Memorandum 1
Submission from the Department of Trade
and Industry
SPACE—A DTI
SUCCESS STORY
"In aerospace, shaping the design and manufacture
of the next generation, supporting over 270,000 jobs across the
UK economy. The satellite and space industry, alone, has grown
by 17% in the last two years".
(Secretary of State for Trade and Industry: Labour
Party Conference: September 2006)
"The UK is a world leader in the space
industry with many world-class companies and products both in
upstream activities and downstream exploitation of these assets.
At the same time we have extensive experience of commercialising
space opportunities and we know a lot about the financing and
insurance of these activities."
(Lord Sainsbury: Case for Space Conference May
2005)
The primary role of DTI innovation funding for
space is to drive economic growth through the use of satellite
systems and services in a high technology area.
Recent studies show:
— UK space industry turnover is £4.8
billion.
— UK space sector contributes approx
£6.8 billion and 70,000 jobs to UK GDP taking direct, indirect,
induced and spillover effects into account.
— Productivity (value added per employee)
in the UK downstream sector is £160k per worker compared
with an overall UK average of £36k.
— UK space industry is six times more
R&D intensive than the UK economy as a whole.
— Public benefit occurs from space
in a range of applications including weather satellites, environmental
satellites and, in the future, through the range of applications
which Galileo will provide.
THE DTI CONTEXT
1. DTI is the anchor Government department
of the British National Space Centre (BNSC). DTI's focus has been
principally on technology and industry issues (both upstream and
downstream), through the European Space Agency (ESA), the European
Commission (EC) and through national activity. Significant new
DTI commitments (to European satellite telecommunications programmes
and GMES) were made in December 2005 and to Galileo in August
2006.
2. DTI funding for civil space contributes
to two of the three overall UK Space Strategy objectives and related
outcomes namely:
— Stimulating increased productivity
by promoting the use of space in government, science and commerce;
— Developing innovative space technology
and systems, to deliver sustainable improvement in quality of
life.
3. Further information on DTI funded activities
is set out in the UK Space Strategy.
4. The DTI's over-arching PSA target (shared
with HM Treasury) is:
"To demonstrate further progress by 2008
on the Government long-term objective of raising the rate of UK
productivity growth over the economic cycle, improving competitiveness
and narrowing the gap with our major industrial competitors."
5. The three DTI strategic objectives for
delivering this agenda are:
— Supporting successful business;
— Promoting world-class science and
innovation; and
6. BNSC contributes principally to the first
two of these high level strategic objectives.
7. DTI's contribution to BNSC funding and
activity should also be seen against the background of the Science
and Innovation Framework 2004-14 and the DTI Innovation Report
published in July 2004.
DTI'S ROLE
IN THE
BNSC
8. With the setting up of BNSC in 1986 it
was agreed that the Centre should be hosted by the DTI who would
also provide the majority of the core staff including its first
Director General. This provides a strong anchor for the Government's
interest and involvement in civil space. It was also agreed that
the Minister with responsibility for the BNSC would be located
within the DTI and with structural changes in early 2006, BNSC
now sits in the Office for Science and Innovation (OSI). Lord
Sainsbury has been Minister for Science with responsibility for
space since 1998.
CURRENT DTI SPACE
FUNDING
9. DTI funding should be seen in a context
in which funding is also provided by other Government departments
and Research Councils (PPARC, NERC, Met Office, MoD, DfT and DEFRA)
in pursuit of their own objectives.
10. DTI's historic space funding has been
as follows:
| £ MILLION
|
|
| 1997-98 |
1998-99 | 1999-2000
| 2000-01 | 2001-02
| 2002-03 | 2003-04
| 2004-05 | 2005-06
|
|
| Total UK funding | 183.18
| 184.99 | 172.62
| 177.38 | 169.18
| 160.20 | 188.65
| 197.94 | 207.61
|
| Of which, DTI | 102.68
| 87.76 | 87.73
| 90.89 | 87.50
| 85.06 | 34.10
| 38.70 | 42.40
|
|
11. The reduction in DTI expenditure in 2003/04 reflects
the transfer of responsibility for Earth Science activity (principally
the Earth Observation Envelope Programme) to the Natural Environment
Research Council (NERC).
