The Space Economy (UK Engagement with Space Committee Report)

Debate between Baroness Lloyd of Effra and Lord Lansley

Thursday 9th July 2026 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

My Lords, I am pleased to respond for the Government. I thank my noble friend Lady Ashton of Upholland for securing this debate and for her committee’s important report on this matter. I also thank the chair for her expert leadership on the very thorough and seemingly enjoyable work that the committee undertook. It is a particular pleasure to have heard the appreciation across your Lordships’ House for the importance of the space sector today and the enormous potential it holds for the future.

As we have heard, the space dimension of our economy is coming to the fore. The UK has a strong space sector, with over twice the UK’s average productivity and global satellite services underpinning nearly 18% of the UK’s GDP. Beyond our financial services and well-known uses in telecommunications, space technology is helping farmers increase crop yields and enabling faster, more effective responses to natural disasters such as floods. As we have heard, it is a sector that contributes over £18 billion to the UK economy and employs over 55,000 highly qualified people. Over the past year, I have had the pleasure of meeting many of the industrial and scientific partners who make up this sector.

The sector relies on a strong partnership with government. Every pound invested by the Government through the European Space Agency sees a £7.49 return into the UK economy. In 2024-25 alone, UK Space Agency activity is estimated to have catalysed £2.2 billion in investment and revenue across the UK space sector. As was recognised by noble Lords today, space is also critical for national security and defence, providing the intelligence, communication and navigation required to keep the UK and its citizens safe. Reflecting many of the recommendations of the committee, we have recently taken further action to support our space sector. One of our strengths is the “one government” co-ordinated approach.

Noble Lords asked about the governance of space. Over the last year, Ministers from across government have met together four times to discuss critical issues for the space sector, our capabilities and support. Our teams work together, particularly across defence, national security, all parts of DSIT and transport, to align our approach. A clear example is the UK’s National Space Operations Centre, a joint civil-military command that brings together the UK Space Agency, UK Space Command and the Met Office Space Weather Operations Centre. Together, they help protect the critical space assets we rely on every day and provide the central hub for the UK’s space domain awareness. In response to my noble friend Lord Shamash, I am very happy to meet him and other members of the committee to talk further about how we work together on that front.

Noble Lords asked about the UK Space Agency’s move into the department. It is an important step towards closer collaboration, reducing duplication and gaining greater consistency across strategy, policy and delivery, while retaining the world-leading expertise and technical advantage to which the noble Lord, Lord Willetts, referred.

Our upcoming space strategy will set out how space remains a government priority, in a funded way, and how the co-ordinated vision will ensure the very best outcome for the UK. I reassure noble Lords that we have taken action in the interim. I set out the strategic direction, alongside £500 million in funding, in my speech at Space-Comm Expo earlier this year. I am sure the committee will be looking forward to reading the strategy when it is published, which unfortunately will now not be before Summer Recess.

Noble Lords commented on prioritisation. As I set out earlier this year, we are moving further and faster in the areas that matter most to the UK’s future in space. One of those areas is satellite communications, which are critical for national security and resilience. In response to the questions from the noble Baroness, Lady Stowell of Beeston, and the noble Lord, Lord Tarassenko, sovereign capability is an important consideration as we look at satellite communications. The Skynet programme run by the MoD provides that sovereign capability in satcoms, and we have increasing sovereign capability in space domain awareness.

In response to the questions posed by the noble Lords, Lord Willetts and Lord Clement-Jones, and others, DSIT is leading cross-governmental work to develop our proactive relationship with Eutelsat, which will include working with defence colleagues on requirements following the publication of the defence investment plan. UK launch is not yet operational, but we are encouraging the company to take advantage of the UK’s capability as this becomes available. We are also encouraging the company to take more advantage of the UK’s world-leading satellite manufacturing and supply chain capabilities.

In response to the questions from my noble friend Lord Shamash and the noble Baroness, Lady Mobarik, who I had the opportunity to discuss the opportunities of Sutherland with earlier this year, assured access to space is critical to our national security and economic growth. To the point made by the noble Lord, Lord Lansley, both those objectives, national security and economic growth, have caused this to be a priority for the Government. We are making significant progress towards that ambition. SaxaVord was Europe’s first licensed vertical launch site and expects to see its first launch this summer. We have established a world-leading regulatory regime and secured a comprehensive set of international agreements to enable launch operations from the UK.

