Space Industry (Indemnities) Bill

Debate between Jonathan Lord and Karen Bradley

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.