Space Industry (Indemnities) Bill

Jonathan Lord Excerpts

2nd reading
Friday 23rd February 2024 Commons Chamber

[Mr Jonathan Lord (Woking) (Con)]

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

I am delighted to be here to introduce a Bill that will help to support our thriving and dynamic space sector. It will amend section 12(2) of the Space Industry Act 2018 to make clear in legislation that all spaceflight operator licences must specify a limit on the amount of the licensee’s liability under section 36 of the Act.

The 2018 Act enables commercial spaceflight activities, which include launching a spacecraft and operating a satellite in orbit, for example, and other activities such as the operation of a spaceport and management of a range, to be carried out under a licence in the United Kingdom. The 2018 Act sets out the broad licensing and regulatory framework for carrying out such activities and is underpinned with more detailed provisions in the Space Industry Regulations 2021.

United Nations space treaties place obligations and responsibilities on states for activities in outer space. In particular, UN space treaties make states liable for damage or injury caused by their space activities or those of their nationals. Section 36 of the 2018 Act requires persons carrying out spaceflight activities to indemnify the UK Government and a number of named public bodies against any claims brought against the Government or bodies in respect of damage or loss arising out of, or in connection with, those spaceflight activities. However, that is subject to any limit on the amount of an operator’s liability specified in their licence, except in prescribed circumstances, such as where the operator is liable in respect of gross negligence or wilful misconduct.

The 2018 Act currently provides powers for the regulator to specify a limit on the amount of the operator’s liability in their licence, but the Act does not make it mandatory. Currently, section 12(2) of that Act provides that an operator licence may specify a limit on the amount of a licensee’s liability to indemnify under section 36, but this contrasts with regulation 220 of the Space Industry Regulations 2021 made under powers in section 34(5) of the 2018 Act, whereby an operator licence must specify a limit on the amount of a licensee’s liability for damage or injury to third parties. It also contrasts with section 5(3) of the Outer Space Act 1986, which regulates UK nationals, Scottish firms and bodies incorporated under the law of any part of the UK that carry on space activities from outside the UK. These require a licence to specify the maximum amount of the licensee’s liability to indemnify the Government under section 10 of that Act.

Through responses to the Government’s consultation on spaceflight liability, insurance and charging, the Government are aware that operators holding unlimited liabilities could be a barrier to conducting spaceflight activities from the UK. The same consultation confirmed that other launching nations limit liabilities or provide a state guarantee for spaceflight activities conducted from their territory.

Current Government policy and guidance is that all spaceflight operator licences will contain limits on the amount of the operator’s liability and the amount of insurance that they are required to hold, so that no operator will face unlimited liability. However, industry operators continue to lobby for legislative certainty and have raised that, for spaceflight activities in the UK to be commercially viable, there needs to be a clear mandatory cap on the amount of liability to indemnify under section 36 of the 2018 Act.

The Bill will provide legislative certainty by amending “may” to “must” in section 12(2) of the 2018 Act, so that an operator licence must specify a limit on the amount of the operator’s liability under section 36. The Bill makes a small amendment to section 36(3) of the 2018 Act. The proposed amendments to the 2018 Act will meet a key ask of the space sector on regulatory improvements to provide assurance to investors that limits on the amount of an operator’s liability will be included in licences. The Bill will also address a recommendation made by the Taskforce on Innovation, Growth and Regulatory Reform.

There has been parliamentary scrutiny. The Science and Technology Committee raised the question of operator certainty on liability caps in its second report of the 2022-23 Session, “UK space strategy and UK satellite infrastructure”, published on 4 November 2022. The Taskforce on Innovation, Growth and Regulatory Reform considered current requirements and viewed them

“as discouraging investment and making the UK uncompetitive”.

Recommendation 15.1 was to

“Amend the Space Industry Act 2018 to cap liability and indemnity requirements for licence applicants to launch and operate satellites from the UK.”