The third area that we set out as a priority is in-orbit servicing, assembly and manufacturing, and the fourth is space domain awareness. These are the capabilities that will drive growth, strengthen resilience and protect our ability to operate in space, so we are pivoting our support to those, where it will have the greatest impact.

Prioritisation is challenging and requires the Government to intervene assertively if we are to succeed. We know that space industries thrive with clear priorities, the right funding, a clear public procurement approach, the right regulation and strong international partnerships.

We are increasing the financing for space in recognition of many of the long-term projects, which, of course, include areas such as earth observation. The Government increased the UKSA budget in 2025-26 by 8%. That funding for space is inclusive of our subscription to Copernicus and is carried forward to over £3.3 billion over 2026-27 to 2029-30. Wider civil funding for space from other departments and organisations, from science funded by UKRI to critical meteorology services provided through the Met Office’s membership of EUMETSAT to planned procurements of satellite services from other departments, will further bolster this by over £900 million.

To the questions posed by the noble Lord, Lord Tarassenko, and others about research, the STFC has spent considerable time engaging with the particle physics, astronomy and nuclear physics community, its advisory bodies, scientific board and council to understand the implications of different options and gather feedback from across the sector. Given the significance of that decision, it was right to test options, understand the impacts and ensure that expert advice was fully reflected in the final outcome. That engagement has now concluded, and UKRI will set out the outcome of the prioritisation extremely shortly, if not now.

My noble friend Lady Ashton and the noble Viscount, Lord Camrose, highlighted skills, an incredibly important point. Some areas of targeted education and future workforce programming are supported by the department in UKSA, alongside other government programmes such as TechFirst and the advanced manufacturing skills package. As noble Lords have mentioned, the defence investment plan published on 30 June sets out future spending priorities, demonstrating clearly the importance of further developing capability in satcoms, ISR and SDA. The capability of defence funding to 2029-30 is £2.3 billion for satcoms and £880 million for space-based ISR and space control. Together with UK Space Agency funding, Ministry of Defence funding and planned activities across the rest of government and arm’s-length bodies, we anticipate that funding for space over the spending review will exceed £7.4 billion—a substantial increase over previous spending review periods.

My noble friend Lord Stansgate, the noble Baroness, Lady Stowell, and the noble Viscount, Lord Camrose, raised the importance of supporting companies to commercialise and grow. The point was very well made and is well taken. We are moving away from serial grants to more structured contracts for services. We are also supporting companies as they grow. Some of this relates to wider changes; for example, the announcements by the Chancellor under the Mansion House agreement, visas for talent and the support for the British Business Bank. Some of this is space-specific, such as the Unlocking Space for Investment programme. We are committed to supporting British companies to develop next-generation space technologies. At London Tech Week I announced new investment of more than £9 million to support early-stage UK companies through the UK innovation and science seed fund and a £10 million investment in the Welsh company SpaceForge, which is pioneering in-space manufacturing technology. That action is happening now.

Important points were raised by my noble friend Lady Ashton, the noble Lord, Lord Willetts, and the noble Baroness, Lady Stowell of Beeston. Procurement is indeed extremely important, as is the balance around contracts and small-scale grant funding. Our upcoming space strategy will set out how we will refocus grant programmes and use contracts to support innovation. We are also making greater use of contracts for innovation, which enable public sector organisations to work with businesses to test innovative solutions and build the evidence that is needed for wider adoption. I agree with the noble Lord, Lord Clement-Jones, that this can bring real benefits. We have awarded contracts for innovation through our partnership with the Department of Agriculture, Environment and Rural Affairs in Northern Ireland to improve water quality monitoring in Lough Neagh, support for an earth observation-enabled flood forecasting service at the University Hospitals Coventry & Warwickshire NHS Trust, and with the Home Office. This procurement for innovation is very important. We will continue to innovate in many different areas.

On regulation, all cutting-edge applications of technology need agile regulation and space is no exception. From the changes in the liability and indemnity regime for satellites to regulatory sandboxes for rendezvous and proximity operations, we have acted and will continue to do so; for example, with space multi-mission licensing and re-entry.

International partnerships and collaboration have always been a feature of advances in space. Given the global uncertainty, they are more important than ever. We are strengthening our international partnerships. In 2025, the UK committed £1.7 billion to ESA programmes over the next five years, which deliver against our objectives and leverage international collaboration to drive economic growth in the UK and bolster national security here. To the point made by the noble Lord, Lord Lansley, we also collaborate, for example, with Japan and France, with bilateral funding, including on LiteBIRD, where UK universities are helping to explore the universe’s earliest moments.

