Space Industry Bill [HL]

Lord McNally Excerpts

Report stage (Hansard): House of Lords
Tuesday 14th November 2017 Lords Chamber

Moved by

[Lord McNally]

1: After Clause 1, insert the following new Clause—
“Potential impact of leaving the European Union on the United Kingdom’s space industry
(1) The Secretary of State must carry out an assessment of the potential impact that leaving the European Union will have on the United Kingdom’s space industry.(2) The assessment under subsection (1) must make reference to the following areas—(a) Membership of the European Space Agency;(b) the impact of the UK’s exit from the EU on research and development and access to funding, including Horizon 2020;(c) the free movement to the UK of those who work in the space industry;(d) the UK’s participation in the Galileo and Copernicus programmes; and(e) the impact of the UK leaving the Single Market on supply chains within the space industry.(3) The Secretary of State must lay a report of the assessment before Parliament within one year of this Act passing, and once in each of the five calendar years following.(4) If an assessment of the impact of leaving the European Union on the UK’s space industry has already been undertaken, the Secretary of State must lay a report of this assessment before Parliament on the day on which this Act is passed.”

[Lord McNally (LD)]

My Lords, while other noble Lords go to more urgent business, perhaps I could open by welcoming the noble Baroness, Lady Sugg, to her position commanding this particular spaceship and wish her a very fulfilling role in that and in the other positions that I am sure will come.

We have no hesitation in probing further on where our space industry will find itself if Brexit ever occurs. During the passage of the Bill we have had a glimpse of the exciting opportunities ahead for British technology and British industry. The UK space sector is already at the cutting edge of exploring the universe and connecting people to the world around them. It is an industry with a £14 billion turnover, £5 billion in exports, 71% growth since 2010—thanks in no small measure to the priority that the coalition Government gave to the industry under the stewardship of the noble Lord, Lord Willetts—and more than 40,000 direct employees, including 1,400 apprentices. But no industry epitomises the European project more than this industry and its future. Indeed, only yesterday Airbus put out a press release saying that it had won contracts to build two new satellites and that this would be done with work both in Britain and in France.

It is interesting that in an annexe to a letter to the noble Lord, Lord Boswell, in his capacity as chair of this House’s European Union Committee, the European Commission spells out its ambitions by stating:

“The Commission aims to boost demand for space programmes among public and private users, facilitating access to and use of space data, and stimulating the development and use of innovative downstream applications. The Commission intends to take concrete measures (including regulatory ones where justified) to encourage the uptake of space services and data, advance the EU space programmes, and meet new user needs. The Commission will prioritise the following main actions:


Promote the uptake of Copernicus, EGNOS and Galileo solutions in EU policies, where justified and beneficial, including measures introducing the use of Galileo for mobile phones, and critical infrastructure using time synchronisation.


Facilitate the use of Copernicus data and information by strengthening data dissemination and setting up platform services, promoting interfaces with non-space data and services.


Stimulate the development of space applications with the greater involvement of new actors from different domains.


Together with Member States and industry, promote the efficient and demand-driven use of satellite communications to foster ubiquitous connectivity in all Member States.


Remain committed to the stability of the EU space programme and develop these on a user-driven basis to continue delivering state-of-the-art services including exploring alternative business models and taking account of technological progress.


Address emerging needs related, in particular, to climate change/sustainable development and security and defence”.


The purpose of the amendment is simple: to ask the Government whether they have made any assessment of the impact of Brexit on our space industries—and, if so, whether they will publish it. It is clear that the Commission has clear ideas of where it wants to go in terms of space, which is very much in parallel with the discussions that we have had in discussing the Bill. Do the Government intend to remain part of the strategy and programme outlined by the Commission in the letter to the noble Lord, Lord Boswell—and, if so, how? If we are not an integral part of the European space programme, what impact would that have on our viability as a spaceport centre, compared to spaceports located within the European family?

These are questions to which, “It’ll be alright on the night”, is not an answer. We need to know whether the Government’s policy is not a journey into space but simply a leap in the dark. I beg to move.

[Lord Moynihan (Con)]

My Lords, I declared an interest at the beginning of Committee and feel that that it is appropriate to do so again. I live in sight of Prestwick Airport, which has an active interest in the Bill and is an ideal site for the licensing of the first UK spaceport. I notice that my noble friend Lord Strathclyde, who was in his seat at the beginning of this debate, and my noble friend Lord Lang, who remains in his seat, have been very active supporters of the Ayrshire growth strategy and the interests of the airport in being so licensed.

