Space Industry Bill [HL]

Lord Willetts Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 16th October 2017 Lords Chamber

The space sector has an exciting story to tell. The more the Government can give us the facts as they know them, the more momentum will be created behind this new space age. I beg to move.

[Lord Willetts (Con)]

My Lords, I thank the noble Lord, Lord McNally, for his kind remarks. I declare an interest as a member of the boards of Surrey Satellites, a space company, and of Sirius, a space security company. The noble Lord raised an important question. When talking about science innovation it is very hard to be absolutely confident about what the exact scale of monetary benefits to the British economy might be. However, we have a particular geographical advantage. If one is trying to launch satellites into polar orbit, launching over an ocean at a good angle is very attractive for many companies. With the Irish Sea and, even more importantly, in Scotland, we have the opportunity for spaceports that could be a good location for vertically launching satellites into polar orbit.

There is now a very lively race going on between several possible locations for spaceports. Norway is planning one and the Azores are working on one to launch satellites out over the Atlantic. I strongly support the Bill because it provides the possibility of the UK entering that competition early with, apparently, a range of candidates in other locations as well as the north of Scotland. From the Back Benches, I assure the House that there is an enormous opportunity here. There is currently no major spaceport functioning in Europe that enables space launches to take place over the ocean. It could well be that, as a result of this excellent Bill, the UK has an opportunity to take the lead in that.

[Lord Moynihan (Con)]

My Lords, I declare my interest, which I declared at Second Reading, of living in sight of Prestwick Airport. I am a great protagonist for the interests of that airport. The comments that have been made are extremely important: we need to get a first-move advantage in western Europe. This is a highly competitive market and we have a real opportunity to put our significant skills base into effect in ensuring that we have early recognition and licensing of spaceports in the UK. There should be two. However you look at the spaceport option, there will always be the weather challenge. While Prestwick happens to have an outstanding microclimate and is highly suited to being the first spaceport with its nearly three-kilometre runway and a launch direction out over the north Atlantic, as my noble friend has just said—particularly for the launch of satellites, which is a very important part of this—the Government would be wise to look at licensing two spaceports in the first instance, not least because of the weather implications.

In response to the noble Lord, Lord McNally, it is gratifying to see an all-party approach being taken to this issue, both locally and nationally. In the context of Ayrshire and Scotland, not only have the Scottish and British Governments done a lot of very good work, but so have MPs from across the spectrum, such as Bill Grant and Philippa Whitford, and my noble friend Lady Ford, who was very active on this issue during the summer, as well as council leaders of all parties. It is important that they all recognise the benefits of spaceports and of the industrial opportunities around licensing them, as well as of outreaches in terms of employment opportunities and the links to schools and encouraging young people in the vicinity to study science. In Ayrshire, there is heavy unemployment in some of those areas. This would be an inspirational opportunity for young people to study the sciences and related industries. As I say, the advantage of making the first move is critical in the international global market and there are real benefits to local communities where the first spaceports are likely to be licensed.

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[Lord Fox]

My Lords, I apologise to the noble Lord, Lord Tunnicliffe, for missing the first couple of words of his contribution and to the Committee for being slightly detained outside the Chamber.

Very briefly, the mission of these amendments, in the event that they were adopted by the Government, appears to be to create unlimited liability for the companies concerned in the pursuit of their business. Having asked a few questions of such operators, my understanding is that were they in an environment of that nature, the whole spirit of the Bill would be lost very quickly, in that no operator would undertake a risk of that level. I understand the concerns of the mover of this amendment, and the questions he has asked of the Government—who would pick up the liability?—are the right ones. However, the solution of creating unlimited liability across the board for the operator is not one that these Benches would support.

[Lord Willetts]

My Lords, I will comment briefly on this set of amendments. The noble Lord, Lord Fox, has put the point very vividly. This gets to the heart of the economics of the space industry.

