Space Industry Bill [HL]

Lord Callanan Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 16th October 2017 Lords Chamber

[Baroness Randerson (LD)]

My Lords, there are 38,000 jobs in the UK in the space sector, and they are top-quality, well-paid, highly skilled jobs. Brexit threatens the majority of those jobs, both directly and indirectly. Although the Bill is welcome and in itself uncontentious, it does nothing of any significance to plug the gaps that are threatening those jobs.

How and why does Brexit threaten those jobs? Two sets of work are ongoing on which we rely for a very large part of our jobs in this country relating to the space industry; they are funded by the Galileo and Copernicus projects. The UK Government have said that they want to remain part of those projects but they have failed to make a binding commitment to them. The problem is that talk of a no-deal Brexit seriously undermines the Government’s verbal assurances on this issue. They need to make it clear that they want to buy into those programmes in the future—beyond 2019. Clearly that could not happen in a no-deal scenario.

Let us be clear that we do very well out of EU space activity. In terms of what is technically called “geo return”, we put in 12.5% of funding and get back 14% of spend. We are talking about very large amounts of money. When applying for funds, companies now have to make it clear to the EU how they will ensure that after March 2019 they will still have a base in an EU country. This is a new requirement. The impact is that those companies with other EU sites are leading their bids from there, not from the UK. Those companies without another base are obviously thinking of moving to another EU country. Because there is such a long lead-in time in this industry, these decisions are being made now or in the very near future.

The second factor is the supply chain, a lot of which is foreign inward investment into the UK, and there is some current rethinking on that—so more good jobs in the UK are at risk. A major aspect of this problem is the free movement of people. The industry relies a lot on EU nationals, many of whom are already leaving. But British staff, working in the industry, are also looking abroad for opportunities and we cannot afford that brain drain. It is essential to the aerospace sector as a whole that there is free movement. The kind of visa for highly skilled workers that the Prime Minister has already talked about simply would not suit their needs. They need flexible, long-duration visas because they require staff to be so mobile and flexible. Their needs are very much like those for the rest of the aerospace sector.

For example, as many noble Lords will know, Airbus has plants in Toulouse, Broughton and a number of other places. A technician might arrive at work in Broughton one morning and be told that he is off to Toulouse by lunchtime and will be back tomorrow or the day after. Airbus, as a company, moved employees 80,000 times last year between the EU and the UK. It has its own jet shuttle between sites. The kind of visa that the Prime Minister talked about does not start to tackle that problem. The perception in Europe is that we have already left. So whatever the Government’s good intentions with this Bill, if you hollow out what we already have in our space industry in the way in which I have outlined, there is not much point in this Bill. We simply cannot afford to keep losing such high-value industries and high-quality jobs. It is important that the Government persuade us here today that they have already taken on board the key issues that we have raised in relation to Brexit and our relationship in the future with the EU.

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Callanan) (Con)]

My Lords, first, I thank the noble Lord, Lord McNally, very much for his initial comments and his general support. I understand that he will want to probe further and question us on the purposes and intent of the Bill, which of course I welcome—but I also thank him for his initial supportive comments.

The UK space industry is a global success story, leveraging our best talent to deliver highly innovative products and services every year. This Government want a UK space industry that captures 10% of the global market by 2030, creating 100,000 new jobs in the process. The Government are pursuing a range of measures to support this fast-growing sector. This Bill is one of those measures, and aims to put British businesses at the forefront of new space services. Another measure of our support to the UK space sector will be through our negotiations with the EU on future collaboration on the EU space programmes.

The UK has played a major part in developing the main EU space programmes, Galileo and Copernicus, which have supported the rapid growth of the UK space sector and contributed directly to our prosperity and security. We will work to ensure that we get the best deal with the EU to help support strong growth in the sector. I understand the link that noble Lords and the noble Baronesses have drawn between these two measures of support through this proposed amendment, but I do not consider that including provisions related to the EU negotiations will improve the purpose of the Bill or the support that the legislation will provide to our sector. This Bill is about regulation of UK space activities and sub-orbital activities and connected purposes.

As the noble Lord, Lord McNally, acknowledged, the European Space Agency is an international organisation, rather than an institution of the European Union. As I said at Second Reading, the UK’s membership of the European Space Agency will not be affected by the UK leaving the EU.

I was asked about the release of the studies on the impact that Brexit will have on the sector. Since the referendum, the Government have been undertaking rigorous and extensive analysis work to support our exit negotiations, define our future partnership with the EU and inform our understanding of how the EU exit will affect the UK’s domestic policies and frameworks. However, Parliament has voted repeatedly not to disclose material that could damage the UK’s position in the negotiations with the EU. I am sure that the Committee will agree with me that, in any negotiation, information on potential economic considerations was very important to the negotiating capital and to the negotiation position of all parties.

The noble Lord, Lord McNally, and the noble Baroness, Lady Randerson, asked about the effect of freedom of movement on the space sector. Of course, they are correct that when we leave the EU freedom of movement, as we know it, will end. However, we have been clear that there will be an implementation period after we leave the EU to avoid a cliff edge for businesses, and after we leave the EU we will have an immigration system that works in the best interests of the UK. Crucial to the development of this will be the views from a range of businesses, including from high-tech sectors, such as the space industry.

In the light of that information, I ask the noble Lord to withdraw his amendment.

[Lord McNally]

My Lords, I beg leave to withdraw the amendment.

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[Lord Moynihan (Con)]

My Lords, I declare my interest, which I declared at Second Reading, of living in sight of Prestwick Airport. I am a great protagonist for the interests of that airport. The comments that have been made are extremely important: we need to get a first-move advantage in western Europe. This is a highly competitive market and we have a real opportunity to put our significant skills base into effect in ensuring that we have early recognition and licensing of spaceports in the UK. There should be two. However you look at the spaceport option, there will always be the weather challenge. While Prestwick happens to have an outstanding microclimate and is highly suited to being the first spaceport with its nearly three-kilometre runway and a launch direction out over the north Atlantic, as my noble friend has just said—particularly for the launch of satellites, which is a very important part of this—the Government would be wise to look at licensing two spaceports in the first instance, not least because of the weather implications.

In response to the noble Lord, Lord McNally, it is gratifying to see an all-party approach being taken to this issue, both locally and nationally. In the context of Ayrshire and Scotland, not only have the Scottish and British Governments done a lot of very good work, but so have MPs from across the spectrum, such as Bill Grant and Philippa Whitford, and my noble friend Lady Ford, who was very active on this issue during the summer, as well as council leaders of all parties. It is important that they all recognise the benefits of spaceports and of the industrial opportunities around licensing them, as well as of outreaches in terms of employment opportunities and the links to schools and encouraging young people in the vicinity to study science. In Ayrshire, there is heavy unemployment in some of those areas. This would be an inspirational opportunity for young people to study the sciences and related industries. As I say, the advantage of making the first move is critical in the international global market and there are real benefits to local communities where the first spaceports are likely to be licensed.

[Lord Callanan]

I shall take that last point first and thank my noble friend Lord Moynihan for his support. It is unusual for someone who lives near an airport to want to see an expansion of opportunities for it. He will understand that, as aviation Minister, my postbag is normally filled with correspondence from people living near airports who seek to halt whatever goes on at those airports, so I welcome his support.

This amendment raises the impact of the Bill on the UK economy and seeks to provide some degree of assurance through the annual laying in Parliament of an assessment of the monetary benefits. Noble Lords are right to draw attention to the economic opportunity the Bill represents, the need to evaluate the market effectively and how we measure the benefits it will enable. As noble Lords know, the UK space sector is a British success story, a growing sector which continues to pioneer new technologies from satellites and instruments to new applications and services. The one area where our space sector cannot prosper is launch. The Bill will allow us to do just that. This legislation will create a safe and supportive regulatory environment for small satellite launch and suborbital flight in the UK. I am confident that the UK will attract companies and investment. Only last Friday, I met stakeholders to discuss the Bill and the wider space sector. I heard an awful lot of positivity about the Bill and the future demand for launch activities.

Earlier this year, the Government announced a call for industry proposals to establish a launch capability in the UK. This resulted in 26 proposals for grant funding from bidders wanting to establish spaceports around the UK, along with operators from the UK, Europe and the US. Through this approach we have demonstrated a strong interest in spaceflight activities in the UK from right across the country.

On evaluating the importance of the sector to the UK, the UK Space Agency and its partners conduct regular economic evaluation. The majority of these assessments are publicly available and published online. This includes a biannual size and health survey of the UK space industry. The emerging market for spaceflight in the UK will be included in future versions of this industry-wide evaluation and will be made publicly available, as it is now.

The amendment would require a report to include details of companies that have expressed an interest in carrying out spaceflight activities. Details of the companies that have approached government are largely commercial and in confidence. I am sure noble Lords will agree that it would not be appropriate for government to report on these engagements or on these companies’ plans.

With regard to the economic opportunity for the UK, global small satellite launch and servicing could exceed £25 billion in revenue over 20 years, with an untapped European regional market potentially worth around one-third of this £25 billion. Nowhere in the world is this market fully exploited by a sustainable commercial offering. In addition, suborbital launch creates new opportunities for UK science by giving British scientists access to the unique environment of microgravity, as well as training, tourism and supply chain opportunities.