There has also been consultation. On 13 October 2020, the Government published a consultation on spaceflight liability insurance and charging. Respondents raised concerns about the wording of section 12(2) of the Space Industry Act 2018, under which a licence only “may” contain a limit of liability with respect to claims made under section 36 of the Act. On 5 March 2021, in response to the consultation, the Government said in their regulations and guidance on spaceport and spaceflight activities:

“If another suitable piece of primary legislation is brought forward, the Government may seek to amend the wording in section 12(2) from ‘may’ to ‘must’.”

We all benefit from the services provided by satellites. We might pay for our morning coffee using contactless payment, Google Pay or even cash withdrawn from an ATM; none of that would be possible without satellites. Satellites provide precise references for navigation, communication to remote places, and pictures of our changing planet, not to mention the support they provide to the defence and security of the United Kingdom. Satellite data, space technology and space applications are used to enhance our everyday life.

The space sector is hugely valuable to the UK’s economy. It is worth over £17.5 billion and directly employs more than 48,000 people. It supports over 126,000 jobs across the supply chain. The UK is already one of the world’s strongest centres of advanced satellite manufacturing. Thanks to this Government, it is now possible to launch satellites from UK spaceports, rather than relying solely on overseas spaceports to launch UK-built satellites into orbit. Last year, an historical first launch from UK soil was made by Virgin Orbit at Spaceport Cornwall. In December, SaxaVord spaceport in the Shetland Islands became the UK’s first licensed vertical launch spaceport, with more to follow. New launch companies such as Orbex and Skyrora have built factories in Scotland, creating hundreds of new jobs, ready to take advantage of the new opportunities that the Government have created.

In preparation for this debate, I have been asked questions by several Members, and I will address those now. I have been asked what effect the Bill will have on public expenditure, and I can assure the House that it will not entail any additional expenditure, as the amendment is in line with Government policy. I have been asked whether there are any transitional arrangements. There are not. Clause 2(3) provides that the Bill will come into force two months to the day on which it is passed. Transitional arrangements are not required because no licences have been granted that do not have a limit on liability specified in them, by virtue of the Government’s policy on limiting liability.

I have been asked whether I have ensured compatibility with the European convention on human rights. As this is a private Member’s Bill, no statement of compatibility is required. However, as recorded in the explanatory notes, the Department for Transport considers that the provisions of the Bill are compatible with the convention. I have been asked whether it is compatible with environmental law. Again, as it is a private Member’s Bill, no statement under section 20 of the Environment Act 2021 is required, but as the explanatory notes say, the Department for Transport is of the view that the Bill does not contain provisions that, if enacted, would be environmental law for the purposes of section 20.

This is a narrowly focused Bill addressing what the space sector has asked for. I hope that no further amendments will be tabled, as it would be a shame to be unable to progress or deliver this key ask from our increasingly important space industry because of amendments or additions.

Let me give a final summary of the purpose of the Bill, why I think it is important and how it will benefit our space industry. Before a company can operate a satellite in orbit or carry out a launch mission from the UK, it must first obtain a spaceflight operator licence under the Space Industry Act 2018. The licence process ensures that spaceflight activities are undertaken safely, securely and in accordance with the UK’s international obligations. Under United Nations space treaties, the state is ultimately liable for any damage or injury that may be caused by its space activities, even when undertaken by commercial space operators.

The Space Industry Act contains provisions to help mitigate potential costs to UK taxpayers arising from UK commercial spaceflight activities. That includes requirements for operators to hold insurance and, under section 36, to indemnify the UK Government and other named public bodies against any claims brought against the Government or body in respect of damage or loss. It is recognised, however, that unlimited liability on commercial space activities would be a barrier to their operating in the United Kingdom. Other space nations, such as France and the United States of America, limit liabilities, or provide a state guarantee for the launch activities that take place from their territory. The Space Industry Act contains powers to specify in a spaceflight operator’s licence a limit on the amount of an operator’s liability, in order to indemnify the Government and other public bodies. Government policy is that the regulator should use those powers to specify a limit on the amount of the operator’s liability in the licence, so that no operator will face unlimited liability. It is essentially a form of risk sharing between the commercial operator and Government. This policy is set out in guidance, and I understand that all spaceflight operator licences issued under the Space Industry Act to date contain a limit on the amount of an operator’s liability.

