Space Industry Bill [Lords]

Carol Monaghan Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 6th February 2018 Commons Chamber

[Layla Moran]

The hon. Gentleman is right, and my constituency is affected by such uncertainty.

I repeat a point that I made during the passage of the Nuclear Safeguards Bill: we must remember that this is not just about funding. At a recent hearing of the Public Accounts Committee, of which I am a member, witnesses were clear that the most valuable asset we have as a nation is our ability to attract human capital. To put it bluntly, the funding follows the brains. There is real consternation across the entire science industry that European scientists are actively looking to move, if they have not already, to more welcoming countries. Their lives are more than just their jobs; this is about where they live, love and participate in the community, so the tone of this debate matters hugely. It is therefore critical that we maintain freedom of movement for the world-class scientists, specialists and technicians who contribute to the space industry, so that we keep those brains and the funding here.

Patrick Wood, CEO of Surrey Satellite Technology Ltd, an existing supplier to Galileo, has said that

“there are still a lot of unknowns”

about whether UK space companies will be able to access high-quality staff post-Brexit, noting that UK space infrastructure companies

“have a high percentage of staff that come from across Europe”

partly due to a lack of UK applicants. Aerospace companies are heavily reliant on the rapid movement of workers between different sites. A favourite fact of mine is that Airbus moved employees 80,000 times between the EU and the UK in 2016. It even has its own jet shuttle between Toulouse and Broughton. Any additional border checks between the UK and the EU could therefore prove a significant burden.

On Galileo, the European Commission is demanding the right to cancel existing contracts with UK companies that are constructing the £10 billion Galileo satellite navigation system unless the UK negotiates a new security relationship with the EU. If no long-term agreement can be found, UK companies may only be able to retain their contracts by setting up EU subsidiaries. With them will go the tax take, the brains and the supporting jobs.

Finally, I turn to the crucial effect of leaving the single market on supply chains within the UK space industry. Last year, I asked the Minister, in his former role, a series of parliamentary questions about the impact on the UK space sector supply chain of leaving the single market, but sadly there was not much in the answers to give heart to the industry. It has just not received the answers that it needs. Stuart Martin, CEO of the Satellite Applications Catapult said that

“Brexit represents a risk to the United Kingdom in sustaining its leadership position”

among sectors such as satellite manufacturing and navigation services. He also stated that the UK needs to sustain its leadership role within the European Space Agency and maintain access to the single market. Before anyone says, “But we will stay in the European Space Agency,” yes we will, but we must not forget that a quarter of its funding comes from the EU.

It is clear that the industry needs certainty on all those issues. We have had warm words, but not enough action. The Government’s shambolic handling of impact assessments and sectoral analyses, as well as this week’s uncertainty over future customs arrangements, is not inspiring confidence among the space industry. There are few specific commitments or guarantees in the Bill, so it is not unreasonable for the Government to publish an assessment of the sort that new clause 1 would require, and I hope that the Minister will consider doing so.

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

I start by passing on the apologies of my hon. Friend the Member for Central Ayrshire (Dr Whitford), who has been heavily involved in the Bill since the beginning. Unfortunately, she is extremely unwell this week and has uncharacteristically heeded her daughter’s advice by staying at home, but she is no doubt watching from her sickbed.

I rise to support new clauses 1 and 2, which attempt to ensure a proper assessment of the potential damage that an extreme Brexit could cause our space industry. During the passage of the Bill, we have had a glimpse of the opportunities ahead for the UK’s space industry, but this relates to the wider reaches of the EU. The EU funds space research through Horizon 2020, and we want to ensure that we remain a player beyond that point. Although the European Space Agency is separate from the EU, it does still receive significant funding from it, so we need to know whether the Government have made any assessment of the impact of Brexit on our space industries. Given the previous impact assessment fudge, the answer is probably, “Probably not, but if we have, we will not be publishing it anyway.” That is simply not good enough. The new clauses make it clear that the Government will make that assessment and will publish it. If they do not accept these amendments, the question must be: what do the Government have to hide?

The European Commission has made it clear where it wants to go on space, so do the Government intend to remain part of the strategy and programme it has outlined? If we are not an integral part of the European space programme, what will be the impact on our viability as a spaceport centre, compared with other spaceports located within the European family?