There are risks in space, as we have heard in the past hour in which we have been debating. First, probably the greatest risks are at launch. Not all launches are successful, which is why, by and large, launch facilities aim to launch rockets out over the ocean. I am sure that will be a relevant consideration when the rival claims of different locations, especially for vertical launch, are considered. I have to say that Prestwick is very fortunate to have my noble friend Lord Moynihan—if only every possible spaceport candidate had a similarly assiduous Member of this House to make its case.

Secondly, there is some risk in orbit of satellites colliding and doing damage, or one person’s identified satellite taking out someone else’s satellite. That is rare but it does happen. Thirdly, there is the very remote possibility, but it can happen, that a satellite falls out of orbit. In those circumstances they mostly burn up and it is a managed process, but a bit could reach the ground and do damage.

These are, thank heavens, all very remote risks. However, if the worst conceivable thing happened—if a satellite came out of orbit and did not burn up in the atmosphere and landed in the middle of a busy conurbation—serious damage would be done. These remote but potentially large risks are very hard to insure. Therefore, many of the countries that ultimately take responsibility as launch nations for satellites provide some kind of cap on the liability that a private launch operator would face. I very much welcome, therefore, the conception behind Clause 11: that the Government intend that an operator licence may specify a limit on the amount of the licensee’s liability.

There are complicated arguments behind this. I can report from my own time as a Minister that I was regularly asked by the industry whether it would not be possible to reduce the maximum liability operators would face, and I was regularly pressed by the Treasury that the liability that the operators faced should be as large as possible. I suspect that those arguments carry on to this day and will never be finally concluded.

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[Lord Callanan]

My noble friend makes an important point. I emphasise that we are in listening mode on this issue.

Furthermore, there is also a power to make regulations to provide an upper limit to the amount of money the Government may pay out under these provisions. For example, in the US there is a limit in legislation of $3.1 billion. There is also a power to prescribe cases or circumstances where the power to indemnify either an operator or a claimant will not arise or is restricted. Examples would include operator wilful misconduct or where several parties are at fault that might have adequate insurance or assets.

In making any regulations under this clause, we will consult on how we strike the right balance in ensuring that the public are compensated while limiting the Government’s indemnity. For example, the regulations may set out what the Government will not indemnify in the case of operator wilful misconduct, but an exception may be made where an operator becomes insolvent and the general public would not be fully compensated as a result.

The Government will use their powers under this clause to indemnify claimants and operators in a balanced way. We propose to ensure that government money is used appropriately by exercising the powers in this clause as necessary to limit the situations where the Government will indemnify and limit the amount they will pay, as well as playing a role in the legal proceedings surrounding payment of such an indemnity.

I apologise for going into so much detail and speaking at such length on this.

[Lord Willetts]

I very much agree with what my noble friend Lord Moynihan said. Will the Minister share with the Committee any further information about a likely timetable for these consultations? Will he also tell the Committee how he proposes to inform us, in the course of our deliberations on the Bill, of the potential figures involved? This is a subject of considerable concern.

[Lord Callanan]

I am aware that this is a matter of great concern, which is why I went into so much detail about it. As I said in response to the previous intervention, we are in listening mode.

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[Lord McNally]

Yes, I know that every Minister wishes that was there.

I thought that the opening from the noble Lord, Lord Tunnicliffe, was sobering for us all. On the one hand is the tremendous enthusiasm and real excitement about the prospects of the industry, yet we know from history that there are dangers. I live in St Albans, down the road from where the de Havilland Comet was developed, launched and flown with a design fault. I saw a very moving documentary a few weeks ago about the Space Shuttle. Its final conclusion was that, from beginning to end, the Space Shuttle was never safe. They knew it, but because of the pioneering nature of what they were doing they took the risk. That is not open to us when we are legislating like this, so it is a matter of getting it right between risk and cover.

I tabled my amendment simply because we have been approached by the industry with concerns about the way UK law treats the licensing and insurance of small and nano-satellites. Current law makes it difficult and expensive to launch small satellites because of long licensing processes and large insurance costs. Licensing of individual satellites can dramatically increase operator liability. This amendment would allow would-be operators to feed in their concerns and work towards a proportionate but effective insurance regime. I beg to move.