To the points on Europe made by the noble Lords, Lord Clement-Jones and Lord Willetts, we are clear-eyed about the changing regulatory environment in Europe. The proposed EU space Act will have implications for UK companies and for our wider co-operation with European partners. We are engaging actively with the EU to shape that discussion where we can, but we will also act where necessary to ensure that UK industry remains competitive, our access to markets is protected and our regulatory framework continues to support innovation and growth. We have unique capabilities and assets in the UK with locations such as Shetland for launch. Europe will be stronger with the UK as a trusted partner.

It is also important to recognise that the US partnership is critical in both the civil and national security domains. Within the civil domain, our collaboration through missions such as NASA’s James Webb Space Telescope, through which UK-led instrumentation is transforming our understanding of the universe, continues to open new scientific frontiers. On national security, we rely on deep transatlantic co-operation.

Important points were made by the noble Baroness, Lady Bennett of Manor Castle, and my noble friend Lord Stansgate, about space sustainability and debris. Space sustainability is evolving with the increased use of space. We are clear that no one country alone can do this. Our aim is to ensure that growth in space does not come at the expense of its long-term safe and sustainable use by shaping international norms and standards, investing more in space domain awareness and debris removal technologies, and working with partners to build global tech capability. Our licensing regime already expects operators to minimise debris creation through robust mitigation measures, and we will strengthen that further through clearer guidance and incentives for more sustainable missions.

As we know, space underpins the systems we rely on every day—from finance, energy and transport to emergency services—enabling the secure communications, navigation and timing to keep the country running. That is why strengthening our space capability is not simply an ambition for the future; it continues to be a strategic priority, and one we will build on further in our upcoming space strategy.

[Lord Lansley (Con)]

Before the Minister sits down, at several points in the Government’s response to the Select Committee’s report, they say that more detail will come forward in the “spring space publication”—not my language, the Government’s. The Minister has not said when we might expect to see that important spring space publication.

[Baroness Lloyd of Effra (Lab)]

I set out earlier this year, in a speech to the Space-Comm Expo, a number of elements that are important for taking forward the measures envisaged in the space strategy, which include the £500 million of funding. We have taken action in many other areas set out in that report, since it was published and since our response to it. The noble Lord is right: we wish to bring it all together, and we are working to do so. Unfortunately, we will not be able to publish it before the Summer Recess. We hope to do so as soon as possible after that.

British Industrial Competitiveness Scheme

Debate between Baroness Lloyd of Effra and Lord Lansley

Wednesday 22nd April 2026 Lords Chamber

[Baroness Lloyd of Effra (Lab)]

The noble Lord raises the question of the business environment and electricity prices. One of the most important things for businesses around energy prices, business confidence and investment capability is the fiscal situation. Last week, the IMF welcomed the UK’s notable improvement in our public finances, with the economy growing by 0.5% in the three months to February. Taking long-term steps to create a stable economy will enable sound finances, lower prices and enable investment in energy over time, which will bring prices down.

[Lord Lansley (Con)]

My Lords, the alleviation of the high policy costs imposed on energy-intensive and internationally competitive manufacturing in this country is to be welcomed. I will ask a question about the manufacturing sectors that will benefit from the BICS. These are the industrial strategy’s eight sectors and the related foundational technologies, but that leaves out some key manufacturing sectors. The Minister will have heard what was said in the other place about ceramics, and I want to ask about food manufacturing, which is our largest manufacturing industry. It is highly internationally competitive, but exposed to a great deal of international competition. It is often energy-intensive. Given what is happening in the agritech sector, there is considerable potential for growth. I never thought that the industrial strategy’s eight would be designed to leave others behind. I hope that this Minister will give food manufacturing and ceramics the opportunity to make their case as well.

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right that there are many thriving and growing businesses, industries and sectors in the country. Not all of those are going to be covered by the BICS. In the eligibility consultation that we put out before this confirmation, that was one of the questions that we consulted on. We expanded the scope, from the beginning to the end of the consultation, from what we thought was going to be about 7,000 businesses to 10,000 businesses. The focus of the scheme is on the strategic manufacturing sector supporting frontier industries, as the noble Lord mentioned, and foundational manufacturing industries. We are looking carefully at supply chains—for example, fertiliser availability and cost—as we monitor the impact of the current situation in the Middle East.