However, the industry has made it very clear, in response to consultation and in other fora, that it would welcome legal certainty that it will not face unlimited liability when launching or operating a satellite from the UK. Setting that clear requirement in law would provide UK industry and those looking to invest in the UK with greater certainty, and would carry more force than reliance on policy statements and guidance. This Bill will provide that legal certainty by amending section 12(2) of the Space Industry Act, so that spaceflight operator licences must specify a limit on the amount of the operator’s liability under section 36 of that Act. As such, the Bill will provide a vital further boost to our burgeoning UK space industry. I am particularly mindful of the benefits it will bring to growing and innovative companies such as Surrey Satellite Technology Ltd on the Surrey research park, many of whose past and current employees live in my constituency of Woking.

Our UK space industry is thriving, but this measure is vital to secure an equally exciting and dynamic future. It is companies such as Surrey Satellite Technology Ltd —just outside my constituency, and many of whose employees live in my constituency—that will benefit. Other firms, large, medium and small, will grow in the UK and come to the UK if this measure is passed. To ensure that exciting and dynamic future, I commend the Bill to the House.

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[Mr Lord]

I thank honourable Members on both sides of the House for attending the debate and for their support. In particular, I thank my hon. Friend the Member for Wyre Forest (Mark Garnier) , who so ably and knowledgeably chairs the all-party parliamentary group for space. In his wise and interesting speech, he touched on many things, but in particular how important the growing space industry is and can be to our financial and insurance sectors. I thought that was a very interesting point to bring out.

My hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) made a passionate and eloquent speech, particularly pertaining to how the space industry is already changing Cornwall for the better, adding to the Cornish economy and with huge amounts of scope for future growth and engagement. I was particularly taken by her points about how schoolchildren and students are being enthused by the space industry. I thank her for her support.

My hon. Friend the Member for Heywood and Middleton (Chris Clarkson), in a very witty and engaging speech, alighted on a number of interesting and important points, but particularly how our legal services industry—the legal sector—can and will benefit from a growing space industry. I am also extremely grateful to the shadow Minister and the Minister for their support for the Bill. As we would expect, they were masters of their brief and spoke with great insight, but also enthusiasm, about this growing industry and the help that the Bill will give it. For that dynamic, innovative and growing future for our space industry, I urge the House to support the Bill.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

[Mr Deputy Speaker (Mr Nigel Evans)]

I do not know if that makes you a space lord now, Mr Lord, but congratulations.

Space Industry (Indemnities) Bill

Jonathan Lord Excerpts

Committee stage
Wednesday 8th May 2024 Public Bill Committees

[The Chair]

With this it will be convenient to consider clause 2 stand part.

[Mr Jonathan Lord (Woking) (Con)]

It is a pleasure to serve under your chairmanship, Sir Philip. I thank colleagues for being here to scrutinise the Bill.

I am delighted to present a Bill that will help support our thriving and dynamic space sector. We all benefit from the services provided by satellites; paying for our morning coffee using a contactless payment, Google Pay or even with cash withdrawn from an ATM would not be possible without satellites. Satellites provide precise references for navigation, communications to remote places, and pictures of our changing planet—not to mention the support they provide for the defence and security of the UK. Satellite data, space technology and space applications are used to enhance our everyday lives.

The space sector is hugely valuable to the UK’s economy. It is worth over £17.5 billion and directly employs more than 48,000 people; it also supports 126,000 jobs across the supply chain. The UK is already one of world’s strongest centres of advanced satellite manufacturing. Thanks to this Government it is now possible to launch satellites from UK spaceports, rather than our relying solely on overseas spaceports to launch UK-built satellites into orbit. Last year the UK made an historic first launch from UK soil, by Virgin Orbit at Spaceport Cornwall. In December, SaxaVord spaceport in the Shetland Islands became the UK’s first licensed vertical-launch spaceport, with more spaceports to follow. New launch companies such as Orbex and Skyrora have built factories in Scotland, creating hundreds of new jobs—ready to take advantage of the new opportunities that the Government have created.

