Space Industry (Indemnities) Bill

Lord Clement-Jones Excerpts

Friday 5th September 2025 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, given the strong connection between AI and space technology, I declare an interest as an adviser to DLA Piper on AI regulation and policy. I congratulate the noble Baroness, Lady Anelay, on bringing this Bill forward and the original sponsor, John Grady MP, on taking it through the House of Commons. As we have heard, many of us are enthusiastic about being members of the UK Engagement with Space Committee and it has been a great pleasure to hear some preliminary thoughts from members of the committee. No doubt, we will deliver a report, hopefully later this year, that we will debate in this House.

This Bill addresses a fundamental barrier that has been repeatedly raised with the Government over many years, with cross-departmental consultations and reports dating back to 2020 and 2021 consistently highlighting it as a critical unresolved issue. As we have also heard, under the current Space Industry Act 2018, operators face uncapped or unlimited liability when indemnifying the Government against claims arising from spaceflight activities.

As we have heard, this situation has meant that investors have been reluctant to back British space ventures when faced with potentially catastrophic financial exposure. We also know that UK-based venture capitalists tend to have a lower risk tolerance compared to their US counterparts, making this barrier even more significant in the UK context. This has directly put the UK at a serious competitive disadvantage as our competitor nations limit liabilities or provide a state guarantee for launch activities, driving companies to choose other locations with more favourable regulatory regimes. The noble Baroness, Lady Stowell, mentioned the scale-up challenges that this has presented.

Many noble Lords—it has been a pleasure to hear them—have talked about the potential for our space sector. We have seen the historical orbit launch attempts from UK soil, such as through Virgin Orbit at Spaceport Cornwall, which, though ultimately unsuccessful, demonstrated our national intent and capability. The noble Baroness, Lady Anelay, is clearly a spaceport fan. More recently, with vertical launch licences for SaxaVord, which the noble Baroness, Lady Mobarik, mentioned, the UK is positioned to become Europe’s leading destination for commercial space launches. It was a pleasure to hear about the position of the noble Lord, Lord Willetts, and his enthusiasm for the space sector.

The UK’s expertise in legal services and the City of London, with its insurance underwriting capacity, offer a significant opportunity for the UK to become a global centre for space law and arbitration and to influence international regulation and standards. The noble Lord, Lord Evans, made the case extremely well, particularly for our London universities. Having recently chaired the council of Queen Mary, I know that our London universities have considerable expertise in that respect. When the noble Lord, Lord Ranger, talked about the relationship between data and satellite technology, including the potential for artificial intelligence, he made a very good case.

I believe that this Bill will unleash opportunities in the insurance market. It will facilitate activities such as listings on the London Stock Exchange, bond issues and corporate finance, further strengthening the City’s role as a financier of innovation and trade. It is a concerning fact that around 85% of satellites are not insured once they have been launched, making a stable and clear insurance framework even more vital.

However, beyond the immediate impact, this Bill underpins the growth of an extraordinarily important economic sector. Public investment in space yields high economic returns, supporting advanced manufacturing and delivering a strong multiplier effect. This Bill is a strategic piece of legislation that will help cement the UK’s position in space technology and the space economy.

I heard what the noble Lord, Lord Willetts, had to say about the relocation, if you like, of the UK Space Agency—putting it no higher than that—but I would very much like to hear from the Minister how he believes the repositioning of the UKSA will help our space effort and our capacity in the space sector. Seen from the outside, many of us are rather dubious about whether this is purely a cost-cutting exercise.

Although welcomed by the industry, this Bill highlights concerning delays in our legislative response to sectoral needs. We have heard that this is all about going from “may” to “must”, but it has taken seven years from identifying the original problem to effecting a solution, with six years passing since the space sector first identified the problem. We cannot afford such delays when competing internationally. Our regulatory frameworks must evolve at the pace of technological advancement and not that of Westminster’s traditional timeline.

Moreover, while this Bill addresses one crucial issue, broader regulatory challenges persist. The space economy is evolving rapidly, with new business models such as in-orbit servicing and manufacturing—the noble Viscount, Lord Stansgate, mentioned space debris—which will push the boundaries of the existing regulatory framework. So, while the Bill is welcome, it should be seen not as concluding regulatory evolution but, rather, as one essential step in ensuring that Britain remains competitive.