests need to be reforested and whether we are facing climate change at 1.5° or 2°. That is mind-bendingly brilliant stuff, and it is now available to kids who, five or six years ago, might have been told, “Right, once you finish school, you either go work in the JJB Sports factory down the road or in a shop.” It is exciting, fantastically valuable and hugely important for things like our financial sector. Greater Manchester has a fairly sizable financial sector, which is great for us. We also have a large legal sector—I know because I used to work in it. I would love to be a space lawyer. Let’s see how the rest of the year goes; I might need to become one.

Ultimately, the Bill is about empowering us. The other thing I love about it—again, I promise not to wave my LLB about too much—is its simplicity and elegance. It is that Coltrane sax solo: so simple that it is brilliant. Changing a word effectively empowers us to do so much more. The power of that is inestimable. That is why it was part of the report that the Science, Innovation and Technology Committee put out.

At the moment, we are disincentivising people from innovating, and that is not what we should be about. We are saying instead that people should go out and take risks, and we will ensure that they can be rewarded. They will not be completely and utterly obliterated for having a go. Even if the second-stage fuel pump does not work, it will not be the end of the business. We need to be alive to that because we need risk takers, as we do in every sector. We need people who are willing to boldly go into the final frontier. [Interruption.] I have not finished yet. When I shout “House!” everyone will know that I have done them all. Fundamentally, this is about ensuring that Britain’s future is not just here on Earth, but in the stars, and we have every right to be there—as much as any other country.

We are now at a key point in developing a thriving and dynamic space industry—an industry that we now know is worth £17.5 billion to the UK, employing up to 50,000 people. I was speaking recently to Airbus, which the hon. Member for Heywood and Middleton also mentioned. As I am sure Members are aware, Airbus is the second biggest global space company and the largest in the UK. Its representatives told me that they operate over seven key sites in the UK, principally Stevenage and Portsmouth. From Stevenage to Saturn has quite a ring to it—pardon the pun, I was just following the puns of the hon. Member for Heywood and Middleton. As he says, why should this industry not feature in every sector and in every constituency. We are developing the new Atom Valley in Greater Manchester, to the north of the conurbation. The supply chain is vast. There are almost 2,900 space suppliers, half of which are small and medium-sized enterprises, and it is vital that we support the industry here in the UK. I happen to know that in 2022 in my constituency £1 million was spent with space suppliers. It is good to see procurement in the sector that benefits the bottom 10% of the most deprived areas of the land.

There are so many good reasons to support the sector. We want to remove barriers to new businesses setting up here in the UK. We want companies to be incentivised to set up in the UK, rather than taking their business elsewhere, whereupon they are likely to use suppliers geographically local to themselves. We do not want to lose out on these jobs; we want these jobs of the future to be here in the UK.

Interestingly, one of the other main sites that is strong in the space sector is Newport. As we heard from the hon. Member for Truro and Falmouth (Cherilyn Mackrory), jobs have been at risk in that area because of the Tata Steel plant. Unite the Union and my own union, Community, tell me that well-paid, highly skilled, unionised steel jobs are at risk in the area, so we must ensure that these areas are not de-industrialised so that there are opportunities available for our workers and for our young people. We also want our own SMEs to be part of the supply chain. Encouraging businesses is what we should be all about.

The Bill addresses what happens if anything were to go wrong, from launch failure to satellite crashes. However, this is not just about UK launches, but UK ownership, as the Government have the final liability on any space item that is owned by the UK Government.

I congratulate the hon. Member for Woking on bringing his Bill to the House today. I thank the hon. Member for Wyre Forest for his work with the all-party parliamentary group for space. He quoted the “The Wealth of Nations”, which is much-favoured by Conservative Members. I remind him of Smith’s treatise “The Invisible Hand”, in which he said that economic activity should enrich the whole community. We know that space can do that.

I congratulate the hon. Member for Truro and Falmouth. I was intrigued by what she said. Our nation contains a number of left-behind areas, including—I am not trying to make a party political point—some of our coastal areas, market towns and suburbs. Through an agglomeration of the maritime, aviation and space sectors, we can really begin to think about how we can regenerate those areas by giving people opportunities, just as, when I was a young councillor in Manchester in the 1990s, we created a legal sector, a banking sector and a media sector. People will not have to leave their communities when they turn 18, or turn 22 and get their degrees, because those technological jobs of the future will be in the areas in which they grew up, and that, I think, is one of the greatest hopes that we politicians can give our young people. This is what the space sector provides through the supply chain across the country, but particularly in the south-west and the Shetland Islands: a diverse geographical spread.

To the hon. Member for Heywood and Middleton I say thanks for all the puns, and I wish him good luck with his career as a space lawyer after—well, whatever happens at the general election! I wish him well.

Industrialists tell us that the Bill will give them confidence and will encourage investment in the UK, providing highly paid, highly skilled and yes, unionised jobs throughout the nation, and on that basis, we support it.