I understand the intention behind the amendment. However, I hope noble Lords will agree that we already engage extensively with industry to develop our plans and continue to conduct assessments to ensure we are making effective decisions. It would not be appropriate to duplicate information already collated and published in the public domain or to disclose information provided in commercial confidence to public bodies. I therefore hope the noble Lord will withdraw Amendment 2.

[Lord McNally]

My Lords, we shall now move to the nitty-gritty of what is essentially a planning Bill with lots of environmental, health and other matters. Beyond that, however, I was delighted by the two interventions. There is a need to bang the drum on this. It is such an exciting prospect, and although some may be keeping quiet about their intentions, entrepreneurs such as Virgin, Elon Musk, Professor Cox and others, tell us that this is just round the corner. I was therefore glad that the noble Lords, Lord Willetts and Lord Moynihan, took the opportunity to bang the drum, as did the Minister, but we have to keep up the momentum on this. For the moment, I beg leave to withdraw the amendment.

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[Baroness Randerson]

My Lords, as the noble Lord has said, there is very little mention in the Bill of the environment. I am going to address Amendments 13 and 14, in the name of the Liberal Democrats, which cover some of the same ground to that outlined just now.

Clearly, there will be environmental implications of launching space vehicles and, indeed, of bringing the rockets on to site. At the moment, the nearest thing to this we are familiar with is when an aircraft wing is moved along the motorway. We are talking here about developing in rural areas, where there will be an obvious change of pace of life for local people. According to industry stakeholders I have discussed this with, the Bill does not sufficiently address health and safety and environmental aspects related to, for example, on-site assembly, maintenance and refurbishment of the launch vehicle and its payload—that is, the satellite. Nor does it address the storage and transport of launch vehicles or the issues of solid boosters and engine and thruster propellants. All these activities involve the handling of dangerous and explosive materials.

Amendment 13 would ensure that the operator cannot be granted a licence unless they have considered and minimised the impact on the environment. The Minister has made it absolutely clear that both the Scottish and Welsh Governments are very supportive, as is Cornwall Council. These are the areas where the impact is likely to be, at least in the first instance. However, we are legislating for all possible future spaceports, and whatever the supportive nature of the devolved authorities and county councils, one has to think of the impact on local people. Just because it is exciting and being done in rural areas does not mean that we can ignore the impact on the environment. It is already clear that there will be controversy—make no mistake about it, as this is going to be intrusive.

Amendment 14 concerns specifically the impact that the required high levels of security will have in local areas. Obviously, spaceport activity will be subject to very high levels of security, and rightly so; we would demand that. Let me give noble Lords an example that was brought to my attention. In north Wales, the Llanbedr airfield, which is owned by the Welsh Government, is leased to an organisation that wishes to set up a spaceport. The neighbour to this airfield is Shell Island, an enormous holiday camp that was established in the middle of the last century. It has 80,000 happy campers a year and employs somewhere in the order of 100 people. That is a big business in north Wales. At high tide, the only access to the holiday camp for emergency vehicles is along a path across the airfield. This is a very well-established right of access, but now, for security reasons, there is the potential that Shell Island will be denied the right to that access. In other words, emergency vehicles will not be able to access the holiday camp. This is not only an issue of local discussion and so on but a well-documented problem. This dispute may well be settled satisfactorily, but it illustrates the potential for local clashes of interest and that security issues will be of paramount importance and intrusive.

Amendment 14 seeks to probe the extent to which the Government have discussed such issues with the emergency services, potential spaceport operators and the devolved Administrations. It would ensure that the operator of any spaceport must take all reasonably practicable steps to allow emergency access for neighbouring properties. The security aspects of establishing a spaceport are glossed over in the Bill and need to be taken seriously at this point in our discussions.

[Lord Callanan]

My Lords, under this Bill the number one priority for the regulator will be, quite rightly, to ensure the health and safety of the public and the safety of their property. There is clearly a moral case for ensuring public safety but also a compelling business case. Safe operations will be critical to the long-term sustainability of the UK spaceflight industry. There are, of course, other interests and requirements which the regulator must take into account in the exercise of its functions.

On Amendment 3, I thank the noble Lords for raising the issues of the impact on the environment and the interests of local communities in particular. These are important matters which the Government have considered in drafting the Bill. Under Clause 2(2)(e), the regulator is already required to take account of environmental objectives set by the Government when exercising its functions. Environmental objectives here mean both the policy objectives of the Government and the legislation and other forms of regulation which are used to realise those objectives. This places a wide-ranging duty on the regulator and ensures that proper consideration of environmental matters informs the carrying out of its functions.

Under Clause 2(2)(c), the regulator likewise must take account of the interests of persons not involved in spaceflight activities in relation to the use of land, sea and airspace. This will include the interests of local communities affected by spaceport and spaceflight activities. A further protection both to local communities and the environment will be afforded by local planning processes. I stress that the Bill does not impinge upon or override local planning decisions. This will take account of the concerns raised by the noble Baroness, Lady Randerson, about emergency access to a campsite, which we discussed in one of our previous meetings. I hope she is reassured by that.

As part of the planning application process for any spaceport, whether a new site or an existing aerodrome which undergoes development, an environmental impact assessment will be needed if it is required by the EIA directive. The local planning authority will therefore already be obliged to scrutinise the environmental impact under existing planning legislation where the EIA directive applies. An EIA would also be required as part of any airspace change.

On Amendment 13, for the reasons already set out, we can be assured that this matter is sufficiently addressed. However, should we require further environmental legislation as new technologies emerge, the regulation-making powers in Clauses 10(b) and 67 give us the flexibility necessary to develop appropriately detailed measures which would supplement existing legislation.

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[Lord Rosser]

I thank the Minister for his response. Obviously, the issue of the significance or otherwise of someone who is exempt from the licence will come up later in a separate debate, but presumably, if someone is exempt from the licence, the regulator cannot apply conditions that have to be abided by on a licence because the operator will not need one.

[Lord Callanan]

That is true, but it does not exempt operators from the relevant planning provisions.

[Lord Rosser]

But it would exempt the person from some of the duties in Clause 2, which would be covered by the licence. That includes the things the Minister has prayed in aid in rejecting the amendment. Presumably, it does not include the requirement regarding,

“the interests of any other persons in relation to the use of land, sea and airspace”,

or,

“any environmental objectives set by the Secretary of State”.

The regulator could not take those into account when issuing the licence because no licence would be required by the person who was exempt.

I thank the Minister for his response, but if the Government really are determined to make sure that environmental considerations are covered and mentioned fair and square on the face of the Bill, I put it to him that they would not have used the phrase,

“the interests of any other persons in relation to the use of land, sea and airspace”.

I think they would have been a little more specific, because it begs the question as to how one interprets,

“the interests of any other persons”,

which does not say anything specific about the environment or anything else. It would presumably be left open to the regulator, who could be the Secretary of State, to define what they thought that phrase covered. I ask the Minister to think hard about that on the Government’s behalf, because if, as he said, we are all as one in wanting to make sure that environmental considerations are taken fully and properly into account, why not make that a lot clearer in the Bill?

The Minister referred to Clause 2(2)(e):

“any environmental objectives set by the Secretary of State”.

“Objectives” implies something fairly wide-ranging, not something that has to be abided by or adhered to. I have already made the point—which I do not make in relation to the current Secretary of State—that an awful lot will depend on the attitude to environmental objectives of the Secretary of State of the day and the extent to which they are taken into account. Different Secretaries of State may have very different views on that point, so, frankly, I do not regard the Bill as it stands as satisfactory—particularly since the Government seem to accept that we are all as one in wanting to ensure that environmental considerations are properly taken into account.

There are a large number of regulations still to come in the Bill. I know the Minister will say that those affect only minor issues and none of substance, but regulations have a habit of being extended somewhat. I posed the question as to whether regulations could be drawn up that weaken or take away any of the current planning and environmental protections. I also referred to the Henry VIII powers in Clause 66, which by definition enable the Government to alter legislation. I again put it to the Minister that, given the Bill’s current wording, environmental considerations could very much take second place.

I will withdraw the amendment, but I refer to what the Minister said—perhaps I misunderstood him—on Second Reading:

“We do not believe that the Bill engages obligations to produce an environmental impact assessment”.


He also said:

“Environmental impacts are heavily correlated with the type, frequency and location of spaceflight activities. At this stage, it is very difficult to ascertain specific environmental issues. For example, the sensitivities of a site cannot be known until we know the location of the spaceport”.—[Official Report, 12/7/17; col. 1268.]


I would have thought it extremely difficult to argue, as one could interpret the Minister was arguing on Second Reading, that there could be a spaceport site for which no environmental consideration at all needed to be taken into account, and that there was therefore no immediate need for an environmental impact assessment. That part of the Bill could be strengthened.

I hope the Minister will think long and hard about what has been said today, and hopefully he can be more positive during the Bill’s later stages. However, I beg leave to withdraw the amendment.

