Select Committee on Science and Technology Written Evidence

Memorandum 1

Submission from the Department of Trade and Industry


  "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.


  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

    —  Ensuring fair markets.

  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.


  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.


  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:



Total UK funding
Of which, DTI

  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.


  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.


  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.


  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.


  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.


  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.


  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.


  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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