How will we retain access to EU research and development projects, which are so important to our space industry? As has been mentioned, how will changes to freedom of movement affect this industry, an industry that exchanges talent across frontiers on a regular basis? Not all that talent will be at a salary threshold that allows easy access to the UK. Will we retain full access to programmes such as Galileo and Copernicus? Will we be marginalised in EU procurement decisions?

Those are all important questions for the Government to consider now, and they should be included in any impact assessment.

[David Linden (Glasgow East) (SNP)]

My hon. Friend is making a powerful speech that outlines the isolationist view that post-Brexit Britain is about to take. How does she square what the UK Government are saying about “global Britain” with the powerful points she has made this afternoon?

[Carol Monaghan]

We all want to see the space industry succeed, and we want to see it succeed on a global playing field, but we need to get this right. Requiring an impact assessment would make a big difference. We need to probe further on where our space industry will find itself in the increasingly likely event of a hard Brexit.

[Karl Turner (Kingston upon Hull East) (Lab)]

New clause 2 would ensure that Parliament is kept up to date on negotiations between the UK and the European Union in regard to the UK space industry.

New clause 2 differs very slightly from new clause 1, which was tabled by the hon. Member for Oxford West and Abingdon (Layla Moran). Both new clauses have the same aims. New clause 2 asks the Government to produce a summary of any discussions between the UK Government and the European Union to ensure that Parliament is kept up to date on the progress of the negotiations. Just as importantly, new clause 2 would also provide clarity to the UK’s space industry.

It goes without saying, or at least it should, that the Government must ensure we get the best possible deal with the EU to help support the UK space industry’s continued growth. That is the whole point of the Bill, and it is why the Labour party is broadly supportive of it. UKspace, the trade association of the UK space industry, claims:

“The UK leaving the EU has created significant uncertainty which is already affecting the integrated supply chain, R&D collaboration and joint programmes with other EU countries.”

As colleagues have pointed out, the UK space industry makes a noteworthy contribution to our economy and employs close to 40,000 people. The industry is currently highly dependent on EU-led space programmes. As a result, the Government must ensure the UK gets a deal that secures the long-term future and growth of our space industry to ensure that the Government’s ambition for the UK to be a leading player in the global space industry is not just all talk and no action.

The Government provided a report to the Exiting the European Union Committee with a sectoral analysis of the UK space sector after our Opposition day debate on 1 November 2017—it is fair to say that we forced the issue. We welcome the Government publishing that document. However, the Opposition believe the document is not sufficient and that Parliament should be kept up to date with a further summary, which would also give the sector the additional clarity it asks for.

Any further uncertainty would hinder any potential growth in the UK space industry. New clause 2 is a reasonable and sensible amendment that would require the Government to publish a report setting out a summary within 12 months of Royal Assent, which is absolutely fair.

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[Carol Monaghan]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

New clause 4—Cap on licensees’ liability limit—

‘(1) The Secretary of State must, within 12 months of this Act receiving Royal Assent, lay a report before Parliament setting out plans for a cap on licensees’ liability.

(2) Before exercising their duties under subsection (1), the Secretary of State must carry out a consultation on what an appropriate maximum limit would be on the amount of a licensee’s liability, and lay a report before Parliament setting this out.

(3) The report under subsection (1) must provide for, but is not limited to—

(a) a maximum limit on the amount of a particular licensee’s liability for each launch undertaken by the operator;

(b) a maximum limit on the amount of licensees’ liability for each launch classification type;

(c) divisions of responsibility and the level of liability for parties’ spaceflight activities, including—

(i) the Spaceport;

(ii) the launch operator; and

(iii) the satellite operator.

(4) In subsection (3) “launch classification type” means the level of risk attached to each type of launch as determined by the regulator.

(5) Before exercising their duties under subsection (1), the Secretary of State must consult the Scottish Government, the Welsh Government and the Northern Ireland Executive and have regard to their views in respect of any proposed regulations.

(6) As well as consulting those under subsection (5) the Secretary of State must consult with—

(a) UKspace, and

(b) any other such persons as the Secretary of State considers appropriate.”

This new clause would require the Government to consult on and set a mandatory cap on licensees’ liability for each individual launch, based on the classification type of each launch.