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[Lord Moynihan]

My Lords, I rise to make a short probing amendment. Before I do, may I say how much I appreciated the excellent speech by the noble Baroness, Lady Randerson? I want to comment that in Ayrshire, we have none of the problems that she perceives exist in Cornwall, nor indeed in Wales. We have a tough and comprehensive security arrangement that surrounds and includes our airport. On the contrary to the noble Baroness’s concerns about tourism, I think spaceports will increase tourism. In fact, we envisage a visitor centre near the airport because there would be real interest in the adopted and adapted 747s that will be necessary for a lot of the satellite launches, not just from people involved in aviation but from the local community. After all, when it comes to security and noise, many residents of south Ayrshire have experienced Concorde in training many years ago and many military activities at present. The rare launch of these aircraft—we are not talking about a daily basis in this Bill and rarely on a weekly basis—will be of a frequency much less than the general public perceive and the noise associated with horizontal take-offs will be de minimis. Indeed, Prestwick is applying for only a horizontal licence. I make that comment in passing as I am sure my noble friend the Minister is aware of how ready Prestwick Airport is to move on this and how it would like to accelerate the licensing powers in this Bill so as not to lose competitive advantage.

My amendment is rather more specific, but nevertheless very relevant to the comments of the noble Baroness, Lady Randerson, on bringing relevant aircraft parts to the spaceport. At the moment, as I read it, an operator licence means a licence under the clause,

“authorising a person to carry out spaceflight activities”.

It is the word “activities” that I have an element of concern with. This could involve companies involved in R&D relating to spaceflight activities, or bringing relevant aircraft parts and those companies involved in doing that. I am sure the intention is not to have a licence for all those activities. It is my suggestion to the Minister that as currently drafted that may be too wide. My probing amendment is simply to delete “spaceflight activities”, and insert,

“a specific spaceflight mission or class of missions”,

which is what I understand to be the Government’s objective in awarding operator licences. I hope I have been incredibly helpful to my noble friend the Minister, who will be able immediately to accept this constructive and reasonable amendment. I beg to move.

[Lord Callanan]

I pay tribute to my noble friend’s enthusiastic promotion of his local airfield. I am sure his comments have not gone unnoticed. I have certainly taken them on board.

The fundamental purpose of Clause 3 is to prohibit the carrying out of spaceflight activities or the operation of a spaceport in the UK without a licence. Launch from the UK is a new activity and we envisage that launch vehicles will be licensed on a per-launch basis, but the Bill allows for the licensing of a launch vehicle for a number of launches if that is deemed appropriate.

The amendment tabled by my noble friend raises an interesting issue pertinent to the future growth of the space sector—namely, the challenge of licensing classes of satellite together, as opposed to licensing each satellite separately. This is particularly relevant for so-called mega-constellations, comprising a great number of satellites working in concert.

The current licensing regime under the Outer Space Act already allows us to license a constellation of satellites that can be described broadly as multiple satellites of similar or identical design under the control of a single operator and which work together to deliver a single service. The definition of “operator licence” in the Bill is also wide enough to allow for the licensing of a constellation of satellites. Of course, while the Bill is designed to cover all types and classes of mission, a licence will be granted only if the regulator is satisfied that a licensee has met all necessary requirements, most notably those relating to safety.

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[Lord Rosser]

I do not want to prevent an answer to the noble Lord’s question but if the Minister is going to reply to the noble Lord, Lord Lucas, I want to come in afterwards.

[Lord Callanan]

I thought I had responded to it but I will reflect on the point that he has made.

[Lord Rosser]

The noble Lord, Lord Moynihan, moved an amendment to Clause 3 and the Minister went on to talk about Clause 4, perhaps because they are grouped together on the list in front of us. If the Committee is willing to bear with me, I have a stand part resolution down in relation to Clause 4. If I could just make one or two points about that, I would be grateful.

Clause 4(1) refers only to not requiring,

“an operator licence to carry out spaceflight activities”.

It does not refer to operating a spaceport. Can the Minister say whether the provisions of Clause 4 apply only to spaceflight activities—that is, the flight itself—or do they also apply in any way to the operation of a spaceport? Clause 4(1) refers also to international obligations, which the Minister has referred to already. I will read Hansard carefully to see exactly what international obligations he referred to in giving an example of the kind of situation in which an exemption would be given.

What role or powers will the regulator have in relation to a person who does not require an operator licence under the provisions of Clause 4? We partially dealt with that in the discussion on the previous amendment, and I think the Minister referred to later amendments and suggested that he would deal with the matter then since it is not immediately clear what powers the regulator has in relation to a person who is exempted from having a licence or what difference that exemption makes in terms of the regulator.

Clause 4(2) states:

“Regulations may make provision for other activities or persons to be exempted, either by the regulations themselves or by the regulator”.


What other activities or persons could we be talking about—which in relation to activities or who in relation to persons—that would be exempted from an operator licence or does the reference to activities go beyond activities for which an operator licence is required? Although I listened to what the Minister said, I am not quite sure exactly what he said about the need for the provisions in Clause 4(2) as opposed to the provision in respect of Clause 4(1).

Clause 4(4) states:

“Regulations may … make provision about the revocation or renewal of an exemption”.


Why is “may” there? In what circumstances would an exemption from an operator licence be granted which did not contain a provision for that exemption to be revoked?

[Lord Callanan]

I shall first address the noble Lord’s question. It is considered that the activity of operating a spaceport will not qualify for an exemption as the activities that will take place from the spaceport will have safety implications, for example, the storage of hazardous materials, the launching of spacecraft et cetera.

I shall give the noble Lord a few more details on the kind of exemptions that we are considering under these clauses. These exemptions are based on similar exemptions contained in Section 3(2) of the Outer Space Act 1986. The first exemption in Clause 4(1) is for situations under the UN space treaties where the UK and another state are jointly liable for a space activity. This provision allows the UK and the other state to allocate responsibility for regulation, supervision and monitoring activities between themselves. This exemption would be made by way of an Order in Council. The second exemption provides that activities or persons can be exempt from the requirement to hold an operator licence if the activity does not give rise to safety concerns or invoke the international obligations of the UK. There is also an exemption in Clause 7(4) that regulations may exempt persons or services from the requirement to hold a range control licence if the activity does not give rise to safety concerns or invoke the international obligations of the UK.

The terms “operating a space object” and “operating a spacecraft” in the Bill are drafted to be intentionally wide. Although this is useful and necessary to capture all activities for which a UK liability might arise under the UN liability convention, certain activities could be captured where there are no safety or security implications and the state liability is already indemnified by someone else. In such a case, a licence might not be necessary and could be overburdensome on industry. Clause 4 therefore provides for exemptions in these circumstances.

I shall give some examples of activities that could be exempted from licence requirements. The Bill provides that persons engaging spaceflight activities and range control services can qualify to be exempt from the requirement to hold a licence. Some aspects of manned suborbital activities could qualify for an exemption. However, the exemption under Clauses 4(2) and 7(4) will apply only in cases where the activity does not give rise to concerns for public safety or the safety of those involved in the activity. If there were any concerns that the activity would put people’s safety at risk, then it would not qualify for an exemption. To qualify for an exemption under Clause 4(1), another country would be required to take on all the international obligations of the UK. I hope that my response satisfies the noble Lord’s concerns.

[Lord Moynihan]

My Lords, I am very grateful to the Minister for his response and for the intervention from my noble friend, who is exactly right. My concern was not the distinction between a specific spaceflight mission or a cluster of missions—as important as that is, which my noble friend the Minister addressed—but the use of “activities” in the legislation, which seems to go far wider than is intended in the context of issuing licences. It can mean anything from training programmes to a visitor centre, or any activity which is related to the operation of the spaceport. I note that in response to my noble friend, the Minister said that he recognised there might an issue here and that he was prepared to go away and think about it. I would be grateful if he would, because the wording here could be improved to allay any concerns about the breadth of the activities that he has in mind for the issuing of operator licences. In the spirit of his response, I beg leave to withdraw my amendment.

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[Lord Callanan]

My Lords, I thank the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Randerson, for their important interventions on the vital topic of safety, which we take extremely seriously.

Clauses 9 and 10 require that applicants for spaceflight operator and spaceport licences take all reasonable steps to ensure that risks to health and safety of the general public—as the noble Lord, Lord Tunnicliffe, observed—are as low as reasonably practicable. Furthermore, Clause 9(4)(b) means that even after all steps have been taken to reduce risk to as low as is reasonably practicable, the regulator will not issue a licence if the risk to public health and safety remains unacceptably high.

The noble Lord raised through these amendments the question of the role that we expect the Health and Safety Executive to have regarding spaceflight in the UK. The Health and Safety Executive has undoubted expertise and a long track record in a breadth of issues and across a range of sectors. Clause 20 ensures that the regulator is able to draw on this expertise to inform decision-making in connection with safety of spaceflight activities. This is consistent with the role the Health and Safety Executive plays in other sectors. The Health and Safety Executive does not normally regulate by licensing or certifying safety. Instead, it imposes a duty on those that may create risk to manage those risks to be as low as reasonably practicable.

[Lord Tunnicliffe]

The noble Lord will accept that the Health and Safety Executive in the permissioned industries—for instance, nuclear, railways and several others—directly approves the operation of those industries.

