Space Industry (Indemnities) Bill

John Grady Excerpts

Friday 7th March 2025 Commons Chamber

[John Grady (Glasgow East) (Lab)]

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

It may be of interest to you, Madam Deputy Speaker, that Bradford, part of which you represent, contains a centre of space expertise, namely the University of Bradford. I will return to that later.

I am privileged to introduce a Bill that will help to push forward investment in the UK’s critical space sector. It will amend two sections of the Space Industry Act 2018 to provide legal certainty that all space flight operator licences must include a limit on the amount of the operator’s liability to the Government under section 36 of the Act. What are space flight activities, one may ask? They cover launching spacecraft, such as satellites, into space, operating spacecraft in space—for example, allowing a spacecraft to orbit Earth—and bringing spacecraft back down to Earth.

Under the international law applicable to space, Governments, including ours in the UK, are liable for damage to property, death or personal injury caused by their space activities or by their nationals. That is a key reason why section 36 of the 2018 Act requires people carrying out spaceflight activities to indemnify the Government against such claims. The Bill provides legal certainty over the need to limit liability because that will encourage desperately needed investment in the sector.

The space sector and satellites are central to almost everyone’s day-to-day life. Let us take something simple like a trip to a football match. Middlesbrough fans—I’m afraid I am not among them—have a famous fanzine called “Fly Me To The Moon”. That is not a reference to Sinatra, but they might buy it using contactless. People will make their way to the match with the use of maps and travel updates on their phones and use Google Pay or Apple Wallet to store tickets and get into the stadium. All this depends on satellite technology. One may ask why the Boro fanzine is called “Fly Me To The Moon”. It is because Bruce Rioch, a great Scottish manager, then manager of Middlesbrough, said of his captain:

“If I had to fly to the moon I’d take Tony Mowbray, my captain, with me. He’s a magnificent man.”

Both men played a significant role in saving that magnificent football club.

Suppose, Madam Deputy Speaker, you wanted to read on your device “The First Men in the Moon” by H.G. Wells. That requires satellites. The protagonist in that novel is a Mr Bedford. I was brought up in Bedford, a wonderful town in Bedfordshire, and my hon. Friend the Member for Bedford (Mohammad Yasin) is a fine friend. Suppose you wanted to stream “Breakfast at Tiffany’s”, famous for Audrey Hepburn singing “Moon River”. Streaming music depends on satellites. I confess that “Moon River” was one of my lullabies of choice when my children were younger and I was desperately trying to get them to sleep. I did not think that “Subterranean Homesick Alien” by Radiohead would be an apposite choice or, for that matter, Lou Reed’s great song “Satellite of Love”, so I stuck with “Moon River”. The House will be pleased to know that I do not propose to sing “Moon River”, because I am appalling at singing.

The critical point is that satellites and related technology are critical to modern life, and they will become even more so. There is a significant economic opportunity for the United Kingdom here. European demand for satellites up to 2033 is forecast to be worth $50 billion. Even 2% of that would bring around $1 billion in revenues for the UK economy alone. This provides a serious economic opportunity to the United Kingdom, and we must seize it with both hands, because we must get growth back into the British economy, and that is what our Government are determined to do.

Space is an industry of the future—a future of hundreds of years—and it is critical that we invest in and support industries that can bring our family of nations prosperity for decades to come. As President John F. Kennedy said,

“man and his quest for knowledge and progress is determined and cannot be deterred. The exploration of space will go ahead, whether we join in it or not. And it is one of the great adventures of all time.”

President Kennedy said that in 1961, and in 2025 I say it is high time that the United Kingdom got stuck into this adventure and seized the opportunities it will provide.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

I thank my hon. Friend for introducing this Bill—he is reaching for the stars with it, quite literally. I am proud to have a company in my constituency called Alpha Data, which is just 50 metres from my constituency office, but the products it designs are 250 miles above us. It has a sensor outside the International Space Station that measures atmospheric heating and cooling. Alpha Data employs 30 people in its office, but its supply chain stretches from inside the city to Kilsyth, the Scottish Borders and nearby Livingston. Does my hon. Friend agree that this company is evidence that the space sector is thriving in Scotland, and that this Bill should help it to go “To infinity and beyond”?

[John Grady]

I could not agree with my hon. Friend more. Edinburgh has a thriving space sector, as does Scotland. My hon. Friend has for many years been heavily involved in work to grow the economy in Edinburgh and the Borders, and I pay tribute to him for that.