12. At the ESA Ministerial Council meeting in December
2005 Lord Sainsbury committed additional DTI funds of £17.53
million to the European SatCom Programme (ARTES) and to the Global
Monitoring for the Environment and Security Initiative (GMES).
In August 2006 DTI Ministers agreed that a further £22 million
should be provided to the European Galileo Satellite Navigation
project.
13. DTI funding for civil space aims to maximise the
economic and or societal return from UK investment in the development
and use of space. It is focused principally on investments that
deliver a significant downstream benefit to the UK as well as
benefits to the leading edge UK upstream space industry and its
technological development.
DTI ROLE IN
SPACE STRATEGY
2003-06
14. Exploitation of Space is now one of the major areas
of new and developing advanced technologies. It provides the demand
stimulus for the early stage development of a wide range of new
technologies. Space is an extreme environment in which the potential
of these technologies can be fully explored and tested and space
companies possess the knowledge base and technical expertise to
do this effectively. Technologies developed in this way are then
available for use by other sectors of industry.
15. Demand for high technology and/or novel inputs by
companies producing space equipment, infrastructure and services
stimulate innovation and the growth of high-value added businesses
in other sectors. Space investment also offers, in its own right,
extensive opportunities for innovation in the form of a range
of potential new products and services. Thus Government expenditure
on space contributes to wealth creation targets and objectives
particularly those relating to the exploiting of new technologies,
knowledge transfer and innovation.
16. Although exploitation of space technology for services
is already an important global market, valued at over $110 billion
in 2005, it is still growing at around 10% pa[1]
and offers enormous future potential for the UK and others. Hence
the UK aims to be competitive to participate and share and benefit
in key global markets.
THE UK SPACE
INDUSTRY AND
THE IMPACT
OF SPACE
BASED TECHNOLOGIES
17. The BNSC supported and DTI funded study of the "Size
and Health of the UK Space Industry 2006" estimated the
turnover of the UK space industry at £4.8 billion and an
employment of 16,200 in the upstream and downstream space sectors.[2]
Some 57% of the staff employed in the UK space industry are qualified
to first-degree level or higher,[3]
with a large proportion in science and engineering disciplines.
An Oxford Economic Forecasting (OEF) study suggests that the UK
space sector contributes approximately £6.8 billion and 70,000
jobs to the UK GDP taking direct, indirect, induced and spillover
effects into account.[4],[5]
18. The "Size and Health of the UK Space Industry"
also investigated R&D funding by the UK space industry in
2004-05. It found that upstream companies invested 2.5% of
turnover in R&D, rising to 14.1% when externally funded R&D
is included. Downstream companies invest 3.1% of turnover in R&D,
rising to 4.3% when external funding is included.[6]
For the year 2004-05, the UK space industry invested 12% of its
GDP contribution in R&D, making the space industry six times
more R&D intensive than the UK economy as a whole.[7]
Productivity (value added per employee) in the UK space upstream
industry is estimated at £90k per worker and in the downstream
sector is £160k per worker. These compare well with an overall
average of £36k per worker in the UK economy.[8]
19. The spillover impact of the satellite infrastructure
on the economy in terms of services and economic benefit is significant
and potentially run into billions per year. Examples include the
value of satellites in weather forecasting, in communications,
broadcasting and the growing role of satellite navigation systems
in transport and traffic management. In total, including direct
and multiplier (indirect and induced) impacts, Oxford Economics[9]
latest estimate is that the UK space industry supports a value
added contribution to GDP in the region of £5.2 billion.