[Lord Callanan]

I will come on to that point shortly.

I am confident that the approach we are taking is appropriate. In line with agreed health and safety practice, the Bill places the onus on the regulator to be satisfied that risks are as low as reasonably practicable and that they are acceptable. But equally, the Bill ensures that the regulator will have access to the expertise possessed by the Health and Safety Executive, where this is required. I stress that this is expertise we have already benefited from. I thank the Health and Safety Executive for the integral role it has played in developing this legislation with my department and the UK Space Agency.

I will share some detail on how we believe regulators will determine whether risk to public safety is acceptable. The approach will be aligned with best practices for managing risk across all sectors in the UK. We expect to use an individual risk per annum approach—in other words, in a given location, the risk of death arising from the activity to an individual across a reference period of one year. The regulator will publish a methodology for assessing risk which operators may choose to use. The Government are currently working with HSE’s Science Division—its research arm—to develop a comprehensive methodology for the assessment of risk to third parties.

How can we be assured that the regulator will have the appropriate personnel and skills to assess the safety cases presented by operators? The Civil Aviation Authority, the UK Space Agency and the Health and Safety Executive are respected regulators in their fields, with proven track records in regulating risky activities. That is why we are drawing on their relevant regulatory expertise for this new sector. I assure the Committee that these organisations are building on their existing heritage to develop their technical and analytical capability to assess the specific risks posed by spaceflight.

Although regulating and managing the risk of spaceflight is new to the UK, other countries have many years’ experience of it. We are learning from existing spaceflight regulators in other countries and intend to enter into agreements that will include provision for the training of our personnel and the sharing of information on those activities. I hope that the noble Lord will feel that I have answered his questions and will agree to withdraw Amendment 7.

[Lord Tunnicliffe]

My Lords, in the interests of time, I will withdraw the amendment. However, my immediate reaction is that I am not fully comforted by what I have heard, and I expect us to come back on Report on this issue. In the meantime, it may be fruitful to engage in further discussions with the Minister to see whether we can get closer together on this. I beg leave to withdraw the amendment.

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I realise that the detail of this provision will be decided subsequently, but I hope the Minister will be able to give an assurance in this debate about the approach he will take to encourage this important sector.

[Lord Callanan]

We have seen in the speeches the different approaches that noble Lords wish the Government to take to cap liabilities. In the case of the noble Lord, Lord Tunnicliffe, it is to remove the provision.

[Lord Tunnicliffe]

The purpose of the amendments was to bring out precisely, in simple words, what the Government want to do. I am not hostile to a cap or to some government help, but I want to be clear what the Bill means. If I do not like what I have heard, we will come back on Report.

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[Lord Callanan]

I take the noble Lord’s point and that of the noble Lord, Lord Fox. The noble Lord, Lord Willetts, who spoke from a position of great knowledge on the subject because of his past work as a Minister, referred to the importance of capping and summed up the dilemma well. This is an important issue which has been raised with me constantly both by noble Lords and by those who are interested in carrying out spaceflight activities. I hope noble Lords will bear with me as I explain the provisions in great detail and go through what we propose. I somewhat doubt that I will satisfy everyone at the end but I will do my best.

The liability provisions of the Bill are vital but necessarily complex and I will take a little time to explain the Government’s position and why these amendments would not be appropriate. Clause 11 concerns the terms which may or must be included in a licence issued under the Bill authorising space flight activities, the operation of a spaceport or the provision of range control services. Subsection (2) provides a power to specify in an operator’s licence a limit on a licensee’s liability to indemnify the Government and other listed bodies under Clause 35 against claims brought against them for damage or loss caused by space flight activities. Amendment 15 relates to this subsection and seeks to remove it altogether. Amendment 36 is linked to Amendment 15, as it removes reference to the subsection from Clause 35. These amendments would therefore remove the regulator’s power to cap this liability to indemnify under Clause 35.

I should be clear that the position under the Bill is exactly the same as that in the aviation industry—that operators have an unlimited liability to indemnify government. However, satellite operators have previously raised concerns that such a liability is a barrier to operating in the space industry. Operators have found that the unlimited liability has made it difficult to raise finance or insure against the point made by the noble Lord, Lord Fox. This is not the case in the more mature aviation market. The Government have responded to these concerns.

The Outer Space Act 1986 was amended by the deregulation Act in 2012 and, since then, licences issued under that Act for the procurement of an overseas launch and the in-orbit operation of a satellite benefit from a cap, which is set out in the licence conditions. The UK Space Agency publishes the usual level of cap in its guidance, which currently sets it at €60 million for standard missions. Since the level is not set by statute, the cap can be increased for riskier missions. It should be noted that some activities currently regulated under the Outer Space Act, notably procuring the launch of a space object and the operation of a satellite in orbit taking place from the UK, will in the future be regulated under this Bill. Therefore, following Royal Assent, the amendment would reverse the current policy under the Outer Space Act—that the indemnity to government for these activities is capped. However, the current cap under the Outer Space Act would remain in place for such overseas activities regulated under that Act. As a result, there is a very real risk that UK operators may decide to procure overseas launches and conduct their satellite operations overseas under the Outer Space Act or a different regime altogether to avoid an unlimited liability to indemnify government. This would go against the Bill’s aim, which I hope all noble Lords support, to grow the UK space industry.

The cap on the indemnity to government under the Outer Space Act was based on many years of licensing those activities and it was well received. The costs and benefits of capping liabilities for those activities have already been considered and were subject to a full consultation with industry at the time. There was an amendment to primary legislation that was also subject to parliamentary scrutiny. Evidence provided by industry during the Science and Technology Committee inquiry into the Bill reiterated that an unlimited indemnity to government was a barrier to entry into the industry. The discretionary power in Clause 11 therefore allows the Government to remain committed to their current policy position under the Outer Space Act. However, it also allows the Government a discretion on whether to cap the indemnity to government for other activities licensed under the Bill, such as a UK launch.

I shall move on to Amendment 35 which would remove subsections (5) and (6) from Clause 33. The power in these subsections to make regulations provides for the capping of an operator’s liability to prescribed persons or in prescribed circumstances in an operator licence. The Bill therefore goes further than the Outer Space Act and provides a power to cap all of an operator’s liability to prescribed persons. This is intended to cover third parties or the uninvolved general public who suffer injury or damage caused by regulated space flight activity. Removing these subsections would mean that a regulator would be unable to cap this liability. As a consequence, the operator would bear unlimited liability, and as previously highlighted, operators have already raised concerns about managing unlimited liabilities. Most of the main space launch nations, including France and the United States, do cap an operator’s liability in some form. Having this power enables the UK to compete on a level playing field by allowing the Government the power to share the burden of liabilities with operators. There is a real concern that we risk being uncompetitive internationally if we do not have the powers to cap operator liabilities both to the Government and to third parties. Without the powers to cap, we may be unable to attract operators in the UK. The reason for conferring a power to cap rather than simply providing for a cap in the Bill is to ensure that careful consideration can be given to whether and when it is appropriate to exercise the power, as there may be missions where capping is not appropriate.

While we have assessed the cap on the operator’s indemnity to government for activities currently licensed under the Outer Space Act, a more general liability cap for space flight activities taking place from the UK has not been fully analysed. Launches are a new activity for the UK and we believe that we should cap the operator’s liabilities for this activity only if there is clear evidence that it is necessary to do so. That is why we have taken powers to cap liabilities for space flight activities on a discretionary basis under the Bill. We are already undertaking work on assessing the availability and cost of insurance to cover the liabilities. That work will inform any policy on limiting the level of any cap on the liability both to indemnify government and to prescribed persons.

The flexibility provided by the powers in the Bill means that the right balance can be created for each mission, based on the risks involved. The Bill is designed to ensure that space flight activity is as safe as possible in the first place, which will minimise any liability arising. Under Clause 33, an operator is strictly liable where injury or damage is caused, meaning claimants can bring a claim without having to prove fault. Regulations requiring operators to be insured can be made under Clause 37; that would provide a resource to meet any of those claims. Furthermore, it should be noted that Clause 33(5)(b) provides a power to constrain the circumstances in which a liability cap applies. For instance, we envisage that a cap would be disapplied in cases of operator wilful misconduct.

On Clause 34—the power of the Secretary of State to indemnify—we have previously considered clauses that allow for an operator’s liability to third parties to be capped. Clause 34 provides a power for the Secretary of State to indemnify a claimant or an operator for injury or damage arising because of space flight activities; that includes situations where an operator’s third-party liabilities have been capped under Clause 33. In order for the Government to provide such an indemnity, the injury or damage must be sustained as a result of space flight activities. To qualify for an indemnity, the person suffering the injury or damage must not have taken part in, or be connected to, the activities. Those people will be identified in regulations; however, it is likely that they will be the same people to whom the informed consent provisions apply, under Clause 16, and who are excluded from the right to bring a strict liability claim against an operator under Clause 33. That is because they will have engaged in space flight activities in full knowledge of the risks involved. As part of the informed consent process, such people will be made aware that this indemnity does not apply to them. The Government may only indemnify an operator where a claim for injury or damage exceeds any insurance held by it. The Government may only indemnify a claimant where the amount of liability has been limited by regulations under Clause 33(5) and the claimant would otherwise have been entitled to more money.