I must, however, take this opportunity to pick a minor bone with my hon. Friend. He mentioned that Glasgow does not have a castle, and I wish to correct the record. We have a fine ruined castle called Crookston castle. It is the second-oldest building in Glasgow. The first-oldest building in Glasgow is the beautiful cathedral. I will not indulge in a dispute about whether Edinburgh or Glasgow is the better city. They are both beautiful, great cities. Glasgow is slightly better, but there you are. I am obliged to my hon. Friend for his intervention, and I am also glad to be able to correct that point.

There is another reason why it is important that we have a thriving space and satellite industry. Space is critical to defence, and we must have a thriving space sector to protect our country. The United Kingdom works with allies to ensure that our interests are defended in space. However, the world is becoming more unstable, and it is essential that we have our own capabilities to launch and operate satellites from the United Kingdom, and this Bill is important in that regard, too. It will help to secure a vibrant end-to-end space industry in the United Kingdom, and that is important for defence. To take one example, having our own domestic launch capability is important, and a vibrant civilian sector will help to cover the costs of that launch capability. This Bill also has a national security theme.

Owing to much hard work, including by the last Government, the UK Space Agency and many others, the United Kingdom also has a firm foundation for a thriving space industry. In the time available, I cannot provide a complete survey of the vibrant and growing space industry, but here are some key points. One key task we have had is to develop our own launch capability to put satellites up in space, and then to get them back down. That is why there is so much chat about spaceports—in my life, at least.

SaxaVord, the UK spaceport in the Shetland Islands, is one of only two licensed vertical launch spaceports in Europe. That is at the far end of the north of the map of our family of nations. Down in the far south-west, we also have an operational spaceport in Cornwall. That illustrates that space is an opportunity for our family of nations from the very top to the very bottom—I mean that only in a cartographic sense; I am not looking to offend any Members from Cornwall.

There are also spaceports under construction and planned in: Sutherland, on the far north of the coast of Scotland, to the west of Thurso; North Uist, a wonderful place, which I commend as I spent much of my honeymoon there; Glasgow Prestwick; Spaceport Machrihanish, on the southern tip of the Argyll peninsula, which I would also recommend for a visit to Scotland; and, Snowdonia. Some may wonder where those places are. They are all wonderful places, and they illustrate that space is an opportunity across the United Kingdom.

Let us turn to the satellite or, as Lou Reed sang, “Satellite of Love”. The UK has incredible talents in manufacturing satellites and satellite technology. As a Scottish MP, I focus on Scotland, and as a Glasgow MP, I focus on Glasgow, but let us start in the Moray firth, where my mother came from. It has a fine tradition of engineering. For those who follow highland league football—I suspect I am in a minority of one in the House today—the fact that Forres Mechanics is one of the oldest football clubs in the north of Scotland points to a tradition of engineering there. The Jones shipyard in Buckie is another great engineering industry in the north of Scotland.

Of significantly more relevance to this debate is that Forres is home to Orbex, which is developing a rocket called Prime. It will be the first UK-manufactured and UK-launched orbital rocket. Prime is set to take off from SaxaVord in 2025. Prime is set to take off from SaxaVord in 2025. The UK Government have recently announced a £20 million investment in Orbex—an important investment that demonstrates the opportunities being brought to the north of Scotland, for which we need to redouble our efforts to secure economic growth and prosperity.

My home city of Glasgow has a rich history of innovation and an incredibly promising cluster of space expertise. As a Glasgow MP, I am determined that it should have a bright future in space. Glasgow is building more satellites than any other city in Europe. There are fantastic companies in the area including, Alba Orbital, which specialises in PocketQube satellites, AAC Clyde Space, which has expertise in small satellite technology, and Spire Global, which is a leading provider of space-based data analytics and space services. This year is Glasgow’s 850th birthday. The Bill will help secure the prosperity of Glasgow for the next 850 years, creating jobs and economic growth in my great city of hard work, innovation and enterprise.

There is clear economic analysis that shows that the space industry is an important opportunity area for growth and jobs. The latest “Size and Health of the UK Space Industry” report estimates that 228 organisations in Scotland generated a combined income of £298 million in 2021-22—almost double that of 2018-19 in real terms. About 6,500 people work in space in Scotland, and the figure for the UK is between 48,000 and 52,000. Income amounts to between £17.5 billion and £20 billion. There are more than 100,000 jobs in the supply chain as well.

Let us pause for a moment on that: we have only just got going on this and we have 48,000 or more jobs. There is much potential here for many more good, high-paid jobs of the future, which is what Britain needs.

