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.