In most cases, we envisage that an operator’s liability, if capped, will equal the amount of third-party liability insurance that they are expected to hold. Therefore, an operator’s insurance should cover their liability. However, there may be situations where an operator has taken out more insurance; Clause 34 ensures that the insurance is exhausted before the Government step in. The purpose of the clause is to ensure that the uninvolved general public can be compensated in the event of injury or damage, particularly where an operator’s liability to third parties has been capped. However, the intention is that the provisions in the Bill and subsequent regulations will work together to reduce the likelihood of injury or damage occurring in the first place. That will be achieved by implementing a robust safety regime and ensuring operations take place with appropriate provisions for range control and safety to minimise damage in the event of failure.

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[Lord Callanan]

My noble friend makes an important point. I emphasise that we are in listening mode on this issue.

Furthermore, there is also a power to make regulations to provide an upper limit to the amount of money the Government may pay out under these provisions. For example, in the US there is a limit in legislation of $3.1 billion. There is also a power to prescribe cases or circumstances where the power to indemnify either an operator or a claimant will not arise or is restricted. Examples would include operator wilful misconduct or where several parties are at fault that might have adequate insurance or assets.

In making any regulations under this clause, we will consult on how we strike the right balance in ensuring that the public are compensated while limiting the Government’s indemnity. For example, the regulations may set out what the Government will not indemnify in the case of operator wilful misconduct, but an exception may be made where an operator becomes insolvent and the general public would not be fully compensated as a result.

The Government will use their powers under this clause to indemnify claimants and operators in a balanced way. We propose to ensure that government money is used appropriately by exercising the powers in this clause as necessary to limit the situations where the Government will indemnify and limit the amount they will pay, as well as playing a role in the legal proceedings surrounding payment of such an indemnity.

I apologise for going into so much detail and speaking at such length on this.

[Lord Willetts]

I very much agree with what my noble friend Lord Moynihan said. Will the Minister share with the Committee any further information about a likely timetable for these consultations? Will he also tell the Committee how he proposes to inform us, in the course of our deliberations on the Bill, of the potential figures involved? This is a subject of considerable concern.

[Lord Callanan]

I am aware that this is a matter of great concern, which is why I went into so much detail about it. As I said in response to the previous intervention, we are in listening mode.

[Lord Tunnicliffe]

The Minister went into exactly the sort of detail we were looking for. I stress that I am not hostile to the concept of a cap, but I will reduce this to very simple terms. If I were to suffer—no, I am nowhere near that rich. If Glasgow suffers an event that substantially exceeds the cap, can it reasonably expect that the excess above the cap will be met by the Government?

[Lord Callanan]

There is no simple answer to that question. It would depend on the conditions of the licence issued for the particular activity and whether any cap was imposed on that activity at the time. We are looking at every launch activity, and every application will be considered on an individual basis.

To go back to the comment made by my noble friend Lord Willetts, as I said, we are in listening mode. I am aware that this is a controversial subject. He will understand the discussions taking place between different government departments on this issue. I will say more on it as soon as I can, but I take on board the concerns raised by many people and those of industry, which have been expressed to me personally and by many noble Lords this afternoon. If it is helpful, let me say that the Government intend to exercise their power under Clause 11 to cap an operator’s indemnity to the UK Government in licence conditions for the activities of procuring the launch of a space object and the operation of a satellite in orbit, as this is currently the policy for activities licensed under the Outer Space Act.

As I said, I am listening to people on this. I will say more as soon as I am able to. I am aware of the concerns. We are in listening mode and we will reflect on the comments made. In the light of that, I ask noble Lords not to press their amendments.

[Lord Tunnicliffe]

Is the noble Lord likely to be able to shed light on this issue before Report?

[Lord Callanan]

If I possibly can, I will.

[Lord Tunnicliffe]

I hope noble Lords will agree that this exchange was worth while, because we have the record, which we can all examine. The needs or rights of the uninvolved third party in the circumstances of a very large catastrophe are still unclear as a result of that exchange. Perhaps we will have some conversations about that issue before Report. Otherwise, we may feel the need to table an amendment, because it seems reasonable for a citizen to expect, with appropriate caveats, that where the Government have allowed an operator to enjoy special rights of limitation—I can see exactly the reasons for that; it happened in aviation at the peak of the terrorist events, for example, so it is perfectly sensible—the Government would be the insurer of last resort. We may well come back to that point.

In the meantime, I thank the Government and all those involved in the debate because the record will clarify what is very difficult to understand from the Bill. With those comments, I beg leave to withdraw the amendment.

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[Lord McNally]

My Lords, having listened to that debate, I feel this amendment should perhaps have been grouped with it—I hesitate to criticise the groupers because I know how difficult it is. It was a fascinating debate. The Minister need make no apology about the length of his reply. It will be studied closely. Following it was a bit like following those things that come on your iPad to say that you have agreed, but I am sure when we have time to read Hansard—

[Lord Callanan]

Perhaps there could be a box at the bottom he could tick to say he has fully understood the debate.

[Lord McNally]

Yes, I know that every Minister wishes that was there.

I thought that the opening from the noble Lord, Lord Tunnicliffe, was sobering for us all. On the one hand is the tremendous enthusiasm and real excitement about the prospects of the industry, yet we know from history that there are dangers. I live in St Albans, down the road from where the de Havilland Comet was developed, launched and flown with a design fault. I saw a very moving documentary a few weeks ago about the Space Shuttle. Its final conclusion was that, from beginning to end, the Space Shuttle was never safe. They knew it, but because of the pioneering nature of what they were doing they took the risk. That is not open to us when we are legislating like this, so it is a matter of getting it right between risk and cover.

I tabled my amendment simply because we have been approached by the industry with concerns about the way UK law treats the licensing and insurance of small and nano-satellites. Current law makes it difficult and expensive to launch small satellites because of long licensing processes and large insurance costs. Licensing of individual satellites can dramatically increase operator liability. This amendment would allow would-be operators to feed in their concerns and work towards a proportionate but effective insurance regime. I beg to move.

[Lord Willetts]

I will add one comment to that. I thank the Minister, who has already given a full and lucid account of the Government’s intentions, which itself is very helpful. Another issue we should add, which the noble Lord, Lord McNally, touched on, is that historically we have been thinking about very large satellites and the risks associated with them. That is not really the issue for a UK space launch capability. It is much more likely to be constellations of small satellites, some of them meeting real UK requirements. Imagine there was a trouble spot in which UK troops were involved or a natural disaster affecting us—let us think of what happened in the British Virgin Islands recently—where you wanted to get a satellite over the scene urgently; small satellites are very likely to be used in those situations. They are often launched in constellations, and one other issue on which, again, I hope at some point we will have guidance from the Minister is whether each individual small satellite in a constellation has to be separately insured and licensed or whether, as we appear to be heading for constellations of small satellites, there could be significant flexibility in the regime so that constellations of satellites could have a single launch permission and a single insurance arrangement. If not today, I hope that during the passage of the Bill that is also made clear.

[Lord Callanan]

My Lords, I can answer the noble Lord, Lord Willetts, directly: a constellation can be launched with one licence.

Amendment 16 is a further amendment to Clause 11(2). It requires the Secretary of State to hold a consultation within 12 months of Royal Assent on whether an operator licence should specify a limit on a licensee’s liability to indemnify government, and what an appropriate limit would be. By imposing that a mandatory consultation takes place within a set period, the amendment prioritises the consideration of the power to limit the operator’s liability to indemnify the Government, thereby eroding the discretion to introduce a limit only if this is considered necessary and appropriate.

I accept that consultation is a critical part of policy-making. It allows stakeholders to contribute their views on new policy that affects them. We have in fact already listened to industry views extensively—I did it only on Friday, in the latest round—and an unlimited liability to indemnify government could make it difficult to raise finance and obtain insurance. We have already had an extensive debate on that with the previous amendment, and that is why we have taken the power in this subsection. However, we need to ensure that we take a balanced approach between attracting operators to the UK by making it commercially attractive to carry out space flight activities and limiting the Government’s exposure to claims arising from such space flight activities. Our policy is for space flight activities to be conducted on a commercial basis but we have taken a power to intervene and cap the liability to indemnify government if this becomes necessary.

As I set out in the previous debate, we are already assessing the availability and cost of insurance to cover the liabilities under the Bill. This work will inform any policy on limiting the level of the liability to indemnify government. If a limit is deemed appropriate, the Government need to consider the level of such a limit and the consequences of bearing the contingent liability. We may conclude that a limit on this indemnity for UK launch activities is not appropriate in all circumstances. The Government have an obligation to use public funds appropriately. It is therefore not right that they should be bound to consult on setting such limits before the need to do so is established and accepted.

Furthermore, the current power also allows the Government to deal with each licence application on a case-by-case basis. The regulator will need the flexibility to decide whether a limit is appropriate, as well as what that limit should be, depending on the risks associated with each mission. Because of the variety of spaceflight activities that may be conducted from the UK and the individual circumstances of each operator, it may not be possible to have a specific limit or a methodology that works in every case for all missions. A flexible approach to setting a limit is good for both government and industry and, in our view, a legal requirement to consult on what an appropriate limit might be may restrict this. I assure noble Lords that we will consult on this matter once we have conducted our detailed analysis and have established the need to set a limit, and assessed the consequences of so doing. I therefore ask the noble Lord to withdraw his amendment.