I will focus briefly on paragraph (3) of the amendment: the importance of the Secretary of State laying,

“a report of the assessment before Parliament within one year of this Act passing, and once in each of the five calendar years following”.

Looking at the five items listed under new Clause 1(2). I think that the noble Lord, Lord McNally, would agree that the wider importance of collaboration not just with Europe but internationally is critical to ensure the economic success of the industry. I believe that a spaceport in the UK is a key development to unlock the potential for economic growth related to the space industry for the whole of the UK. As the first spaceport in Europe, it could be the catalyst for a whole new launch industry, and everything that flows from that. We will need to co-operate with Europe on all these areas if we are to achieve that objective. Grants of some £10 million here or there are frankly nothing compared with the huge development costs associated with this industry. I hope that the Government will be serious about getting involved.

At a time when my noble friend the Minister is looking to ensure economic growth during the Brexit period, and when significant infrastructure projects are being funded, surely a significant commitment to the spaceport is a sensible investment, and is small in overall terms. But it would be a major catalyst to ensure that this project happens, as would the ongoing relationship with Europe. I would be grateful if my noble friend could comment on this and recognise the vital importance of a significant, wide opportunity to bring together the vested interests in the economic success of this project—which, in addition to Europe, I would add are: a clear understanding of the range of trade and technical issues with the United States and the acquisition of funding required to deliver the spaceport and spaceflight operations. With that in mind, I hope that the Minister is looking at special-purpose vehicles rather than the straightforward grant process in order for operators to undertake activities and operations from the UK—in other words, to have a wide range of partners, including the Government and the Scottish Government but also private sector operations and organisations. Financial guarantees and an insurance cap will be absolutely essential.

I close by saying that we need a strong level of government support and a strong level of co-operation with Europe to achieve these objectives. This will be a highly competitive global market. I fear that we may have a hollow Bill, which might be a great exemplar of regulatory, legal and structural support—but if we do not address the issue I have raised, it will remain hollow. We as a country should not allow ourselves to miss this opportunity. If we do, we will be left with an Act of Parliament promoting an industry that never takes off.

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

My Lords, the UK space industry is a global success story. I am grateful for the productive debate we had in Committee, which will ensure the Bill puts this country at the forefront of new space services.

The Government continue to invest in the success of the UK space sector—for example, we recently invested more than £100 million in new satellite test facilities at Harwell, and manufacture and test facilities for rocket engines at Westcott in Buckinghamshire. As we discussed, 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 are working to ensure we get the best deal with the EU to support strong growth in the sector. Last month, the Government published a science and innovation discussion paper and an external security discussion paper. Both set out the Government’s wish to discuss options for future arrangements in the EU space programmes.

My noble friend Lord Moynihan asked about continued support for the space industry. The European Space Agency programmes will continue to play an important role in delivering the UK national space objectives and, in December last year, the UK negotiated an investment of more than €1.4 billion over the next five years in ESA space initiatives. This sustained investment, alongside our industrial strategy, will ensure that we build on the strengths of the UK’s growing space industry. The UK’s membership of the European Space Agency will not be affected by the UK leaving the EU.

The Government hold a mix of qualitative and quantitative analysis of the impact of leaving the EU on sectors of the UK economy, including the UK’s space industry. This is contained in a range of documents developed at different times since the referendum. The analysis in this area is constantly evolving and being updated based on our regular discussions with industry and our negotiations with the EU. As the Secretary of State for Exiting the EU said in his Written Statement on 7 November, the intention is to provide this information to the Exiting the EU Select Committee as soon as possible, and within three weeks of the date of that Statement.

My noble friend Lord Callanan has confirmed to the House that we anticipate sharing the same information on the same basis with the Lords EU Committee as with the House of Commons Select Committee, subject to our being able to agree the terms of that disclosure. Given that this evidence will be published in the coming weeks, I ask the noble Lord to withdraw Amendment 1.

[Lord McNally]

My Lords, I thank the Minister for that reply. We look forward to this information being gathered together into one clear document, as at the moment it is scattered among many documents. I am sure that not only the EU Committee but the whole House will read it with great interest.