20. The UK space sector makes a valuable contribution
within the UK economy in its role as a leading edge, high technology,
high value sector. With its high levels of R&D activity, it
helps to meet Lisbon targets on levels of R&D spending. It
is a source of employment for highly skilled staff working at
the leading edge of technology. It therefore adds to UK's "portfolio"
of high productivity industry sectors.
21. Commercial led new markets are emerging in which
the role of the DTI is to facilitate through legislation and standards,
rather than intervene directly. Space Tourism is potentially a
highly visible example and the UK is well placed to become a major
player. BNSC, through DTI will need to contribute with other interested
bodies, to the development of an appropriate regulatory framework.
Additionally there are significant opportunities for UK companies
to be at the forefront in developing the systems and expertise
needed to enable space tourism to develop.
DRIVERS FOR
GROWTH
22. Future growth and the demand for services from the
exploitation of space and the satellite network will be driven
by:
— Development of new services which will capitalise
on space technology. There is consumer demand for instant access
to global information in real-time (eg navigation, weather data);
— Increasing need for scientific and observational
data to support government policies;
— Growth in e-connectivity, mobile communications
and broadcasting, including HDTV;
— Lower costs of access to space thus enabling better
exploitation and provision of data, information and services;
— Increasing requirements for natural resources
management and emphasis on population security;
— Growing need for disaster relief and humanitarian
aid in response to changing environmental conditions.
COMPETITIVENESS AND
KEY AREAS
FOR DTI SPACE
FUNDING
23. The UK remains competitive in a wide range of space
activity and selective investments by DTI are intended to boost
the sector's competitiveness. Particular UK strengths are satellite
telecommunications, navigation and positioning and earth observation.
UK industry is very effective at maximising knowledge and technology
transfer from it extensive scientific activities, and is also
very active in "down stream" activities providing user
solutions. Worldwide many countries recognise the value of space
technology and are investing heavily. This can lead to market
failures in the early R&D phase, which DTI assists to overcome
in selected areas. DTI is working with UK industry to change the
economic dynamics of access to space. One such area is in the
development of strong UK small satellite capability under the
MOSAIC-Small Satellite Programme. This has now given the UK a
world lead in this capability and has led to significant export
successes eg in China, Nigeria and Spain.
24. Within the sector, SMEs are a key part of the knowledge
transfer chain and a substantial contributor to the high level
of competitiveness. Their inherent flexibility means that they
can adjust quickly to take account of emerging technologies and
develop products to address new markets. Until recently, the DTI
supported such companies through sector specific technology development
funding under the BNSC national programme. However with changes
in DTI to the delivery of technology support to companies this
has proved difficult. It is recognised that the space industry,
and SMEs in particular, have been less successful in gaining such
support from the aggregated technology fund that the DTI established
in 2004.
Satellite Communications
25. The UK is a leading manufacturer of satellites for
communications. With the increase in Internet traffic and development
of broadband, multimedia, mobile and digital broadcasting technologies,
the satellite communications industry is set to experience significant
growth in the coming years.
26. UK companies have played a key role in the next generation
of advanced civilian communications satellites for Inmarsat and
are currently working to deliver advanced broadband and high definition
TV services in Europe.
Navigation and Positioning
27. Satellite navigation and positioning enables users
to accurately locate their position using signals from orbiting
spacecraft. Principally through DTI funding, the UK is playing
a significant role in the development stage of the European Galileo
Satellite Navigation Project and has carved out some leading roles
for UK industry. The potential uses for satellite navigation are
huge. Industry estimates suggest that by 2015, Galileo will be
generating €10 billion worth of benefits every year and that
Galileo will create 140,000 new jobs. UK efforts are focused on
developing new applications and services using the signals offered
by Galileo.
Earth Observation
28. Earth Observation provides a large-scale view of
the earth and enables monitoring of how the planet changes over
time. This is increasingly important not only for environmental
research but also for environment monitoring, weather forecasting,
mapping and disaster relief.