Amendment 4, in clause 9, page 8, line 24, at end insert—

‘(10) The Secretary of State must, within 12 months of this Act receiving Royal Assent, publish guidance about any regulations in relation to operator licences. Such guidance must be issued by the regulator (if the regulator is not the Secretary of State).

(11) The regulator must hold pre-licensing discussions with any potential operator before an operator licence can be issued to them.

(12) Discussions under subsection (11) must include, but are not limited to, providing potential operators with guidance on any regulations in relation to operator licences.”

This amendment would require the Secretary of State to publish guidance about any regulations issued in relation to operator licences, and to hold discussions with all potential operators before a licence can be issued to them, to ensure that the UK space industry is sufficiently aware of the regulatory framework.

Amendment 1, in clause 68, page 44, line 35, after “offences,” insert—

“(n) regulations under subsection (1) of this section”

This amendment would make regulations made under section 68(1) subject to the affirmative procedure.

Amendment 2, in schedule 6, page 61, line 2, after “authority” insert “and devolved administration”

This amendment would make it a requirement that when an order is made to obtain rights over land, notices about the orders must be served to devolved administrations, where relevant.

Amendment 3, page 61, line 22, after “authority” insert “and devolved administration”

This amendment would make it a requirement that when an order is made to obtain rights over land, notices about the orders must be served to devolved administrations, where relevant.

[Carol Monaghan]

Once again, this amendment stands in the name of my hon. Friend the Member for Central Ayrshire (Dr Whitford), who cannot be here this afternoon. New clause 3 will ensure that guidelines for spaceports are clear and published, and take into account the views of devolved Administrations and stakeholders. The devolved nations currently have the majority of the sites being considered for spaceports, so we are looking for some consultation in the event of rights being taken over land that would be with the devolved Government.

The lack of a liability cap in the Bill is causing us concern. New clause 4 would ensure that there must be a cap. It calls on the Government to come to Parliament, after consultation, and provide their plans on what an appropriate cap would be. A liability cap would bring our space industry into line with those of Australia, France and the USA, which is the world space leader. The purpose of the liability cap is to allow spaceflight operators to obtain affordable insurance—without it, the prohibitive cost of obtaining insurance for unlimited liability would undermine the growth of the space industry in the UK, which is the key point of the Bill. Simply put, without a cap in place, launches will not take place in the UK.

The industry stakeholders’ main worry with the Bill is the absence of a mandatory liability cap for spaceflight operators. The Government have said that they need to be flexible, but if the industry is calling for a cap, they need to both listen and take action. We understand that a cap level will not necessarily be set at this point, but a guarantee that there will be a cap would go some way to providing assurance to the industry. The chairman of UKspace, Richard Peckham, has said that insurers have made it clear that they would not be prepared to do business without a benchmark, so it is vital this takes place.

Our new clause 4 would allow the Government to be flexible on the liability cap by creating different caps for different launches, given there will be quite a broad range of risk depending on the scale of the satellite. One mechanism that has been discussed in Committee is the red, amber and green risk assessment to describe different types of missions, with a different cap for each type of mission. I am not entirely convinced that that would be entirely useful, as clearly those classified as a red risk would not get a licence. However, this could be done by class, for example, with horizontal take-off vehicles carrying cube satellites being given a different classification from a vertical take-off vehicle carrying large satellites, as has happened elsewhere.

It is also important that we do not speak about liability per satellite and actually move towards a cap based on a per-launch system. That would be better suited to much of the growing UK industry. In Committee, I mentioned the importance of the cube satellite industry to Glasgow, which is second in the world, behind San Francisco, in the manufacture of cube satellites. Such satellites are often launched in clusters. If the figure for a liability cap were to be €60 million for each one of these tiny satellites, that would be prohibitive in terms of growing the industry.

In the longer term, this issue could affect where future developments take place in the space industry. Some countries do not require satellites to be built locally, whereas other jurisdictions require satellites that are being launched to be built in the local area or in the country of launch. If cube satellite businesses do not get a mandatory liability cap in this Bill, there is a danger that future investment will be affected and a real possibility that when those businesses are looking to expand, they will do so in a jurisdiction where liability is capped and insurance can be obtained.