[Lord Willetts]

I will add one comment to that. I thank the Minister, who has already given a full and lucid account of the Government’s intentions, which itself is very helpful. Another issue we should add, which the noble Lord, Lord McNally, touched on, is that historically we have been thinking about very large satellites and the risks associated with them. That is not really the issue for a UK space launch capability. It is much more likely to be constellations of small satellites, some of them meeting real UK requirements. Imagine there was a trouble spot in which UK troops were involved or a natural disaster affecting us—let us think of what happened in the British Virgin Islands recently—where you wanted to get a satellite over the scene urgently; small satellites are very likely to be used in those situations. They are often launched in constellations, and one other issue on which, again, I hope at some point we will have guidance from the Minister is whether each individual small satellite in a constellation has to be separately insured and licensed or whether, as we appear to be heading for constellations of small satellites, there could be significant flexibility in the regime so that constellations of satellites could have a single launch permission and a single insurance arrangement. If not today, I hope that during the passage of the Bill that is also made clear.

[Lord Callanan]

My Lords, I can answer the noble Lord, Lord Willetts, directly: a constellation can be launched with one licence.

Amendment 16 is a further amendment to Clause 11(2). It requires the Secretary of State to hold a consultation within 12 months of Royal Assent on whether an operator licence should specify a limit on a licensee’s liability to indemnify government, and what an appropriate limit would be. By imposing that a mandatory consultation takes place within a set period, the amendment prioritises the consideration of the power to limit the operator’s liability to indemnify the Government, thereby eroding the discretion to introduce a limit only if this is considered necessary and appropriate.

I accept that consultation is a critical part of policy-making. It allows stakeholders to contribute their views on new policy that affects them. We have in fact already listened to industry views extensively—I did it only on Friday, in the latest round—and an unlimited liability to indemnify government could make it difficult to raise finance and obtain insurance. We have already had an extensive debate on that with the previous amendment, and that is why we have taken the power in this subsection. However, we need to ensure that we take a balanced approach between attracting operators to the UK by making it commercially attractive to carry out space flight activities and limiting the Government’s exposure to claims arising from such space flight activities. Our policy is for space flight activities to be conducted on a commercial basis but we have taken a power to intervene and cap the liability to indemnify government if this becomes necessary.

As I set out in the previous debate, we are already assessing the availability and cost of insurance to cover the liabilities under the Bill. This work will inform any policy on limiting the level of the liability to indemnify government. If a limit is deemed appropriate, the Government need to consider the level of such a limit and the consequences of bearing the contingent liability. We may conclude that a limit on this indemnity for UK launch activities is not appropriate in all circumstances. The Government have an obligation to use public funds appropriately. It is therefore not right that they should be bound to consult on setting such limits before the need to do so is established and accepted.

Furthermore, the current power also allows the Government to deal with each licence application on a case-by-case basis. The regulator will need the flexibility to decide whether a limit is appropriate, as well as what that limit should be, depending on the risks associated with each mission. Because of the variety of spaceflight activities that may be conducted from the UK and the individual circumstances of each operator, it may not be possible to have a specific limit or a methodology that works in every case for all missions. A flexible approach to setting a limit is good for both government and industry and, in our view, a legal requirement to consult on what an appropriate limit might be may restrict this. I assure noble Lords that we will consult on this matter once we have conducted our detailed analysis and have established the need to set a limit, and assessed the consequences of so doing. I therefore ask the noble Lord to withdraw his amendment.

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[Baroness Randerson]

My Lords, as the Bill stands, there is no obligation to get down what you have put up into space. As my noble friend outlined, it is becoming increasingly cluttered.

In my mind there are parallels with, for example, Everest or the Arctic, where historically as a human race we have dumped what we no longer need because we are in difficult circumstances and we cannot retrieve it easily. Of course, the difference with space is that it is floating around. When we worry nowadays about drones—I saw a report only today about a near-miss involving a drone—we are increasingly aware of things that are in space, in the skies, which are not accounted for and not under any kind of official control or pathway. Clearly, there is a risk to other spacecraft and to earth itself. We take fly-tipping seriously here on earth, so why not out there in space? Amendment 17 would make it a condition of a licence that the operator has to take reasonable steps to dispose of a payload, as my noble friend said.