Let me explain the purpose of the Bill, why I think it is important and how it will benefit our space industry. Before a company can operate a satellite in orbit or carry out a launch mission from the UK, it must first obtain a spaceflight operator licence under the Space Industry Act 2018. The licensing process ensures that spaceflight activities are undertaken safely, securely and in accordance with the UK’s international obligations. Under United Nations space treaties, it is the state that is ultimately liable for any damage or injury that may be caused by their space activities, even when undertaken by commercial space operators.

The Space Industry Act contains provisions to help mitigate potential costs to UK taxpayers arising from UK commercial spaceflight activities. They include requirements for operators to hold insurance, and—under section 36 of the Act—to indemnify the UK Government and other named public bodies against any claims brought against the Government or body in respect of damage or loss.

It is recognised, however, that placing unlimited liability on commercial space activities would be a barrier to operating in the UK. Other space nations, such as France and the United States, limit liabilities or provide a state guarantee for the launch activities that take place from their territory. The 2018 Act contains powers to specify in a spaceflight operator’s licence a limit on the amount of an operator’s liability to indemnify the Government and other public bodies. Current Government policy is that the regulator should use those powers to specify a limit on the amount of the operator’s liability in the licence, so that no operator will face unlimited liability. This is essentially a form of risk sharing between the commercial operator and the Government.

The policy is set out in guidance, and I understand that all spaceflight operator licences issued under the Space Industry Act to date contain a limit on the amount of an operator’s liability. However, the industry has made clear, in response to consultation and in other forums, that it would welcome the legal certainty that they will not face unlimited liability when launching or operating a satellite from the UK. I believe that setting such a clear requirement in law would provide UK industry, and those looking to invest in the UK, greater certainty and would carry more force than reliance on policy statements and guidance. The Bill will provide that legal certainty, by amending section 12(2) of the Space Industry Act so that spaceflight operator licences must specify a limit on the amount of the operator’s liability under section 36 of the Act.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

My hon. Friend makes the case for his Bill very eloquently, and I fully support it. Has he had any indication of how much the space industry might grow, once we have put these measures in place? He has already mentioned the large figures involved in the space industry’s operations across the whole country, regardless of where the launch capacity is, but it would be interesting to know how much more the sector could grow if his Bill is enacted.

[Mr Lord]

I am grateful to my hon. Friend for his intervention and firm support for the Bill, which has cross-party support. The relevant Departments of Government and the space industry itself are still working on the figure, but it is thought to be to the tune of £10 billion or more over the coming years. This Bill is a small but important measure to ensure that our thriving space sector grows and flourishes further into the future. With that, I commend it to the Committee.

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[The Parliamentary Under-Secretary of State for Transport (Anthony Browne)]

It is an honour to serve under you, Sir Philip. I congratulate my hon. Friend the Member for Woking for promoting this short but incredibly important Bill. I also commend the eloquence of his speech. He made all the points that I would have made. I have a speech here, but I will not go through it all; not only has he made all the points but on Second Reading we had a prolonged debate in which the issues were covered extensively. I covered all the points that the Government want to make and can declare that we fully support the Bill.

Before I conclude, I want to answer a couple of points. It was lovely to hear the excitement of my hon. Friend the Member for Windsor; I loved his description of the Bill being the last piece of the jigsaw being put in place. It very much is that. We now have a comprehensive set of legislation and regulation for the space industry, which I am sure will grow fast. I was looking for the information about how much it is going to grow; we do have a forecast somewhere. I will get back to my hon. Friend. At the moment, we know that 48,000 people are employed in the UK space industry, but that number will grow rapidly. There is a huge opportunity.

On my hon. Friend’s question about liability, I should say that that is set by the regulator, the Civil Aviation Authority, under something called the modelled insurance requirement process; if he wants more detail on that, he can write to me and I will give him it. Basically, this is done on a case-by-case basis, depending on the type of spaceflight being undertaken. In the case of insurance for satellite orbital operators, for standard orbital missions there is a flat-rate liability limit of £51 million. I think that answers all the questions, but as I set out on Second Reading, there are no amendments and the Government fully support the Bill.