This is not a hostile amendment but one that genuinely searches after facts. A generation of us—not including the Minister—remember our last great adventure into the space industry with Blue Streak and Black Arrow over 40 years ago. I also exclude my noble friend on these Benches from that. I had better not go any further: I remember Blue Streak and Black Arrow and finding out that this was too expensive a game for us to go it alone. As we take forward what is still a very exciting industry—the Minister herself announced a number of new facets—we need to ensure that we are at its cutting edge and do not miss this chance. In that spirit, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

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[Lord Rosser]

The noble Lord, Lord McNally, spoke eloquently in Committee on the issue of his party and pavement politics, before referring to his concerns about space debris and the need to bring it back safely—although he did not say whether he was looking for weekly or fortnightly collections. If the noble Lord, Lord McNally, considers that the Government’s amendments address the legitimate concerns he raised, they will of course have our support.

[Lord McNally]

My Lords, I welcome the amendments. They are a first step in the right direction. Although I may have rather light-heartedly introduced the issue at the last stage, we have only to look at what we have done to the sea and to Everest to see how easily important places can be polluted. For that reason, it is important that this is on the agenda.

As was indicated in our last debate, work is being done about this problem by British technology companies. Although it may be the less glamorous end of space travel, clearing up space debris may well be another cutting-edge area that we can exploit as this expands.

The IADC is a representative body. Its membership includes all the big players—Russia, the United States, China, ourselves, the European Space Agency, India, Italy, France, Japan, Ukraine. It is the right body to take these matters forward and the amendment is welcome.

[Baroness Sugg]

I thank noble Lords for their support for the amendment, particularly the noble Lord, Lord McNally, who raised this issue in Committee and has put his name to the amendment.

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[Baroness Sugg]

Both the regulator and the Secretary of State would need to be satisfied that the transfer of a licence was appropriate.

[Lord McNally]

My Lords, this is a good example of the Lords’ way of doing things in action. The Labour Front Bench noticed what they thought was a weakness; the Minister said he would go away and reflect. The Government have reflected and come back with a solution that makes the Bill better.

Amendment 10 agreed.

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[Lord Tunnicliffe (Lab)]

My Lords, I rise to move Amendment 15. We put forward a series of probing amendments in Committee. The noble Lord, Lord Callanan, gave a long and detailed response to those, which I thank him for, which helped us understand how the various clauses relating to this whole issue work together. Unfortunately, there is just one point left. It is not at all complicated, and therefore I will not make a long speech about it, but this amendment addresses that single point.

Where the damage to an uninvolved third party exceeds the cap, and the insurance, the state must meet the excess. We are talking about a new phenomenon—flying bombs of one sort or another. The potential for catastrophic damage is there. It may not be very likely, but it could happen. It is potentially significantly more dangerous than the worst conceivable civil aviation accident at present, and it cannot be right that an uninvolved third party who suffers loss does not receive full compensation.

The Government have argued effectively to the House that the industry may need a cap and that it may not get off the ground without an appropriate arrangement. We agree, but if Her Majesty’s Government limit the operator’s liability, they must commit to making up the difference, and put that commitment in the Bill. I beg to move.

[Lord McNally]

My Lords, listening to what the noble Lord, Lord Tunnicliffe, said, and the earlier debate about safety, one thing that occurred to me was seeing the newsreel footage of the crash of the “Hindenburg”, just before the Second World War—a crash that virtually ended the airship as a commercial prospect. That is a useful reminder that what may be seen as the next new thing could be disastrously impacted.

The simple message, which seems so obvious, is that if entrepreneurs considering coming into the industry have unlimited liability, they will not come in. If there is no cover—particularly, as the noble Lord, Lord Tunnicliffe, emphasised, for third parties—that would be totally unacceptable. The problem has been spelled out; the Government should face up to those contradictions.

[Baroness Sugg]

My Lords, Amendment 15 relates to the liability provisions in the Bill. As my noble friend Lord Callanan outlined in Committee, these provisions are vital but complex.

I would just like to clarify a point my noble friend Lord Callanan made in Committee. He said 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”.—[Official Report, 16/10/17; col. 434.]

While it is correct that under aviation law an operator holds an unlimited liability, an operator is not required to indemnify the Government for third-party claims brought against it.

The requirement to indemnify the Government arises in this Bill and in the Outer Space Act 1986 only because under UN space treaties the UK Government are ultimately liable for the space activities of their nationals. Operators are therefore required to indemnify the Government for any claims brought against them as a consequence of their licensed activities. I hope that the House finds this clarification helpful.

With this complexity in mind, I should like to provide further background before turning to the amendment. Clause 33(5) provides a power to make regulations that enable a regulator to specify in a licence a cap on an operator’s liability arising out of its spaceflight activities to prescribed persons or in prescribed circumstances. These persons and circumstances would be set out in regulations, but we envisage that a cap, if imposed, would be on an operator’s liability to the uninvolved general public who suffer injury or damage as a result of spaceflight activities. The uninvolved general public will have a strict liability claim against the operator.