[John Redwood (Wokingham) (Con)]

Is the hon. Lady saying that the taxpayer should stand behind the extra liability above the cap?

[Carol Monaghan]

That is exactly how the liability works: the insurer covers up to whatever that liability is and the rest is picked up by Government. Once that is picked up by Government, we have to look at the revenue that is generated from that industry and at the amount of growth and jobs created. If we look at proper regulations on our spaceports, liability or risk will be extremely low. Every other country that is launching has a liability cap. We cannot possibly compete unless we have that in place.

As I have said, I understand that the Minister has committed to looking at the issue of the cap and talking to industry leaders about this issue. As I have also said, I am not pressing today for a figure, but the indication that a cap will be in place will provide great reassurance for the UK space industry and will allow it to grow in the way in which we hope it will.

[Vicky Ford (Chelmsford) (Con)]

In Committee, I heard the hon. Lady press the case for an unlimited liability cap. I also heard the Minister give an extraordinarily good and detailed explanation of the work that needed to go into the detailed preparation for such a cap. That is why it was decided in Committee not to put this measure in the Bill, by a vast majority, with cross-party support. It is not that we do not understand the need for this, but it needs to be set in the correct way.

[Carol Monaghan]

I thank the hon. Lady for her contribution, but I think she is missing the point, which is that there must be a cap in place for these companies to get insurance. Without it, they cannot get insurance, and without insurance, they cannot launch. If the Government are considering this cap, why is it not in the Bill? Why does the Bill not contain a statement that a cap will be put in place? I am not asking for a figure and I certainly did not talk about unlimited liability; we talked about limited liability. Unless this is in place, we are stifling a serious growth industry. So I call on the Government to accept the new clause and to listen to the concerns of the space industry.

[Mr John Hayes]

I intend to speak briefly on this issue, having heard what the hon. Member for Glasgow North West (Carol Monaghan) said and having looked at these matters in my previous life, as it were. Liability is salient to this Bill. The Government have acknowledged that in what they have said and in the changes they have already made as a result of our consideration in Committee.

I pay tribute to the new Minister for the work he has done on this. It is right to say that he is continuing discussions with the industry. As the hon. Lady said, there is a fragility about the industry. That is not to say that it is not successful, growing or doing wonderful things, but when one innovates or is on the margins of innovation, as this industry is bound to be, given that it is pushing the frontiers ever further, of course one is in a risky business. To gain the necessary investment to make that innovation happen and to take on board those risks, one needs to create a framework of certainty, and the certainty is to some degree about liability.

If I may say so, though, there is a simpler way to deal with the hon. Lady’s points. As I said, I shall be brief. I notice that the Government have already made changes to clause 35(3), where the word “may” has been changed to “must”. They could make similar changes to clause 34(5). Were the Government obliged to make regulations to deal with liability, I think that would go a long way towards satisfying the hon. Lady. I have sufficient trust in the Minister and his Department to know that even with the word “may” in the provision, it is likely that, following the discussions that he and others are having with the industry, further regulations will be introduced for the very reasons the hon. Lady set out in a measured and moderate way.

It is vital that we create the investor confidence that will allow the industry to grow and, as I have said, push forward the frontiers of technology in what is necessarily a risky business. This can be a great success and the Bill takes us a long way towards enabling that success. To get the issue of liability right will be the icing on the cake, but as everyone who has ever dressed or consumed a cake knows, the icing is vital—it is what draws us in, encourages and seduces us to consume the cake. With that overture, I hope that the Minister can provide the reassurance that the industry and I seek and that on that basis the hon. Lady might see fit to withdraw her new clause, although that is a matter not for me but very much for her.

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[Carol Monaghan]

Can the Minister offer any timeframe for the consultation and the ongoing process, because the industry would welcome that?

[Joseph Johnson]

The Government have committed to launch the call for evidence as soon as the Bill receives Royal Assent, which we hope will not be too long now. Should the evidence show that there is demand and a need for a liability cap of the kind that the hon. Lady has been describing, we will launch a formal consultation at that stage. That consultation will, properly, involve the devolved Administrations and others with interests in this matter.