[Mr Lord]

The Minister’s answer to my hon. Friend the Member for Windsor was absolutely correct, and I have further details in front of me that I am very happy to share with my hon. Friend. I am extremely grateful to all colleagues for attending and for the cross-party support that I have received. As the Minister said, we had a full Second Reading debate; it was wonderful to have you participating in that as well, Sir Philip. Without further ado, I commend the Bill to the Committee.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill to be reported, without amendment.

Space Industry (Indemnities) Bill

Jonathan Lord Excerpts

3rd reading
Friday 17th May 2024 Commons Chamber

[Mr Jonathan Lord (Woking) (Con)]

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

Clause 1(a) is the central and crucial provision of the Bill, so I shall briefly explain its purpose and why it is necessary. Before a company can operate a satellite in orbit or carry out a launch mission from the UK, it must first obtain a spaceflight operator licence under the Space Industry Act 2018. The licence process ensures that spaceflight activities are undertaken safely, securely and in accordance with the UK’s international obligations.

Under United Nations space treaties, the state is ultimately liable for any damage or injury that may be caused by its space activities—even those undertaken by commercial space operators. The 2018 Act therefore contains provisions to help mitigate potential costs to UK taxpayers arising from UK commercial spaceflight activities. The provisions include the power to incorporate licence conditions requiring operators to hold insurance and, under section 36 of that Act, to indemnify the UK Government and other named public bodies against any claims brought against the Government or body in respect of damage or loss.

It is recognised, however, that placing unlimited liability on commercial space activities would be a barrier to operating in the UK. Other space nations, such as France and the United States, limit liabilities or provide a state guarantee for the launch activities that take place from their territory. Section 12(2) of the 2018 Act currently provides a power to specify a limit on the amount of the licensee’s liability to indemnify under section 36. Current Government policy is that the regulator should use those powers to specify a limit on operator liability in the licence so that no operator will face unlimited liability. That policy is set out in guidance, and I understand that all spaceflight operator licences issued to date under the 2018 Act contain a limit on the amount of liability. However, those in the industry have made clear, in response to consultation and in other fora, that they would welcome the legal certainty that they will not face unlimited liability when launching or operating a satellite from the UK.

Clause 1(a) amends section 12(2) of the 2018 Act by replacing “may” with “must”. That will change section 12(2) from being a discretionary power to a mandatory requirement by specifying a limit on the amount of an operator’s liability under section 36 in respect of the licence.

Clause 1(a) is a key regulatory improvement to the 2018 Act. It will provide assurance to investors that limits on the amount of an operator’s liability to indemnify Government and other named bodies will be included in licences. However, the existing provisions in legislation about the circumstances in which the limit on the amount of liability does not apply will continue to have effect. They include circumstances in which an operator is liable in gross negligence or wilful misconduct, or in which damage or loss is caused by non-compliance by the operator with its licence conditions, the requirements of the 2018 Act, or regulations.

Clause 1(b) contains a minor but necessary consequential amendment to section 36 of the 2018 Act. Overall, clause 1 meets a key request from the sector. It will also address a recommendation made by the Taskforce on Innovation, Growth and Regulatory Reform.

The amendments made by clause 1 are consistent with Government policy, which is designed to support and grow the UK’s commercial space sector. By setting a clear requirement in law for a limit on operator liability in the licence, the clause will provide UK industry and those looking to invest in the UK with greater certainty, and carry more force than reliance on policy statements and guidance.

As we convene for Third Reading of this vital Bill, I urge colleagues across the House to consider the profound impact it will have on safeguarding British industrial and business interests in the burgeoning field of space and spaceflight. The Bill seeks to address critical uncertainties surrounding liability and indemnity for our space industry, providing much-needed clarity for current and prospective spaceflight operators and investors alike.

[Dame Karen Bradley (Staffordshire Moorlands) (Con)]

I congratulate my hon. Friend on his Bill. Will he confirm that it will give the UK a real competitive advantage in the space industry? It seems to me that it will.

