Space Industry Bill [HL]

Lord Fox Excerpts

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

[Lord Rosser]

I must say that I rather support the thrust of the points that the noble Lord, Lord Moynihan, has made. Later on, though not today, we will come to the amendment we have tabled about how regulations should be dealt with in view of the number of them that will be associated with the Bill.

I shall confine my comments now to the view of the Delegated Powers and Regulatory Reform Committee, particularly in respect of the issue in Amendments 9 and 10 where clearly there was a disagreement, with the Delegated Powers and Regulatory Reform Committee arguing that where there was a requirement to abide by the terms of what the Government described as “guidance”, and where there was a requirement that an applicant must do something of importance with that guidance for the regulations to be satisfied, it should in fact be subject to parliamentary scrutiny given its legal significance. The noble Lord, Lord Moynihan, has of course drawn attention to that point.

The Government seem less than enthusiastic about going down the road of the Delegated Powers and Regulatory Reform Committee on that issue. However, they did not actually address the point being made by that committee, which was the distinction between guidance that an applicant may take into account and guidance that an applicant must take into account in order for the regulator to be satisfied. Although I certainly support the thrust of everything the noble Lord, Lord Moynihan, said, I confine my specific comments to that point in the Delegated Powers and Regulatory Reform Committee report and invite the Minister to think again about what appears to be the Government’s rejection of it.

[Lord Fox (LD)]

My Lords, at this stage, I declare my financial interest in GKN and Smiths Group, both of which probably have some activity in the space industry, although I am not currently aware of it. I associate these Benches with the amendments and the overall thrust, which I am sure that the Minister is beginning to get, that there is considerable concern about the exercise of delegated powers. As the previous speaker mentioned, that will come up in a series of later amendments.

I defer in my knowledge to the noble Lord, Lord Moynihan, who is expert in these matters, but it is clear that we want to get the balance of affirmative and subsequent negative delegation right, and the excuse or otherwise that parliamentary time may not be available for the return of legislation is probably insufficient. Again, I hesitate to say this in front of the noble Lord, but safety is often dealt with by safety cases rather than a line by line, “You should do this, you should do that”, style of legislation. It does not require line-by-line scrutiny by government or Parliament.

With those points in mind, we associate ourselves with the amendments. We ask the Minister to review the Government’s position on delegated powers and are interested to hear how he stands on the amendments.

[Baroness Neville-Rolfe (Con)]

My Lords, I am sorry that I was unable to speak at Second Reading on this important Bill, but I have had a helpful exchange with the Minister on the powers in it and his plans for consultation in future.

Following on from the comments made by my noble friend Lord Moynihan, I have a question and a comment. First, he argued for parliamentary procedure in relation to guidance. I would find it helpful to have a little more detail as to what sort of guidance is envisaged, so that we can look critically at whether any parliamentary procedure is appropriate. Secondly, I share his concern at the double barrel—having an affirmative resolution for the first regulation and a negative resolution for subsequent provisions—because it could be open to abuse and give too much power to the Executive on important matters. I would welcome further study of this provision, as has been suggested, before Report.

I am worried about the powers in the round—in this Bill and the Data Protection Bill—and I think that delegated legislative provisions will also become an issue when we come to the plethora of Brexit Bills later in the Session. It would be very useful, in this less contentious Bill, to make sure that we have the right provisions.

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[Lord Tunnicliffe]

My Lords, I said that the previous group of amendments was probing. We had had time with the Minister to try to understand the Bill but unfortunately we did not get as far as this area. Therefore, I will not attempt to explain the amendments in this group because I do not really understand the parts of the Bill that they relate to. With that admission, perhaps I may simply put a few questions to the Minister.

I think I understand that there is the concept of strict liability towards an uninvolved third party who suffers a loss. I would be grateful if the noble Lord could confirm that—we are moving forward question by question—obviously with the necessary caveats and niceties. As I understand it, the amount of liability may be capped. To me, that means that there is a limit on how much the operator—or the Government, who might be liable—must pay in damages to an uninvolved third party in the event of an accident. I hope that I have that bit right. However, I am not clear about who pays if the losses exceed the cap. Clearly, it is not the operator—that is what a cap means. Therefore, is it the injured third party?

It is very rewarding working in the safety sector, although it means that you get a bit ridiculed. However, we are talking about a TriStar with a bomb on it crashing in the middle of Glasgow. That is not an impossible scenario. Of course, it is not very likely but the unlikely happens—that is what the statistics show. Who would meet the costs of such a catastrophe? Even if there is no cap on the operator’s liability, the commercial structure of the company means that there will be a de facto cap because the company will rapidly go out of business without one or if it is uninsured. However, there will be circumstances in which the amount exceeds the cap.

