Space Industry (Indemnities) Bill

Baroness Stowell of Beeston Excerpts

2nd reading
Friday 5th September 2025 Lords Chamber

[Baroness Stowell of Beeston (Con)]

My Lords, the topic of space makes us think about rockets, astronauts and faraway places, but one of the great things about being a Member of your Lordships’ space committee has been learning that there is a UK space economy. It is vital to so many industries on earth and, so good are we at developing the relevant science and technology, our UK space industry has the potential to grow.

As with any sector, especially a high-tech one such as space, growth requires investment. This Bill, sponsored and ably introduced by my noble friend Lady Anelay, addresses a small but important gap around insurance indemnities, which are a disincentive to investment, as my noble friend has explained. Indeed, this Bill serves to remind us that small things matter, and I hope, like the noble Viscount, Lord Stansgate, that it is passed without amendment and put on the statute books without delay, because it is important.

On its own, the Bill will not address the bigger challenge facing the UK space industry: getting the investment needed to scale UK businesses so they are globally competitive and stay here in the UK. Noble Lords will recall we had a debate in June on the scale-up challenge for the UK AI and creative tech sectors, to which most of us speaking today contributed, so I am certainly not going to repeat what I said then. However, I want to highlight that the scale-up challenge also applies to the UK space industry, where it is arguably harder, because so much of it relies on patient capital.

To paint a picture, there are 1,700 space firms in the UK. That sounds great, but only 25 of them have an annual income of over £50 million. That is what needs to change. During our inquiry, to which the noble Viscount referred, we heard from Mark Boggett of Seraphim Space, a VC firm specialising in this sector. He told us that, while the UK ranks highly in total private investment—third in the world—it is 17th in the world and 10th in Europe when you look at the average deal size. He said this shows that the UK is identifying the right entrepreneurs and backing them in the earlier stages, but consistently underfunding those businesses, which does not enable them to grow on the global stage.

Just like our AI start-ups and spin-outs, which have the potential to grow and be hugely successful and deliver massively for our wider economy, the worry is that UK-based space firms will be bought out, or will move operations to other countries where raising capital is easier. We heard from Joshua Western of Space Forge, an aerospace company based in Wales, who told us that he was continually inundated with offers from Europe, the Middle East and America to shift its HQ to another country.

I know that the noble Lord, Lord Hendy, is a Minister for Transport, but what can he tell us to give us some confidence that the Government will make the necessary changes to incentivise growth capital investment in our space sector? There is much by way of recommendations the Government could adopt. We have had many reports from previous committees, and I have chaired one of them. In the debate in June, there were further recommendations that the Government could adopt.

Sadly, I feel that we are not getting the right signals from Government to incentivise the investment that is needed. I know that all attention today will be on the resignation of Angela Rayner as Deputy Prime Minister, but I was very sorry to hear earlier this morning that the noble Baroness, Lady Gustafsson, has also decided to leave the Government. As the Investment Minister and someone who has come into government having scaled up a tech business, losing her from the Government is something we should be concerned to see.

I was a bit confused by the Government’s decision to abolish the UK Space Agency. I hope the Minister can give some explanation of the Government’s thinking on that, and maybe my noble friend Lord Willetts might have something to say when he follows me. I am pleased to support my noble friend’s Bill and I hope that its passage through this House is swift.