29. DTI is working with other Government departments
and Research Councils to develop the EU/ESA GMES initiative on
global monitoring and has provided a contribution towards the
funding for a Disaster Monitoring Constellation built in the UK
to cooperate and supply detailed images of any part of the world
in times of need.
30. Some examples of current successes in the 3 areas
referred to above are provided in Annex A.
EXPLOITING COMMERCIAL
BENEFITS FROM
INNOVATION AND
TECHNOLOGY TRANSFER
31. The DTI supports Knowledge Transfer Partnerships,
which enable companies to obtain knowledge, technology and or
skills, which are of strategic importance to them, competitively,
from the further/higher education sector or from a research and
technology organisation. This is embedded into the company via
a project or projects undertaken by an individual recruited for
the purpose to work in the company.
32. In the space related domain DTI has supported the
Location and Timing Knowledge Transfer Network (KTN), managed
by the National Physical Laboratory.
33. Location and timing technologies span many key areas,
and it is the KTN's responsibility to put the UK at the forefront
of this growing industry. Their aim is to overcome barriers by
combining academic excellence, industrial expertise and government
support to drive development for the UK in this emerging market.
34. The KTN, with 700 members, drawn from industry, academia,
end users and government, is growing at a rate of 50% per year.
LICENSING
35. DTI is charged with regulating space activity to
ensure compliance with the UK's international obligations. The
Outer Space Act 1986 (OSA) requires UK individuals or organisations
to apply for a licence from DTI whenever they launch or procure
the launch of a space object, operate a space object or carry
out any other activity in outer space. The UK government maintains
an up to date public register of space objects launched by UK
organisations or individuals.
36. The licensing regime under the OSA enables HMG to
offset some of the unlimited liability that falls to it by requiring
insurance, indemnity, technical and financial checks on applicants.
Before granting a licence, the Secretary of State for Trade and
Industry has to be satisfied that the activity will not jeopardise
public health or the safety of people or property. DTI considers
it particularly important that satellite operators show they have
considered how they will dispose of their satellite once it has
reached the end of its operational life.
37. An independent review into UK licensing of space
has been completed recently. DTI, through BNSC, will be carrying
out a consultation on proposals shortly.
EXPORTS
38. Principally through DTI and UK Trade and Investment
BNSC takes the opportunity to promote UK technology overseas and
to help UK companies to do international business. DTI through
BNSC coordinates HMG support for companies bidding for projects
overseas and arranges visit programmes for key space industry
decision makers from overseas to view UK capabilities.
39. International markets are important both for international
collaboration but also as markets for UK space technology and
know-how and BNSC has co-operation agreements with a range of
countries, including China and India. A good export example is
the international Disaster Monitoring Constellation (DMC), a series
of satellites built by Surrey Satellite Technology Ltd (SSTL).
The DMC constellation of low-cost, small satellites is able to
provide daily images for applications including global disaster
monitoring. An offshoot of SSTL runs the constellation with the
spacecraft owned by the individual partners: Algeria, Nigeria,
Turkey, the UK and China.
October 2006
1
2005 state of the space industry prepared by the International
Space Business Council. Back
2
Size and Health of the UK Space Industry: 2006 edition,
Executive Summary pages 2 & 6. Bramshill Consultancy. Back
3
Ibid 7 page 6 Back
4
The Case for Space. The Impact of Space Derived Services and
Data, pages 4-5. June 2006. Oxford Economic Forecasting. Back
5
The BNSC-supported Size and Health study investigates the size
and characteristics of UK commercial space activities in terms
of a number of key parameters including turnover, employment and
R&D investment. The OEF study, using the Size and Health data
as a starting point, modelled the wider impacts of investment
in UK space activities on the economy as a whole. Back
6
Ibid 7 page 7. Back
7
Ibid 9 page 22. Back
8
Ibid 9, pages 13-14. Back
9
The Case for Space. The Impact of Space Derived Services and
Data, page 17. June 2006. Oxford Economic Forecasting. Back
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