[Lord McNally]

My Lords, those who asked us to table this amendment will read the Minister’s reply. In the meantime, I beg leave to withdraw the amendment.

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[Lord Willetts]

There is indeed a problem with space debris. The aim is not to bring it back to earth—although I love the Liberal Democrat imagery of pavement politics and everything being recycled—but to knock it out of its orbit so that it burns up in the atmosphere and therefore disappears. We should take some pride in the fact that Fylingdales is where a lot of this debris is tracked. We have fantastic expertise there. It has always proved very difficult to get international agreement in this area, but the UK has a strong capability in disabling debris, and I very much hope that we will hear from the Minister that this is something that the Government continue to support. However, the prospects of any kind of international agreement in this area are, sadly, remote, not least because some of the technologies that are used for moving stuff out of orbit and disabling it are dual-use technology which can also be used in a very different way, so it has been very hard to reach any international agreement on the circumstances in which it would be used.

[Lord Callanan]

My Lords, in his introduction the noble Lord, Lord McNally, said that he was taking the Liberal Democrats into outer space. I am tempted to observe that many of us believe that the Liberal Democrats have been in outer space for a considerable time. I look forward to my next Local Focus newspaper dedicated to the recycling of space junk alongside plastic bottles and glass jars.

To be serious, this is an important subject, and I thank the noble Baroness and the noble Lord for raising the issue of space debris and the proper disposal of satellites and other payloads at the end of their operational life. These amendments illustrate the crucial role of licence conditions in ensuring the effective regulation of spaceflight activity, and highlight the importance of drawing on advice from all the relevant expert bodies. The UK Space Agency already considers matters related to spacecraft disposal—passivation, which is the removal of a spacecraft’s internal energy at the end of its useful life; and deorbiting, a brilliant word I discovered yesterday—and regulates this through existing licensing regimes under the Outer Space Act. Clause 12 enables regulators to set conditions on a licence tailored to the particular activity. Schedule 1 provides a non-exhaustive list of the types of conditions that regulators may attach to licences, which includes conditions governing disposal of a payload when it is no longer operational and requiring notification to the regulator when disposal has been effected. In addition, conditions may require compliance with any guidelines on space debris mitigation issued by international organisations.

The UK Space Agency is an active member of the United Nations Inter-Agency Space Debris Coordination Committee—a marvellously august body—and takes minimising space debris extremely seriously. Through this body, the UK Space Agency works with international partners, including bilaterally on specific issues, to develop and implement measures to safeguard the space environment and minimise the risk of space debris. As a number of noble Lords have pointed out, space debris is a global problem that requires jointly agreed global solutions. This is why the Government remain fully committed to working with and drawing on the expertise of these specialist bodies. Through this engagement, the regulator will continue to shape thinking on the vital issue of space debris mitigation.

The noble Baroness, Lady Randerson, referred to the UN Inter-Agency Space Debris Coordination Committee. Outer space is a global resource shared by everyone but owned by nobody. The UN has a unique role in developing best practice measures to protect the space environment for future generations. The Inter-Agency Space Debris Coordination Committee plays a critical role in helping to formulate technical policy free of the political influence in the UN. The committee, as a grouping of space agencies, is able to develop scientific consensus on debris issues and present them to the UN for endorsement and application by member states. I assure the Committee that it is the Government’s intention to continue to require appropriate disposal of obsolete payloads in accordance with international guidelines. I hope that in the light of those assurances the noble Lord will withdraw the amendment.

[Lord McNally]

In the light of those assurances, I beg leave to withdraw the amendment.

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All I seek to do in the present amendment is to hear from the Minister what he means by “satisfied” in this context. In the opening amendments this evening, we faced the consequences of a future relationship between the UK and Europe. Things will change—there is no question about it—so will satisfaction need to be replaced by something more concrete? There are many in the industry who believe that satisfaction is too weak a word. Being enshrined into an MoU, even at this early stage in the Bill, would be of significant comfort to the industry, given the uncertainty. Put simply, is satisfaction sufficient or would it be wise to go further to give greater clarity to the industry in this point?

[Lord Callanan]

I thank my noble friend for making an important point and for tabling this amendment on what is an interesting subject. I start by assuring him that the Government have had a very constructive discussion with the European Aviation Safety Agency on our proposals to regulate suborbital spaceplanes in the UK.

The outcome of this dialogue has resulted in mutual agreement that suborbital spaceplanes are considered to be aircraft and therefore EU aviation legislation should apply to them. EU Regulation 216/2008, known as the EASA basic regulation, exempts from its scope those,

“aircraft specifically designed or modified for research, experimental or scientific purposes, and likely to be produced in very limited numbers”.

In discussions about revising the text of the EASA basic regulation, the European Commission agreed that, while spaceplanes are in the developmental stage, spaceplane operations would continue to fall under this exemption. The context of the assurance was that member states should be able to legislate for commercial suborbital spaceplane operations that launch and return to the same spaceport now, before the EASA has had time to make EU-wide rules. The Commission has also confirmed that neither commercial use nor having paying passengers in itself precludes a spaceplane from falling within the exemption.

The UK recognises—we are in agreement with the EASA on this point—that as soon as the suborbital operation starts and finishes in two separate locations, it may be considered to be public transport and subject to the full weight of European aviation rules. Although the Government’s intention is to continue to work closely with the EASA whatever the outcome of EU negotiations, we need to ensure that in doing so the UK retains a degree of flexibility to develop its own regulatory framework, drawing on the best practice from those states that already conduct commercial launches, such as the US and India, as well as from other European states.

Currently there are no European-wide regulations for spaceplanes and spaceports. We are leading by example by creating this comprehensive regulatory framework in the UK. This should have considerable business benefit for the UK. But this will also benefit the EU, and the EASA recognises that this will help inform the development of any future European regulatory framework. The Government have agreed with the EASA to work with other European states to develop common principles for regulation for suborbital operations. However, in doing so, the Government will ensure that the UK is not put in a position, as a result of any change in our future relationship with the EASA, where the EASA is handed too much control, or worse a veto, over the development of the UK space sector.

I hope I have provided the reassurance that my noble friend is looking for and that in the light of that he feels able to withdraw his amendment.

[Lord Moynihan]

That was an outstanding and exceptionally helpful answer from my noble friend on this important subject. As long as the mutual agreement has been documented in the way that he has suggested, I am completely happy to withdraw the amendment. His assessment of the current position of our relationship with the EASA was exceptionally helpful to the House, and I thank him for it.

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[Lord Fox]

My Lords, I will be very brief. We welcome this probing amendment because this issue is very important. It is analogous in one sense to the potential for flagging out a particular enterprise. If the regulator is minded to allow a transfer of licence, what legal basis would there be for any enforcement of those licence agreements once they cease to be within the domain of this country? The second point is on the role of takeovers and acquisitions, where companies that own a licence and are within the remit of the United Kingdom are acquired and move beyond these shores for regulatory purposes. Perhaps the Minister can include those points in his answer as well.

[Lord Callanan]

My Lords, Clause 14 enables a licensee to transfer their licence to another party, provided that the regulator has given written consent. This provision enables a new body or company to take over the licence without starting a licence application afresh. In addition, the Bill requires that a licence holder has the necessary financial and technical resources, and that they are fit and proper persons, to do the things authorised by the licence.

Amendment 22 would ensure that the regulator would need to be satisfied that the new licensee met the requirements under Clause 8(3) before consenting to a transfer. I can confirm that it is our intention that the regulator will need to do this. Where the regulator is appointed under Clause 15, Clause 14(5)(c) requires them to consult the Secretary of State before consenting to a transfer. Thus the Secretary of State can ensure that they are satisfied that the new licensee meets the requirements under Clause 8(3).

The noble Lord, Lord Rosser, asked why the power to transfer a licence is necessary. The power avoids the need for wasteful bureaucracy that could affect businesses and local communities. For example, where a spaceport licence has been issued, it should not be necessary to demonstrate the suitability of the site again just because of a change of operator. However, the regulator would need to be content that the new operator met the eligibility criteria under Clause 8. Both the regulator and the Secretary of State would need to be satisfied that the transfer of a licence was appropriate, ensuring that there were the proper checks and balances in the system if that occurred.

I am confident that the amendment is not necessary but I will reflect on whether it is appropriate to make our intentions explicit in the Bill. On those grounds, I hope the noble Lord will feel able to withdraw his amendment.

[Lord Rosser]

I thank the Minister for his reply and the noble Lord, Lord Fox, for his valuable contribution to this debate. The Minister has indicated—at least I think this is a fair reflection of what he said—that he will reflect further on this issue. I would certainly have thought that if the transfer under Clause 8(3) will apply, it would be helpful if it said so. One would assume that the provisions of Clause 8(2) would also apply—that is, the parts about not impairing national security, being consistent with international obligations and not being contrary to the national interest. I take it from what the Minister said that he will indicate to us before Report whether the Government intend to make any amendments in the light of the amendment that I have moved.

