Space Industry Bill [ Lords ] (Second sitting)

Carol Monaghan Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 23rd January 2018 Public Bill Committees

[Dr Whitford]

This group of amendments comes back to the issue of liability for operators and, in particular, the need to set some form of cap on their liabilities so that they can get insurance.

Amendment 7 would change “may” to “must” in subsection 5. As I said earlier, that is not to set the limit, but to raise the principle of one. Later, as we will see when we come to Government amendments to clause 34, the Government themselves change “may” to “must”, implying that there is a cap that they are paying above. Similarly, in clause 33(6) we would also change “may” to “must”.

It needs to be stated that the maximum limit would not go above the €60 million that satellite launchers currently have to indemnify elsewhere. However, what has been described in the Bill and in the explanatory notes is that the launch activities carried out in the UK may be quite different, as the Minister just talked about with regard to noise nuisance. In horizontal take-off, we are talking about an aeroplane carrying a small rocket that will launch cube satellites and micro-satellites such as Unicorn.

As I said earlier, the current limit of €60 million per satellite, and therefore the launch of micro-satellites, would be untenable. Therefore, we need to consider in the consultation making the amount per launch, or per cluster, as opposed simply to per satellite. The Government need to reassure us that they accept the principle of a limited liability and of a liability cap.

There is also the discussion in the paper of describing launches as having a green or amber risk—obviously, those at red risk would not get a licence. Therefore, it could be done by class as opposed to launch by launch. Horizontal take-off vehicles launching cube satellites and micro-satellites might be given a different classification than a vertical take-off vehicle carrying large satellites, as has been the case elsewhere.

This cluster of amendments simply intends to bring back this basic principle that the industry has raised with me, and I am sure with other Members. It has also submitted in writing again that the failure to commit to setting a liability cap whereby industry indemnifies the Government up to a certain level means that companies will not manage to get insurance and they simply will not launch from the UK.

[Carol Monaghan (Glasgow North West) (SNP)]

To add to the comments of my hon. Friend, this issue could affect where future developments take place in the space industry. Jurisdictions such as Singapore do not require satellites—Glasgow has strength in satellites—to be built locally. However, other jurisdictions require satellites to be built in the local area or in the country.

If cube satellite businesses do not get a mandatory liability cap within this Bill, there is a danger that future development will be affected, and a danger that, when those businesses are looking to expand or develop satellites for future use, they will do so where they can get one. That would be where they can insure and launch satellites. It is absolutely crucial that we get this issue sorted at this stage.

[Joseph Johnson]

We discussed an operator’s liability to indemnify the Government against claims from foreign states and their nationals in clause 35. In addition, clause 33 places a strict liability on the operator to compensate third parties in the UK who suffer injury or damage as a result of space flight activity. This is necessary because the Bill allows spaceflight activities to take place from the UK. The intention is to provide easy recourse to compensation for the uninvolved general public in the UK on the same basis as compensation available to foreign nationals.

Clause 33(5) provides a power to make regulations to limit an operator’s liability arising out of spaceflight activities. As we have discussed, the Government intend to issue a call for evidence to consider whether such a cap is appropriate. The amendments seek to require the Government to make regulations that specify a cap on liability in an operator’s licence based on the risk profile of the launch.

The proposal is to set an upper limit on that cap in secondary legislation of €60 million. That figure, as we have discussed, reflects the existing cap on an operator’s liability to indemnify the Government in a licence for a standard mission issued under the Outer Space Act 1986, which was set following considerable experience of satellite licensing. There is no reason to believe that that is also an appropriate level at which to cap a launch vehicle operator’s liability to third parties in the UK, since that activity is likely to be inherently more risky.

Creating inflexibility in legislation is also not helpful. The existing Government indemnity liability cap of €60 million for satellite operators is set by a policy decision and can be varied as appropriate—the figure is not laid down in the Outer Space Act for that reason. The UK Space Agency is considering its approach to risk management of satellite licensing, including the implications for liabilities and insurance requirements. That flexibility is vital if regulation is to keep up with a rapidly changing space sector. The UK Space Agency intends to issue further guidance on that new approach later this year.

As that demonstrates, legislative flexibility is better for both industry and the Government, because it allows the regulator to determine case by case whether to cap liability and the level of any cap. That should encourage operators to design their missions to reduce injury and damage as much as possible, leading to safer launches and reduced costs for them.

[Carol Monaghan]

Will the Minister give way?

[Joseph Johnson]

Let me turn to some of the hon. Lady’s specific points before she intervenes—I may anticipate what she is about to ask.

A mandatory cap on liability and mandatory Government compensation embedded in primary legislation could potentially breach state aid rules. That could also cause difficulties in respect of future trading rules applying to the UK, although those are of course as yet unknown. For that reason, it is important to retain the flexibility to deal with the issue by way of secondary legislation. In that way, this and future Governments will have a power to introduce and vary a cap to ensure that it is in line with our legal obligations. It can also be varied in the light of changes in the market or in our trading commitments.

The amendment to clause 33(4)(a) means that the Government—the hon. Member for Central Ayrshire commented on this—must compensate a claimant only in the event of a cap. That amendment does not mean that there is a cap on the face of the Bill.