Space Industry (Indemnities) Bill

(Limited Text - Ministerial Extracts only)

2nd reading
Friday 5th September 2025 Lords Chamber

[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.