Further work needs to be done to check the appropriateness of capping an operator’s third-party liability. We plan to issue a call for evidence on issues relating to insurance and liabilities in early 2018, following Royal Assent to the Bill.

As this liability can be capped, Clause 34(3) provides the Secretary of State with a power to indemnify a claimant in the event of injury or damage caused by spaceflight activities. This means that the Government can pay compensation to the uninvolved general public in situations where injury or damage exceeds the operator’s capped liability amount.

As we have already emphasised, we are trying to put safety at the heart of the Bill. It is designed to ensure that spaceflight activity is as safe as possible in the first place, which will minimise liability arising. But, as noble Lords have pointed out, injury or damage could arise, and if it does, it is the Government’s policy that the uninvolved general public should have easy recourse to compensation. This policy does not and should not change if an operator has a capped liability or, for example, becomes insolvent and cannot meet all its claims.

I therefore understand the concerns that have led to this amendment which seeks to ensure that the Secretary of State has to pay compensation above the capped amount to the uninvolved general public. The liability provisions in the Bill are complex and we need to ensure that amendments in this area are appropriate and achieve what they are set out to do. We are working on this and look forward to tabling an amendment similar to this one in the other place, which I hope will allay the concerns shared by noble Lords that have led to this amendment. With that in mind, I ask the noble Lord to withdraw his amendment.

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Moved by

[Lord McNally]

16: Clause 36, page 26, line 18, at end insert “or gross negligence”

[Lord McNally]

My Lords, this takes forward a recommendation from the Science and Technology Committee in the other place that “gross negligence” should be on the face of the Bill, and that is what the amendment would do.

[Baroness Sugg]

I thank the noble Lord, Lord McNally, for tabling this amendment, following a similar amendment that he tabled in Committee. We discussed Clause 36 in relation to the protection it affords a regulator. Having considered the persuasive points made by the noble Lord, and others, after reflecting on the wording of this new amendment, we agree that to achieve the right balance in this clause the regulator protection should not apply in cases of gross negligence, and we accept the amendment as tabled.

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Moved by

[Lord McNally]

17: Clause 36, page 26, line 18, at end insert—
“( ) For the purposes of subsection (4) there is “gross negligence” on the part of a person or body if—(a) the person or body is in breach of a duty of care owed under the law of negligence, and(b) the conduct constituting that breach falls far below what can reasonably be expected of the person or body in the circumstances.”

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[Baroness Sugg]

My Lords, in Committee last month, a number of noble Lords urged my noble friend Lord Callanan to reconsider the Henry VIII powers contained in Clause 66. The noble Lord, Lord McNally, highlighted the powerful arguments made by several speakers on this issue and recommended that the Government give thought to that between Committee and Report. I am pleased to say that we have followed his advice and have considered the arguments made by noble Lords. As a result, I have tabled these amendments, which will remove the Henry VIII powers from the Bill. I hope noble Lords will appreciate the considerable ground the Government have given. We have not taken this decision lightly; we recognise that there may be situations in the future that leave some legal uncertainty. However, we will continue to examine related legislation and address any omissions as necessary.

Amendments 34, 36 and 37 ensure that the power to make consequential amendments in Clause 67 is now limited to changes to secondary legislation made under the negative resolution procedure. Turning to Amendment 33A, we had an interesting debate on this same issue in Committee. I take it that my arguments then failed to convince noble Lords of the necessity of the subsection. However, the Government remain convinced that the subsection is needed to ensure that all aspects of the Bill can be fully implemented effectively.

As noble Lords are aware, the Bill provides powers to make regulations for specific purposes such as safety and security. However, there remains the possibility that due to the complex and evolving nature of spaceflight technology, we may need to supplement such regulations with regulations on other aspects of spaceflight and associated activities. The power in Clause 67(1) would only be used in such cases. I hope noble Lords are reassured by my explanation and feel able not to press the amendment. I beg to move Amendment 31.

[Lord McNally]

My Lords, I see that the noble Lord, Lord Callanan, is in his place. I would like to say that he was sorely missed this afternoon, but unfortunately I cannot—we did not miss him at all. I can see that his popping in occasionally in the afternoon to this House of concord and agreement must be a pleasure, away from the hell of the Brexit department. It is good to see him. I do not know whether it was my eloquence or the fact that a former Lord Chief Justice—the noble and learned Lord, Lord Judge—applied his powerful arguments, but we welcome the Government’s concession.