Elsewhere in the Bill, the Government seem to have the ability to meet the obligations towards the injured third party. So if the answer to my question is that the Government will meet the excess over the cap, which part of the Bill provides for that? Is it an assurance to the uninvolved in society—us and the people around Prestwick—that where there is an event, their damages will be met either by the operator or by the Government? Who will meet the excess over the cap, or is society in general exposed above the cap? I beg to move.

[Lord Fox]

My Lords, I apologise to the noble Lord, Lord Tunnicliffe, for missing the first couple of words of his contribution and to the Committee for being slightly detained outside the Chamber.

Very briefly, the mission of these amendments, in the event that they were adopted by the Government, appears to be to create unlimited liability for the companies concerned in the pursuit of their business. Having asked a few questions of such operators, my understanding is that were they in an environment of that nature, the whole spirit of the Bill would be lost very quickly, in that no operator would undertake a risk of that level. I understand the concerns of the mover of this amendment, and the questions he has asked of the Government—who would pick up the liability?—are the right ones. However, the solution of creating unlimited liability across the board for the operator is not one that these Benches would support.

[Lord Willetts]

My Lords, I will comment briefly on this set of amendments. The noble Lord, Lord Fox, has put the point very vividly. This gets to the heart of the economics of the space industry.

There are risks in space, as we have heard in the past hour in which we have been debating. First, probably the greatest risks are at launch. Not all launches are successful, which is why, by and large, launch facilities aim to launch rockets out over the ocean. I am sure that will be a relevant consideration when the rival claims of different locations, especially for vertical launch, are considered. I have to say that Prestwick is very fortunate to have my noble friend Lord Moynihan—if only every possible spaceport candidate had a similarly assiduous Member of this House to make its case.

Secondly, there is some risk in orbit of satellites colliding and doing damage, or one person’s identified satellite taking out someone else’s satellite. That is rare but it does happen. Thirdly, there is the very remote possibility, but it can happen, that a satellite falls out of orbit. In those circumstances they mostly burn up and it is a managed process, but a bit could reach the ground and do damage.

These are, thank heavens, all very remote risks. However, if the worst conceivable thing happened—if a satellite came out of orbit and did not burn up in the atmosphere and landed in the middle of a busy conurbation—serious damage would be done. These remote but potentially large risks are very hard to insure. Therefore, many of the countries that ultimately take responsibility as launch nations for satellites provide some kind of cap on the liability that a private launch operator would face. I very much welcome, therefore, the conception behind Clause 11: that the Government intend that an operator licence may specify a limit on the amount of the licensee’s liability.

There are complicated arguments behind this. I can report from my own time as a Minister that I was regularly asked by the industry whether it would not be possible to reduce the maximum liability operators would face, and I was regularly pressed by the Treasury that the liability that the operators faced should be as large as possible. I suspect that those arguments carry on to this day and will never be finally concluded.

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[Lord Rosser]

Clause 14(1) states:

“A licence under this Act may be transferred with the written consent of the regulator”.


The Bill then appears to say little more of substance on this issue. It does not appear to set any considerations the regulator has to take into account before giving such written consent, nor does it appear to say to whom or to what a licence can be transferred or what licences are or are not able to be transferred. Clause 8(3) says:

“The regulator may not grant an application for a licence under this Act unless satisfied that … the applicant has the financial and technical resources to do the things authorised by the licence, and is otherwise a fit and proper person to do them”,


or that,

“the persons who are expected to do, on the applicant’s behalf, any of the things authorised by the licence are fit and proper persons to do them”.

Amendment 22 seeks to ensure that the provisions of Clause 8(3) will also apply to the regulator when deciding whether to give written consent to the transfer of the licence.

An argument could be made for saying that the provisions of Clause 8(2) should also be included in this amendment, since presumably one would want the regulator to be satisfied in agreeing to transfer a licence that it would not impair national security, that it would be consistent with our international obligations and that it would not be,

“contrary to the national interest”.

However, this is Committee stage and I will wait to hear the Government’s response to the amendment as it stands.

On a more general point about the transfer of a licence, can the Minister set out for the record the circumstances in which a transfer might be considered necessary and those in which the Government would not expect written consent to be agreed? Finally, for the granting of a licence, the consent of the Secretary of State will also be required under Clause 8(4) if they are not the regulator granting the licence. That provision does not appear to apply if a licence is being transferred. If this is the case, why is that so?

[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.

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[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.

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Moved by

[Lord Fox]

24: After Clause 15, insert the following new Clause—
“Report on the duties of the regulator and appointed persons
(1) The Secretary of State must, within the period of six months beginning with the day on which this Act is passed, lay a report before Parliament detailing the responsibilities and duties of the regulator, any appointed person or persons and any other Government department or agency responsible for regulating spaceflight.(2) The report under subsection (1) must specify the legal basis under which the regulator, any appointed person or persons and any Government department or agency exercise their powers.”