I have a question on one point that I asked about at the end, which I appreciate is mainly a point of detail. For the granting of a licence, the consent of the Secretary of State is also required under Clause 8(4). If the regulator granting the licence is not the Secretary of State, is the intention that that would also apply in relation to a licence being transferred or is the Minister likely to come back on that when he has reflected further on the issues raised during this debate?

[Lord Callanan]

I will reflect on that and come back to the noble Lord on it.

[Lord Rosser]

I beg leave to withdraw the amendment.

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[Baroness Randerson]

This amendment relates to the capacity and resourcing of the regulator. One assumes that it is to be the CAA because the Explanatory Notes indicate it will be, but they allow a fallback position where another body could be created. I invite the Minister to confirm that the Government have the CAA in mind.

My concern is that the CAA seems to be increasingly the maid of all work, which will undoubtedly have capacity and resourcing implications for that body. After Brexit, the duties of the CAA in relation to what one might call mainstream aviation will undoubtedly increase. The issue of drones will add to its duties. A couple of weeks ago, the failure of Monarch Airlines reminded us that the CAA has a very important role relating to such emergencies. One day we envisage the CAA bringing people back from their holidays in Portugal and the next day, or indeed the very same day, it is concerned about trips in outer space. So the body is large, flexible and very broad in its involvement. For that reason, if the Government plan to pass most if not all of the regulatory functions in the Bill to the Civil Aviation Authority, then we are concerned about whether they also plan to add to its capacity and expertise. This is very much a probing amendment to ask the Government whether their assessment is that the CAA currently has the breadth of expertise required and will simply need additional resources, or whether there will be a need to recast the body and take a comprehensive look at its role in future.

[Lord Callanan]

I thank the noble Baroness for her amendment. It is quite right to seek clarity on who will regulate this new spaceflight market and their capacity and resources to do so. Commercial spaceflight from the UK is in its very early stages and we want to be able to draw on relevant regulatory expertise across the UK for this new burgeoning sector. The Secretary of State is the default regulatory authority under the Bill. It is our intention that the UK Space Agency perform regulatory functions on behalf of the Secretary of State. The UK Space Agency already licenses the procurement of satellite launches from other countries as well as satellite operations from the UK. We intend that the UK Space Agency will regulate all the vertically launched rockets covered by the Bill and other space activities, including the launch and operation of satellites into space orbit. The UK Space Agency will also license and regulate associated vertical-launch spaceports and range-control services for launch to orbit.

In answer to the noble Baroness, Lady Randerson, it is our intention to use Clause 15 to appoint the Civil Aviation Authority to regulate suborbital activities and horizontal-launch spaceports. These are likely to take place from specially adapted existing airports, and that will enable us to draw on the CAA’s rich heritage and expertise. The CAA and the UK Space Agency are proven regulators in their respective fields. I assure the House that both organisations are building on this heritage and developing their spaceflight expertise, including learning from existing spaceflight regulators in other countries. Clause 61 enables both organisations to put in place charging regimes to cover their regulatory costs—for example, for assessing and issuing licences, ongoing monitoring and providing advice and assistance. I hope that answers the noble Baroness’s question about the appropriate resources.

I am confident in our planned assignment of regulatory functions to the UK Space Agency and the CAA, and that both will have the resources to fulfil their regulatory functions following the enactment of the Bill and regulations made under it. I am confident in our planned assignment of UK regulatory functions to the UK Space Agency and the Civil Aviation Authority and that both will have resources to fulfil their regulatory functions following enactment of the Bill and regulations made under it.

[Lord Fox]

I have a question on the previous point about the CAA clearly being ready to embrace this new responsibility. We would expect a body such as the CAA to be enthusiastic to have its remit expanded; we would not expect it to say, “Please take this somewhere else”. Have the Government sought an independent viewpoint on the appropriateness and scale of the upgrading of the skills that will be required within the CAA?

[Lord Callanan]

We are confident that the expertise in and knowledge of regulating aviation in the CAA is sufficient for this purpose. The CAA has a worldwide reputation for the comprehensiveness of its approach and expertise, so it will be able to fulfil these functions very well and there is no need to go elsewhere.

I shall directly answer the noble Baroness’s question: if we know that we are going to appoint the CAA to do this, why do we not specify it in the Bill? We believe that it is more appropriate to set out functions of appointed persons in delegated legislation, as the necessary limitations and conditions would be too lengthy to include in primary legislation. Further, as the industry evolves, the Government may choose to adapt the regulatory approach. The current approach allows this flexibility while ensuring that the appropriate level of oversight is maintained by the Secretary of State. With those assurances, I hope that the noble Baroness will feel able to withdraw her amendment.

[Baroness Randerson]

I thank the Minister for his response. I will read Hansard carefully, because I think that there is still an issue about the level of resources. It may be that capacity in terms of breadth of expertise is established, but I remain to be convinced about the level of resources that the Government are willing to commit to allow the CAA to do its job effectively. It was absolutely clear in the past few weeks that the CAA is working extraordinarily hard and at the limits of its current capacity, so if we are adding responsibilities to it, we need to be reassured that it can do this job well. With those words, I am happy to withdraw the amendment.

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[Lord Fox]

My Lords, my noble friend Lord McNally has appointed me as his mouthpiece on earth for this amendment, by which we seek a sort of legal air traffic control ruling from the Government. The fact that I am slightly confused about which Act applies where is probably no surprise, but the fact that leading figures in the industry are scratching their heads probably leads to the conclusion that greater clarity is needed about which Act covers which activities. There is definitely uncertainty about what will be governed under the Bill and what will fall under the Outer Space Act 1986.

We were alerted by the Royal Aeronautical Society about its concerns about which Act applies to non-UK activities and which to UK activities. My assumption—I hope that the Minister can confirm this—is that if the launch is from this country, the Bill covers that activity; in the event that it is a space activity launched from elsewhere, the OSA 1986 covers it. I expect some clarity on that.

Similarly, UKspace has highlighted uncertainty about whether the licensing system entirely replaces the OSA or whether the OSA remains residually. On that basis, there is clearly confusion in the industry; there is confusion on this Bench, in my case; and I would welcome clarity from the Government and the Minister. I beg to move.

[Lord Callanan]

My Lords, as we discussed, the Government intend to use the regulatory expertise in the UK Space Agency and the Civil Aviation Authority to regulate this new sector. For all spaceflights and associated activities, there will be a single regulator responsible for issuing a licence. Whether this is the UK Space Agency or the CAA will depend on the type of activity. Let me give more detail.

In general, the CAA will license suborbital spaceplane activities and the UK Space Agency will regulate space activities and rockets licensed under the Bill. Where both the CAA and the Secretary of State have regulatory responsibilities—for example, where an aircraft has been adapted for mid-air launch of a satellite into orbit—these will be set out clearly in regulations. There will be only one licensing authority, however. In the case of mid-air launch, this will be the UK Space Agency. This approach provides clarity and accountability while making the best use of the proven expertise of existing regulators.

The noble Lord asked for clarification of the difference between the OSA and the Bill. As he said, the OSA covers launch from outside the UK of British-registered equipment, and the Bill will cover launches from the UK. In the light of those clarifications, I hope that he will feel able to withdraw his amendment.

[Lord Fox]

In the light of that clarification, I thank the Minister and withdraw the amendment.

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[Lord Tunnicliffe]

My Lords, I too would like to own up to trying to find some way of squirrelling drones into this debate and this Bill, but I gave up on the early assurance from the Minister that he was doing all that he possibly could. However, on rereading his letter today, I find that there is some confusion in my mind between a registration scheme relating to mandatory competence testing, and so on, and a more powerful scheme that might set up some technological devices to achieve the objective of separating drones from air traffic and be clearer about how it will be enforced. I should be very grateful if he could flesh out some of the ideas in his letter.

Also in the Minister’s letter—although I realise that this matter is only tenuously in front of us—was a paragraph on the misuse of lasers. He pointed out that there was a clause in the Vehicle Technology and Aviation Bill, which fell when Parliament prorogued, and he produced certain assurances about the issue and about how pilots and the wider public might be protected. I would be grateful if he would accept the indulgence of the House for him to repeat the assurances that he provides in that letter about addressing the issue of lasers at an early date.

[Lord Callanan]

I thank all noble Lords who have contributed to the debate, which allows me to explain at length another aspect of my ministerial responsibilities—the thorny issue of drones. I accept that raising it in the passage of this Bill is a way in which to put it on the record, which we intend to do, and I hope that I shall be able to satisfy my noble friends Lord Moynihan and Lord Balfe, at least in part. I realise that their concerns go further than the Bill, as the noble Lord, Lord Balfe, mentioned in his intervention.

The safe use of drones in the UK is vital if we are to realise the full potential that they can deliver. I assure noble Lords from the outset that that is exactly what the Government want, and exactly why we recently responded to our consultation setting out a number of measures that we intend to implement. The UK is at the forefront of an exciting and growing global drones market. We are seeing drones used across many sectors, improving services, increasing efficiency, creating high-tech jobs and boosting our economy. But while aiming to make the UK a global market leader in the drone economy, we must ensure that drones are used safely and in accordance with security and privacy rules. I am well aware of the July Airprox incident at Gatwick reported in the press over the weekend. No one wants to see incidents such as those occurring, which is why we intend to bring forward legislation to strengthen regulation and enforcement for drones.