[Kanishka Narayan (Vale of Glamorgan) (Lab)]

My hon. Friend has given detailed and eloquent descriptions of the UK space sector, and Glasgow’s contribution in particular, but what will the provisions of the Bill do for the rest of us—including those in south Wales and across Wales—so that space is also felt in our communities?

[John Grady]

The Bill applies across the United Kingdom, and obviously there is a space industry in south Wales, too. It will encourage investment in south Wales by protecting investors against unlimited liability. I see this as critical for the space industry in south Wales as well as in Scotland. Naturally, I focus on Scotland because I am obsessed with the place, but, I would add, Madam Deputy Speaker, that it is very important for Bradford, too.

It is important to note that the space industry is a source of good jobs, and not just for people with PhDs in astrophysics. Last year, the Scottish Affairs Committee heard that there were great opportunities for many different people in the space industry. It will provide jobs for school leavers, graduates and PhDs across the spectrum. That is something that is brilliant about space.

[Alex Ballinger (Halesowen) (Lab)]

Does my hon. Friend recognise that the Ministry of Defence is a massive investor in the space sector, having invested £6.5 billion over the last decade? Does he welcome that investment as we are strengthening European security?

[John Grady]

I am obliged to my hon. Friend for his intervention. That is a very important point. Every week, we can pick up the paper and look at the discussion about where we need to invest in defence. We must invest in space, and we must have our own capability here in the United Kingdom—that is critical.

Over my lifetime, the domain of warfare has, sadly, expanded from ground, sea and air to space as well as online. It is critical that we invest in our capabilities here. The Bill is important for that. It is critical that we continue to pursue investment by the Ministry of Defence and the UK Government, which I believe has cross-party support. It creates economic opportunities for the United Kingdom, too. The lesson of history and technological development is that investment in defence has significant civilian spin-outs, so it is quite right and proper for us to invest in it.

In summary, we have a huge opportunity and it is one that we must seize. The Bill has one, sole objective: to help get investment into the space sector so that we seize this opportunity. With that in mind, I now turn to provide more detail about the legal and commercial background to the proposed Bill. I must admit that, given my previous career as a lawyer, I find this bit the most interesting. However, I quite accept that for others it may have a more treacle-esque quality to it. I beg forgiveness, but I am afraid I must proceed!

As I have explained, the Bill seeks to limit space operators’ liability. I start by emphasising that there is a very, very strong safety regime in operation here. Spaceflight activities are very heavily regulated by an independent regulator, the Civil Aviation Authority, to ensure that they are safe. In order to carry out spaceflight activities, one must obtain an operator licence granted by the CAA, which is independent of Government. It has a clear legal duty to secure the health and safety of the public and the safety of their property. That trumps all the CAA’s other duties. It must put safety first.

A range of tests applies to the granting of licences. The applicant must be able to demonstrate that it has taken all reasonable steps to ensure that the risks to people and property are as low as possible, and that the level of those risks is acceptable. More generally, there is a detailed and robust safety regime governing spaceflight activities operated by the CAA. So, here we are concerned with small risks that are reduced to the minimum extent possible by a strong regulatory regime.

Under international space law, the UK Government have a long-standing legal liability for damage caused by spaceflight operations. There is, despite the safety regime, a residual risk that things can go wrong and that the Government can face claims. The UK Government can make claims against operators under section 36 of the 2018 Act. Again, that is quite proper. Under the regime, operators have to assume risk and under the Bill, although it limits liability, operators continue to bear risk. Of course, the Government need to ensure that operators can pay out on claims made against them, which is why the 2018 Act regime and the licences make provision for compulsory insurance to be put in place by the operators. And, of course, it is usual for businesses to insure against foreseeable risks.

Under the regulatory regime, the risks must be properly assessed and appropriate levels of insurance put in place. The policy for that is set out in a detailed guidance document published by the Department for Transport, the Department for Business, Energy and Industrial Strategy—as it was then—the UK Space Agency and the Civil Aviation Authority. I think everyone will be relieved to hear that I do not propose to give a detailed exposition of the regime or take them through the documents, but the critical point is that the regime requires appropriate levels of insurance to be in place that protects the taxpayer and is supervised by a strong independent regulator.

The risk for spaceflight operators is that claims from the Government under section 36 exceed the carefully assessed insurance. The current legislation does not require the CAA and the Government to cap operators’ liability. The relevant section makes it entirely optional. Section 12(2) of the 2018 Act provides that

“An operator licence may specify a limit on the amount of the licensee’s liability under section 36 in respect of the activities authorised by the licence.”

The key word here is “may”. My proposal is that “may” is changed to “must”, and that an “any” in section 36 is changed to “the” as a consequence. The Bill simply swaps two words with two other words.