[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.

Amendment 24 withdrawn.

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Reference has been made to geo-fencing near spaceports. To reduce inadvertent breaching of airspace restrictions and protect safety, we are setting up a pilot project bringing forward work to improve the use of geo-fencing in the UK. Project Chatham will create an authoritative UK airspace data source, including critical national infrastructure sites and spaceports, furthering the implementation of geo-fencing in the UK and building greater awareness of airspace restrictions among drone users.

[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.

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[Lord Rosser]

I have just about recovered from the shock of hearing the noble Lord, Lord Moynihan, refer to not being here for a much later amendment. I was rather hoping we would not get to that because it says here that the target for the day is to complete the group beginning Amendment 32, which is the group we are about to embark on. I sincerely hope that this is the last group we deal with today.

This amendment relates to a view expressed by the Constitution Committee in its report on the Bill published last month. Much of what I will say is lifted straight from that report. It points out that Clause 31 sets out an enforcement regime under which,

“a justice of the peace may issue an ‘enforcement warrant’ in certain circumstances if, for instance, there are reasonable grounds for believing that a person is carrying out spaceflight activities without a licence or in breach of licence conditions”.

The committee points out that:

“Enforcement warrants may authorise extensive powers, including powers to enter property and to use reasonable force. For urgent cases, an alternative regime is set out in clause 32. This allows the Secretary of State to grant an ‘enforcement authorisation’ if satisfied that the case is urgent and that relevant conduct or anticipated conduct gives rise to a serious risk (a) to national security, (b) of contravention of any international obligation, or (c) to the health or safety of persons. Such an authorisation permits a named person to do ‘anything necessary’ for protecting national security, securing compliance with international obligations or protecting health or safety”.


Even though the power conferred by Clause 32 is very extensive and broad, the Bill does not appear to lay down any,

“system of judicial oversight (either anticipatory or post hoc). The House of Commons Science and Technology Committee expressed concerns about this aspect of the Draft Bill”.

In its response to that committee, the Government said that:

“In line with the Committee’s recommendation, we have reduced the period for which an authorisation would be valid from one month to 48 hours. This limits the Secretary of State’s power and if a longer authorisation is required, it will be necessary to get a warrant from a Justice of the Peace under clause 31 (Warrants authorising entry or direct action)”.


The Constitution Committee went on to say that:

“The reduction in the time for which an urgent authorisation may apply is welcome. However, we are concerned that such wide-ranging and potentially draconian powers would be exercisable without anticipatory or rapid post hoc judicial involvement. We draw attention to these enforcement authorisations and call on the Government to consider post-hoc judicial approval of their use”.


Amendment 32 provides that an urgent enforcement authorisation under Clause 32 must be referred to a justice of the peace for evaluation within 48 hours, following the 48-hour period under Clause 32(7) of the Bill, during which the enforcement authorisation remains in force. I hope that the Minister will give a sympathetic and helpful response to this amendment and others in the group. I beg to move.

[Lord Fox]

My Lords, as the noble Lord, Lord Rosser, set out, Clause 32 as it stands offers strong powers to the Secretary of State in which there is no judicial involvement authorising the activities. I support Amendment 32 and will speak to Amendment 33. Those noble Lords who have read them will see that Amendment 32 is repeated by Amendment 33, which goes into more detail at some length, also taking into account the judicial systems of the countries of the United Kingdom.

As the noble Lord said, Clause 32 allows the Secretary of State to authorise the regulator to do “anything necessary”, which is a very dramatic—possibly cinematic—phrase, but we understand what it means. We can understand that there are times when moving quickly would be an issue, but this is not necessarily a block to judicial oversight. In contrast to the proposal in Clause 32, I point to the Investigatory Powers Act 2016 where warrants issued urgently by the Secretary of State, without advance approval by a judicial commissioner, must be approved by a judicial commissioner within three working days of the warrant. If it can be done in those circumstances, I suspect it can be done in those which we are talking about today. The Government have not offered sufficient justification for the wider scope of the powers offered in Clause 32, so Amendment 33 is based on provisions in the Investigatory Powers Act and ensures judicial scrutiny of any enforcement authorisations under that clause. In similar vein to the amendment in the name of the noble Lord, Lord Rosser, it calls for a 48-hour period through which a justice of the peace can be involved. Our amendment stipulates that, if an enforcement remains in force for 48 hours, a justice of the peace should offer authorisation within that time or the action would cease to exist. Furthermore, no future enforcement authorisations may be granted under Clause 32 in relation to the same incident.

Amendment 33 then goes on to spell out the roles of the courts in Scotland, Wales and Northern Ireland, and the detail therein. Overall, we would welcome strong support for this principle from the Government and some idea of how other judicial oversight will be added to what currently appears to be a very wide legal writ for one person in government.