[Mr Lord]

I thank my right hon. Friend for that intervention. I can confirm that the Bill will set us on par with the United States and France, our friends and probably our main competitors in this important arena. The space industry is already worth £17.5 billion a year, and it is estimated that these measures will add tens of billions over the coming decade or more. My right hon. Friend makes a really important point; the Bill will make us competitive in an area where, currently, we are not quite there.

[Nickie Aiken (Cities of London and Westminster) (Con)]

I congratulate my hon. Friend on Third Reading of his Bill, which will make a huge difference to the space industry. Does he agree that it is imperative, as we move through the 21st century, that we encourage more women and girls to consider taking up the skills and employment opportunities that the space industry offers? Sadly, to date the industry has been too male focused. If we are going to pass Bills like this that give the industry the confidence to expand, hopefully we will be able to encourage more women and girls to consider a career in the space industry.

[Mr Lord]

My hon. Friend makes an excellent point. The Bill will help provide certainty for our space industry for many years to come. Of course, we need all the talent that we can provide in this country. I completely agree that we want more girls going into science, technology, engineering and maths, and considering a career in this fantastic, relatively new industry.

By amending section 12(2) of the Space Industry Act 2018, the Bill will firmly establish in law the imperative that all spaceflight operator licences will have a defined limit on liability. Such clarity will not only fulfil a long-standing demand from the sector, but ensure that our regulatory framework aligns with international standards and best practice. In an era when commercial space activities are poised for the huge growth that I have just mentioned, the Bill is a decisive step towards fostering a competitive and thriving space industry on our shores. Members from Cornwall and Scotland in particular will know the benefits of that, with our new spaceports.

Mandating specific liability limits, essentially forming a type of risk sharing between the commercial operator and the Government, will empower businesses to navigate risks prudently while encouraging continued investment in space-related ventures. As a nation, we must seize every opportunity to cultivate an environment in which British enterprises can flourish and contribute to the advancement of our economy and our technological prowess.

Furthermore, we should acknowledge the collaborative efforts that have shaped this legislation, drawing on insights gleaned through consultation with industry stakeholders and from expert recommendations. The Bill reflects a balanced approach that prioritises the interests of both business and the public purse, ensuring that our regulatory framework remains robust yet adaptable to evolving circumstances. By enshrining these principles in law, we affirm our commitment to fostering a vibrant yet responsible space industry that serves the interests of our nation, our businesses and our citizens.

By passing this Bill, we not only bolster confidence in our regulation but lay the groundwork for a future in which British ingenuity propels us to new frontiers of discovery and prosperity. I urge all Members to support this Bill, recognising its significance in shaping the trajectory of our nation’s space industry for decades to come.

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[Mr Lord]

With the leave of the House, I would like to thank all Members of this House for attending. For those who attended Second Reading, I am pleased that we had fewer space-related puns today, although it was a very humorous—and, beneath the humour, very serious—debate that went on for some time and covered all issues. I also thank those Members who served on the Bill Committee, and the Clerk of private Members’ Bills, Anne-Marie Griffiths, who has given such good help and advice to me and to other colleagues who have brought forward private Members’ Bills in this session.

Our space industry is thriving, but this measure is vital to securing an equally exciting and dynamic future. I am so pleased that the Bill has cross-party support. The shadow Minister, the hon. Member for Reading East (Matt Rodda), spoke very eloquently about the space cluster that we have in Surrey and the wider south-east. One of those companies is Surrey Satellite Technology Ltd, which is just outside of my constituency, but has many employees living in my constituency who will benefit. Other firms—large, medium and small—will grow in the UK and come to the UK if this measure is passed.

It was a great honour to see my hon. Friend speaking from the Dispatch Box—the first of many times, I am sure. This measure has cross-party support and, to ensure that exciting and dynamic future that I mentioned, I commend the Bill to the House.

Question put and agreed to. 

Bill accordingly read the Third time and passed.

[Mr Deputy Speaker]

I congratulate the hon. Gentleman on his successful excursion into space.