The Government have a long-standing policy, as did the preceding Government, that liability should be limited. However, the issue for investors is that that is not set out in statute. This means that a future Government and regulators could change the policy with comparative ease, and that could damage existing investments and could lead to investors finding that they are exposed to unlimited liabilities. This is deterring, and will continue to deter, investment in the United Kingdom. The issue is causing real concern to investors.

This is a point that the space industry has made to the Government. In 2020, a cross-departmental consultation took place on the insurance and liability regime under the 2018 Act. In summary, many respondents raised concerns with the lack of a legally firm guarantee in the policy to limit liability. That caused concerns that operators would be exposed to unlimited liability in future. The then Government accepted the point but explained that introducing a provision to require a cap on liability would require primary legislation—and that is what I am proposing today. The Government also made it clear that, in the meantime, all operator licences would include a limit of liability. I agree with that decision.

The issue was also discussed in the 2021 report prepared by the taskforce on innovation, growth and regulatory reform, which proposed the introduction of a mandatory cap on the liability of licence holders, to encourage investment in the sector. Respondents to a UK Space Agency consultation in 2021-22 reiterated calls to make the limit of liability in section 12(2) of the 2018 Act mandatory. This is a long-standing unresolved issue.

The space industry and potential investors are right to be concerned. As some hon. Members know, I am a recovering lawyer. In my past career, I had to deal with complex liability issues—I reassure Members that none of them was of my own making. I learned that investors are happy to accept risk, but if they are investing millions or billions in a high-risk industry, they want to know that they are not exposed to unlimited losses beyond what they can reasonably insure.

The investors are correct to state that a Government policy can be withdrawn with much greater ease than a statute. Indeed, the plain fact, in my experience, is that the scope for legal challenge when Government policies are withdrawn is often quite limited. In such a situation, many investors simply will not invest. They want to know that risks are clearly and fairly allocated, manageable and covered by insurance, and they want to understand that the liability regime is legally solid. In contrast to a guidance document, a statute will provide much greater protection. Investors accept that it will not provide absolute protection, but a statutory protection will give much more comfort. That is a reasonable position for potential investors to adopt.

It is important to understand that investors have a choice of places in which to invest. Many countries want this space investment, and the United Kingdom has to be attractive to investors. These investments are long term and investors need to be sure that they are covered on a firm legislative basis—they need some security. My understanding is that all other launching nations—that is, nations with launch capability—limit liabilities or provide a state guarantee for the type of activities that currently take place from their territory.

At present, faced with this massive economic opportunity, we are at a disadvantage. There is a clear risk to the competitiveness of our space industry and, as a result, to its growth. The unlimited liability of the indemnity to Government is damaging investor confidence and makes the United Kingdom a less attractive place from which to launch. That will undermine our ambition for growth in the sector, and our ambitions to ensure that we can keep our country safe and to grow our defence in this area. The Bill confronts the problem and will make the UK a much more attractive place to invest.

To sum up, Madam Deputy Speaker—I suspect some people will be glad, given the dry topic, although I am happy to keep going—the space sector is central to almost everyone’s life. How could we check our emails in this Chamber without it? There is a significant economic opportunity for the UK here. The space sector is critical to our defence. The United Kingdom has a firm foundation for a thriving space industry, and we must build on it, including in Scotland, south Wales, Cornwall and the south-east of England. There are even people on the Isle of Wight who work in space.

There is a robust safety regime governing space operated by an incredibly highly experienced independent regulator. Operators have to put in place compulsory insurance, but there is a concern for investors that above that insurance, they will have unlimited exposure. That has been repeatedly explained to Government. The investors’ position is reasonable. The proposed change would limit liability and make the UK a more effective place to invest.

The Bill will help create economic growth, jobs and prosperity for decades to come from Cornwall to Shetland. It is good news for the great cities of Glasgow and Edinburgh and for great south Wales, and for growth and jobs across the United Kingdom. It is time to resolve this issue; jobs and investment depend on it—including in Bradford, Madam Deputy Speaker, which is a real centre of excellence for space.

The Bill changes two words: “may” to “must”, and “any” to “the”. It may be one of the smallest Bills in recent memory. I have not done the research into the smallest Bill in Parliament’s history—I guess we are looking for a one-word Bill—but this Bill has one big objective: to ensure further investment in the UK space industry. I could say that this is one small step for Parliament, but a big step for the space industry, if I was any good at puns and humour. But, as I suspect some of the hon. Members from Scotland could tell us, I am no good at puns and I am humourless. Nevertheless, I commend the Bill to the House.