It is important that we recognise that the international group that regulates space debris is not an international organisation but an advisory body. Amendment 21 amends conditions that may be included in licences to refer to advisory bodies as well as to international organisations. Those in the industry are concerned that groups that advise on space debris mitigation have too few members or lack formal decision-making powers to be recognised in law as international organisations. We are interested in whether the Minister has had legal advice that these bodies would be recognised as international bodies rather than having to be separately specified as advisory bodies. The amendment would allow operators to take account of advisory groups, such as the Inter-Agency Space Debris Coordination Committee and ISO’s orbital debris co-ordination working group. We are seeking certainty that they would be covered by the term “international organisations”.

[Lord Willetts]

There is indeed a problem with space debris. The aim is not to bring it back to earth—although I love the Liberal Democrat imagery of pavement politics and everything being recycled—but to knock it out of its orbit so that it burns up in the atmosphere and therefore disappears. We should take some pride in the fact that Fylingdales is where a lot of this debris is tracked. We have fantastic expertise there. It has always proved very difficult to get international agreement in this area, but the UK has a strong capability in disabling debris, and I very much hope that we will hear from the Minister that this is something that the Government continue to support. However, the prospects of any kind of international agreement in this area are, sadly, remote, not least because some of the technologies that are used for moving stuff out of orbit and disabling it are dual-use technology which can also be used in a very different way, so it has been very hard to reach any international agreement on the circumstances in which it would be used.

[Lord Callanan]

My Lords, in his introduction the noble Lord, Lord McNally, said that he was taking the Liberal Democrats into outer space. I am tempted to observe that many of us believe that the Liberal Democrats have been in outer space for a considerable time. I look forward to my next Local Focus newspaper dedicated to the recycling of space junk alongside plastic bottles and glass jars.

To be serious, this is an important subject, and I thank the noble Baroness and the noble Lord for raising the issue of space debris and the proper disposal of satellites and other payloads at the end of their operational life. These amendments illustrate the crucial role of licence conditions in ensuring the effective regulation of spaceflight activity, and highlight the importance of drawing on advice from all the relevant expert bodies. The UK Space Agency already considers matters related to spacecraft disposal—passivation, which is the removal of a spacecraft’s internal energy at the end of its useful life; and deorbiting, a brilliant word I discovered yesterday—and regulates this through existing licensing regimes under the Outer Space Act. Clause 12 enables regulators to set conditions on a licence tailored to the particular activity. Schedule 1 provides a non-exhaustive list of the types of conditions that regulators may attach to licences, which includes conditions governing disposal of a payload when it is no longer operational and requiring notification to the regulator when disposal has been effected. In addition, conditions may require compliance with any guidelines on space debris mitigation issued by international organisations.

The UK Space Agency is an active member of the United Nations Inter-Agency Space Debris Coordination Committee—a marvellously august body—and takes minimising space debris extremely seriously. Through this body, the UK Space Agency works with international partners, including bilaterally on specific issues, to develop and implement measures to safeguard the space environment and minimise the risk of space debris. As a number of noble Lords have pointed out, space debris is a global problem that requires jointly agreed global solutions. This is why the Government remain fully committed to working with and drawing on the expertise of these specialist bodies. Through this engagement, the regulator will continue to shape thinking on the vital issue of space debris mitigation.

The noble Baroness, Lady Randerson, referred to the UN Inter-Agency Space Debris Coordination Committee. Outer space is a global resource shared by everyone but owned by nobody. The UN has a unique role in developing best practice measures to protect the space environment for future generations. The Inter-Agency Space Debris Coordination Committee plays a critical role in helping to formulate technical policy free of the political influence in the UN. The committee, as a grouping of space agencies, is able to develop scientific consensus on debris issues and present them to the UN for endorsement and application by member states. I assure the Committee that it is the Government’s intention to continue to require appropriate disposal of obsolete payloads in accordance with international guidelines. I hope that in the light of those assurances the noble Lord will withdraw the amendment.