I will not go into a great deal of detail on Amendment 33A. I will read out the section we want to delete:

“Regulations may make provision generally for carrying this Act into effect and for achieving the purpose set out in section 1(1)”.


Subsection 1 is equally catch-all. It states:

“This Act has effect for the purpose of regulating—(a) space activities, (b) sub-orbital activities, and (c) associated activities, carried out in the United Kingdom”.


That is far too wide-reaching.

I make one last plea to the Minister: perhaps we could have further talks involving the opposition—the Official Opposition as well, who put their names to this—to see whether we can get some different wording. We have done a lot of good work on this, but the wording is far too wide. I give her this Gypsy’s warning: if we send the Bill down to the other place with this subsection, it will cause just the same trouble. Parliament has to be very jealous of its privileges during the passage of Bills such as this. This is a bridge too far for anyone who cares about the need to keep powers within these two Houses. I am not going to press the amendment—it would be jarring to the spirit of the whole debate to have a Division at this stage—but if the Minister would agree to meet us and have one more go before Third Reading, that would be helpful.

[Lord Rosser]

The noble Lord, Lord McNally, said that widespread concern was expressed in Committee about Henry VIII powers in the Bill and the power they would give the Government to bypass Parliament when amending or repealing primary legislation. I too am grateful that the Government have changed their position. I suspect they were concerned that they would lose a vote on this in this House, and were probably far from sure they could put the Henry VIII clause back in the Bill when it got to the Commons. They would also have had the consideration that, at their behest, the Bill started in the Lords rather than the Commons, which is not the normal procedure for Bills containing potentially controversial clauses, as this one did until the government amendment was tabled. Henry VIII may be turning in his grave at these government amendments, but we welcome them.

On Amendment 33A, like the noble Lord, Lord McNally, I hoped the Government would be able to give some rather more convincing reasons than they gave in Committee for this catch-all regulation-making power being in the Bill. I am afraid the obvious conclusion is that once again, there is no movement because the Government have brought forward this skeletal Bill for their own party management reasons, one year before discussions on the regulations and nearly two years before those key regulations are placed before Parliament. As a result, frankly, the Government do not know what regulations will be needed. Even though this is a difficulty of their own making, they clearly think it quite acceptable to expect Parliament to agree to the wide-ranging regulation-making power Amendment 33A seeks to delete.

I share the view that it would help if this issue could be further discussed before the Bill leaves this House, which means before Third Reading. I also share the view that the subsection that Amendment 33A would delete will, if it remains in the Bill, be the subject of much discussion when it gets to the Commons. If the Government will not agree to delete it, it would be a lot better if it could be amended in some way. I hope they will think again on this issue.

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Tabled by

[Lord McNally]

33A: Clause 67, page 42, line 16, leave out subsection (1)

[Lord McNally]

I am happy not to move the amendment for the moment. I would like to study carefully what the Minister has said, but I reserve the point that we may want to bring back the amendment at Third Reading.

Amendment 33A not moved.

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[Lord Rosser]

In Committee, we expressed our concerns about the extensive use of secondary legislation to bring in provisions under this Bill due to the Government’s insistence on taking a skeletal Bill through Parliament literally years before the all-important regulations appear.

We also expressed our concern, as did the Delegated Powers and Regulatory Reform Committee, about the Government’s intention, in respect of many regulations, that the affirmative procedure be used only for the first regulations and not for subsequent regulations under the same relevant section of the Bill, which would instead be covered by the negative procedure.

The Government said in Committee that the development of the first sets of regulations would be subject to a stakeholder engagement process over the coming months and that they would then issue a full and wide-ranging consultation on each initial draft statutory instrument prior to their being laid. They also said that if there were any material change to the original instruments, there would be further consultation.

Government Amendment 35 seeks to put some of those undertakings in the Bill. While it does not address the concern about the negative procedure being used for subsequent regulations after the affirmative procedure for the first regulations, it provides a statutory requirement for a public consultation before regulations are made to which Clause 67(6) applies and for a report to be made by the Secretary of State about the consultation when a draft of such regulations is laid before Parliament. To that extent, and it is not a minimal extent, the government amendment represents progress and we welcome it.

[Lord McNally]

Amendment 35 shows that some fertile minds have been at work since these issues were raised. Therefore, while I welcome the amendment, I suggest that the Minister puts those same fertile minds to work on Amendment 33A; then we might have an equally happy outcome at Third Reading.

Amendment 35 agreed.