Through amendment 4, the hon. Member for Kingston upon Hull East (Karl Turner) rightly raises the importance of the timely provision of guidance to applicants for spaceflight operator licences, and the benefits of pre-application discussions between prospective applicants and the regulator. The Government fully recognise that all potential licence applicants under the Bill—spaceports, satellite operators, range control service providers and spaceflight operators—will need to understand the regulations and processes with which they will need to comply. I hope that my earlier responses to the hon. Member for Glasgow North West (Carol Monaghan), who is speaking on behalf of the hon. Member for Central Ayrshire, have helped Members to understand the approach that we will be taking.

Pre-licence application discussions are already a key part of current Civil Aviation Authority and UK Space Agency licensing, and they will remain a central part of the process for licences under the Bill. Such discussions benefit prospective licence applicants and the regulator, because they help to build effective working relationships. The hon. Member for Kingston upon Hull East will be pleased to know that discussions of this sort are already under way with a number of interested companies.

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On that basis, I ask the hon. Member for Glasgow North West, speaking on behalf of the hon. Member for Central Ayrshire, to withdraw new clause 3.

[Carol Monaghan]

I am happy to withdraw new clause 3, so I beg to ask leave to withdrawn the motion.

Clause, by leave, withdrawn.

New Clause 4

Cap on licensees’ liability limit

“(1) The Secretary of State must, within 12 months of this Act receiving Royal Assent, lay a report before Parliament setting out plans for a cap on licensees’ liability.

(2) Before exercising their duties under subsection (1), the Secretary of State must carry out a consultation on what an appropriate maximum limit would be on the amount of a licensee’s liability, and lay a report before Parliament setting this out.

(3) The report under subsection (1) must provide for, but is not limited to—

(a) a maximum limit on the amount of a particular licensee’s liability for each launch undertaken by the operator;

(b) a maximum limit on the amount of licensees’ liability for each launch classification type;

(c) divisions of responsibility and the level of liability for parties’ spaceflight activities, including—

(i) the Spaceport;

(ii) the launch operator; and

(iii) the satellite operator.

(4) In subsection (3) “launch classification type” means the level of risk attached to each type of launch as determined by the regulator.

(5) Before exercising their duties under subsection (1), the Secretary of State must consult the Scottish Government, the Welsh Government and the Northern Ireland Executive and have regard to their views in respect of any proposed regulations.

(6) As well as consulting those under subsection (5) the Secretary of State must consult with—

(a) UKspace, and

(b) any other such persons as the Secretary of State considers appropriate.”

This new clause would require the Government to consult on and set a mandatory cap on licensees’ liability for each individual launch, based on the classification type of each launch.—(Carol Monaghan.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

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[Carol Monaghan]

First, I would like to thank the Minister, who has moved seamlessly from his previous role into this new role and is not too far away from where he was a few months ago. I also thank the right hon. Member for South Holland and The Deepings (Mr Hayes) for the work he has done.

It is a nice coincidence, I suppose, that SpaceX will be launching the Falcon Heavy rocket from the Kennedy Space Centre in the next couple of hours. It is the largest rocket ever to be launched and could pave the way for travel to Mars. This is the inspirational industry that we all want to be part of, and for that reason there has been great cross-party support for, and consensus around, the Bill.

The idea of spaceports in the UK is potentially exciting, but it needs investment from both the Government and private industry, and I hope that parts of the Bill will draw down some of that investment. I am pleased that many of the potential sites for spaceports are in Scotland, but I am disappointed that the Government chose not to support new clause 4, tabled by my hon. Friend the Member for Central Ayrshire (Dr Whitford). It would have strengthened the Bill and provided the assurances the industry was calling for. I hope that the cap will be put in place, and quickly, to generate future investment possibilities for the industry.

I want to place on the record the three satellite companies currently manufacturing satellites in Glasgow: Clyde Space, Spire and Alba Orbital. Between them, they ensure that Glasgow is second only to San Francisco, worldwide, for the production of CubeSats. We very much want to support this industry, and it would be great to see these Glasgow-built satellites, manufactured very close to the Clyde—they are all within half a mile of the Clyde—actually being launched. “Clyde built” used to be an indication of quality. Let us hope it is for these new spaceships.

The Bill will, of course, need collaboration between the Scottish and UK Governments, as well as cross-party support, which it has had generally, and I look forward to seeing it strengthened after the consultation process that the Minister described this afternoon.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.