To reply to my noble friends directly, we are exploring both primary and secondary legislation options and hope to bring legislation forward as soon as possible next year, including an amendment to the Air Navigation Order 2016. My noble friend Lord Balfe asked what measures we were introducing. As set out in our July consultation response, all users of drones that weigh 250 grams or more will be required to register themselves, which will encourage drone users to be more responsible and make it easier to identify drones that are breaking the law. Users will then be required to pass at minimum a short knowledge test to prove their awareness of UK law to ensure that they understand safety, security and privacy regulations. We are also looking to mandate the use of a safety app, an example of which is the NATS app Drone Assist, to notify plans to fly a drone and make users aware of local flight restrictions and ground hazards.

[Lord Tunnicliffe]

The Minister’s answer so far implies that there is no risk from drones weighing less than 250 grams. What tests and evidence does he have to assure us that that is true?

[Lord Callanan]

We did extensive safety tests in conjunction with BALPA, and released a detailed report on the size of drones and damage that they could cause to aircraft—both fixed-wing aircraft and helicopters. We considered that 250 grams was a reasonable threshold to impose at the time.

We are considering a possible restriction on all drones flying within a certain distance of airports and above 400 feet, and whether to increase penalties for breaking the rules. That includes whether and how spaceports could be included in any restrictions that we may implement. Furthermore, we are working towards implementing a product standard for electronic identification of drones at EU and international level. We strongly support EASA’s principal electronic identification, but want to see the proposals simplified to all drones above 250 grams to require electronic identification rather than a complex set of conditions.

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[Lord Fox]

The Minister mentioned Project Chatham. Who is accountable and leading Project Chatham?

[Lord Callanan]

As far as I am aware, it is the Department for Transport, my department, which is doing it, but I shall come back to the noble Lord on that issue.

We strongly support EASA’s principle of using geo-fencing to enforce compliance with airspace restrictions and electronic identification, but we want to see the proposals simplified to all drones over 250 grams requiring geo-fencing and electronic identification, rather than a complex set of conditions.

The amendment intends specifically to make malicious use of drones an offence. Of course, I recognise that that may be a desired outcome, but Schedule 4 is drafted in such a way that, no matter what device is used unlawfully, it will be deemed an offence. On that point, and with the assurance that the Government intend to bring forward legislation specifically for drones in the timescale that I outlined, I hope that my noble friend will feel able to withdraw Amendment 29.

[Lord Moynihan]

I am very grateful to my noble friend the Minister. I thought that he might well mention Schedule 4, and I am grateful to him for doing so and putting on the record the view that he has just expressed. I also welcome the phrase “as soon as possible next year”, because that should ensure that changes to legislation in whatever form they may be introduced—and I recognise also that that has yet to be determined—will come in advance of issuing the first licences for spaceports.

I am grateful to the Minister and apologise to the Committee that, having flown in from Sydney at 5 am this morning, after about 26 hours travelling, I will not be here right at the end of this evening’s proceedings. I have put my name to Amendment 44, in the name of the noble Lord, Lord Rosser, which I totally endorse and support.

[Lord Callanan]

I apologise for forgetting to address the point made by the noble Lord, Lord Tunnicliffe, about laser pens. It is not part of the Bill, but I want to give him an answer. I understand where he is coming from: as he correctly said it was included in the Vehicle Technology and Aviation Bill, before Parliament was prorogued, to provide further certainty to pilots and the general public. We are continuing to look at other legislative vehicles. It is our intention to strengthen existing legislation. Safety is our top priority. Shining a laser at an aircraft in flight could pose a serious risk and anyone found guilty could currently be liable to a fine of up to £2,500, but it is our intention to strengthen existing legislation. I cannot give a timescale at the moment but will do so as soon as I am able.

[Lord Moynihan]

On that constructive note, I beg leave to withdraw the amendment.

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[Lord Callanan]

I thank noble Lords for their consideration of the significant powers in this clause, which we recognise are significant. I hope noble Lords will allow me to take this opportunity to provide assurance that this important power, which will be used only when immediate action is necessary, is both proportionate and subject to sufficient safeguards.

Clause 32 confers on the Secretary of State the power to grant an enforcement authorisation in the most urgent cases, where there is a serious risk to national security, compliance with our international obligations or health and safety. In such emergency situations there may not be sufficient time to obtain authorisation from a justice of the peace under Clause 31. I assure the House that there are adequate safeguards in place. Such an authorisation can be granted only to a named person who the Secretary of State is satisfied is suitably qualified to carry out the necessary action. Each time this power is used the authorisation must be in writing, must specify the action required and will remain in force for only 48 hours from the time it is granted. As an additional safeguard, improper use of this power by the appointed person could be challenged by judicial review. It is worth noting that this power is more conservative and requires more stringent authorisation than other comparable powers of entry: for example, those for nuclear inspectors or health and safety inspectors who are provided with a standing authorisation and may act at their discretion. It is anticipated that this power would be used only in the most serious and urgent of cases where there can be no delay in taking action.

I turn to the amendments specifically. The need to find a justice of the peace to review an enforcement authorisation during the period of validity would impose unhelpful bureaucracy on the person authorised at a time when they are trying to take urgent action to protect people from serious risks. A review of an enforcement authorisation by a justice of the peace after the authorisation had expired would not serve any purpose since the power granted would have already been exercised. In addition, a review by a justice of the peace, whether while in force or afterwards, would place an unnecessary and disproportionate burden and cost on the judicial system, given the other safeguards in place. Moreover, appeal by the Secretary of State, which Amendment 33 provides for, may not realistically take place in time to enable the emergency action needed to address the serious risk in question.

I assure noble Lords that the Government are listening. We have taken on board comments from the House of Commons Science and Technology Committee and have reduced the time for which an enforcement authorisation remains in order from one month to 48 hours. The noble Lord, Lord Fox, asked why we have used the wording “to do anything necessary”. It would not be possible or appropriate to list possible actions that may be taken under an enforcement authorisation as this would restrict the scope of the authorisation. The action must, however, be necessary to protect the national security of the UK, secure compliance with the international obligations of the UK or protect the health or safety of persons. An enforcement authorisation will not be issued unless the Secretary of State is satisfied that the risk will be eliminated or mitigated as a consequence. Improper use of this power by the appointed person could be challenged by judicial review.

I understand the concerns of many noble Lords that this power is excessive. However, it is more restricted than other comparable powers of entry: for example, as I said, those for inspectors in the Energy Act 2013 or the Health and Safety at Work etc Act 1974. It is similar to those powers approved by Parliament in that there is no independent judicial authorisation before or after exercise of the power. The power in Clause 32 requires authorisation for each and every use, is in place only for a 48-hour window and cannot be used routinely at the discretion of the person who is authorised to enter. I am confident that our approach is proportionate and contains sufficient safeguards to address the concerns raised while retaining the flexibility necessary to deal with the very serious risks that this clause is designed to address. With the assurances that I have provided, I hope that the noble Lord feels able to withdraw Amendment 32.

[Lord Rosser]

I thank the Minister for his reply and thank the noble Lord, Lord Fox, for speaking to his amendment.

The Minister has produced various arguments but not surprisingly, because he probably cannot get into the mind of the Constitution Committee, he has not said why it was not moved by the kind of considerations that he has put forward. Clearly, that committee regarded this issue as something which could lead in extreme circumstances—at least, one hopes that it would be in extreme circumstances—to an abuse of power if there was no check after the event on whether the power under Clause 32 had been used appropriately and proportionately. My amendment sought to cover that, as did the view expressed by the Constitution Committee. Having a check that this power is not misused, which is what my amendment would provide, is a point that the Minister did not address in his reply. He referred to the difficulties of finding a magistrate or justice of the peace to do this within 48 hours, or at least I think he did. I think he will find that justices of the peace can be produced fairly quickly for a range of rather more minor warrants and issues, and well within the 48-hour period. Unless there is an issue over a Sunday, you can find justices of the peace at a magistrates’ court any day. If some sort of emergency measure needed to be undertaken—as it would in such a case—I imagine that the court would be prepared to co-operate.

The Minister mentioned costs. Frankly, if the Government are throwing at us concerns over costs as a reason for not having a check on whether a draconian power—the wording used by the Constitution Committee—is being used correctly or is being abused, we have reached a fairly sorry state of affairs. The Government must do a bit better than try to argue that this is unacceptable on grounds of cost, which I think was one of the points made by the Minister.

I will, of course, read Hansard and reflect on what the Minister has said but I come back to the point that this view has been expressed pretty strongly by the Constitution Committee, having seen the Government’s response to the House of Commons Science and Technology Committee. These are fairly draconian powers and it is desirable to ensure that those who exercise them know that there will subsequently be a check on whether they have been used appropriately or proportionately. That would help to ensure that they are not abused. However, in the meantime, I beg leave to withdraw the amendment.