Select Committee on Science and Technology Written Evidence

Memorandum 6

Submission from UKspace


  1.  This submission is from UKspace, the main Trade Association for the UK space industry. Membership covers upstream satellite manufacturers, equipment suppliers and ground support providers, including Astrium, SSTL, QinetiQ, Logica, Vega, SciSys, SEA and Serco and downstream operators and service providers such as Inmarsat, BT and InfoTerra.


  2.  Space is a highly beneficial but widely misunderstood sector of UK economic activity. It is in danger of losing major opportunities through funding cuts, with loss of prosperity to the UK and future dependence on others for vital strategic services. A stronger national focus is needed to increase investment and returns and to help the UK achieve its strategic objectives in relation to global competitiveness, wealth creation, social benefit and the challenges of security and climate change. Action is needed to establish a more substantial national presence through a variety of entrepreneurial initiatives, as well as, very importantly, on regulation, co-ordination across government and influencing ESA and the EC.

Impact of funding levels on international competitiveness

  3.  The UK has one of the most competitive space sectors in the world. It is also one of the highest value adding sectors in the UK economy. This competitiveness has been built from judicious investment powered by a user led strategy focused on value adding investment decisions. However, this is not well or widely understood. The UK must reverse recent cuts in already modest space budgets if the UK is to retain this key asset in its hi-tech economy.

  4.  Space is an increasingly rewarding global market, estimated to be growing at 15% pa, reaching $1.5 trillion by 2020.

  5.  The UK's space sector scores well against the Treasury's indicators of competitiveness:

    —    It invested £300 million in R&D in 2004-05, 12% of manufacturing turnover, placing space in the top league for R&D intensity;

    —    Over 60% of employees are graduates, double the national average—the highest skilled workforce in UK manufacturing;

    —    Value added per worker is £135,000, four times the average;

    —    Revenues grew at 12.5% pa in the five years to 2004-05, four times the UK's economic growth.

  6.  The UK's space sector is a world leader in small satellites, satellite financing and insurance, mobile satellite communications and military satellite communications. Inmarsat 4, Skynet 5, MOSAIC, the GIOVE-A Galileo satellite and HYLAS are all testament to this fact. It has 7.3% of the global market, including 11.8% of the high-growth downstream applications sector. The Science Minister recently told Parliament: "How many high-tech and high value industries are there in the UK with such shares?" (Parliamentary Space Committee, 21 June 2006.)

  7.  Government support has been critical in terms of investment and decision making.

  8.  The UK's user-led strategy has provided a framework for focusing investment in areas of maximum tangible benefit—away from launchers and the International Space Station.

  9.  However, the UK's record on implementation has been patchy. Science driven research has enjoyed consistent support, but co-ordination and funding of non science-driven programmes and technology has been far more difficult.

  10.  Two flagship European programmes, GMES and Galileo, provide recent examples. GMES remains 75% under-funded by the UK, seriously prejudicing the UK's role in EU exploitation of Earth Observation. In both cases, user departments without the necessary expertise or remit in space were asked to identify and co-ordinate the UK position and decide on investment. Neither department had an obligation to consider and weigh the impact on the broader economy or competitiveness. The reality is that the UK's excellent user-based strategy is not properly co-ordinated across Government, with slow and complicated decision processes that have compromised competitiveness and wealth creation.

  11.  Market failure prevails because of enormous American government investment (~50% of world space expenditure) and globally agreed data policies.

  12.  UK competitiveness ultimately lies in its technology base. Current technology leadership is the fruit of a long-standing partnership between industry and Government, through joint investment in programmes such as ARTES, Europe's space technology programme for satellite telecoms, and other smaller ESA and national programmes. Satcoms represents 80% of the turnover and employment of UK space manufacturing, and provides the critical mass for it to remain viable, sustain its technology bank, and bid for exports. ARTES is a very successful technology transfer mechanism and has generated returns of 7:1.

  13.  In December 2005 UK Government reduced investment in ARTES from £20 million to £8 million and has blocked most other means for investment in technology. Britain and France lead Europe in satcoms, but UK investment is now lower than Belgium and Luxembourg. The Comprehensive Spending Review threatens further cuts or even to eliminate any remaining investment. Failure to reverse this will have direct, irreversible, long-term impacts. Leading UK technology capabilities will be lost and rebuilt abroad, accompanied by direct and indirect job losses and leading to dependence on non-UK suppliers for key service provision. Failure to sustain technology investment will jeopardise competitiveness and wealth creation potential as the UK platform for lucrative downstream service roll out is weakened and the technology bank dries up.

  14.  Public sector investment in space technology at a national level and through ESA should be put on a firm footing.


  15.  Under the statutory indemnity provisions in section 10 of the Outer Space Act 1986, UK nationals are subject to unlimited liability for treaty claims against HMG. This risk is not imposed on other business sectors and applies to anyone who causes space related activities to occur. Other countries do not require their nationals to indemnify their Governments in respect of space treaty claims. As a result, UK companies involved in space activities are at a disadvantage versus international competitors.

  16.  Further action is needed on market structure, regulation and licensing. New upstream capabilities are not always made available to service providers by incumbent satellite operators. This can prevent delivery of advanced low-cost services. The UK must seek to create competition at the wholesale capacity level to overcome this, possibly through appropriate regulatory mechanisms. Also, licences to operate services are difficult to obtain in some countries, including some EU states. Current EU Directives need proper enforcement. The UK should seek appropriate market liberalisation elsewhere through the WTO.

Benefits and value for money from ESA

  17.  The UK's space industry is fully supportive of Britain's participation in the European Space Agency. It sees involvement in ESA as fundamental to the future and is willing to support discussions on the future of the Agency.

  18.  ESA's role in procuring complex systems and sharing technology and other risks is vital. It provides economy of scale for many space programmes and offers highly leveraged access to world class missions and resulting products and services.

  19.  ESA has played a leading role in kick-starting programmes ahead of emerging end-user needs. It has been instrumental in moving operations and responsibilities to the private sector—eg Eutelsat and Inmarsat. ESA has also helped establish Eumetsat, which provides world class meteorological products.

  20.  Building on the UK's past national technology funding and ESA's technology programmes (GSTP and ARTES), which the UK has previously supported, UK industry has developed world-beating products that have helped develop vibrant export markets. ESA's participation in these developments ensures global acceptance of quality and marketing. Some of the early phases would best be carried out nationally however, giving speedier exploitation and clearer IP ownership. The recent PPARC CREST programme is specifically targeted at better positioning UK industry and academia for the ESA Aurora space science programme in this way.

  21.  It is vital to the future commercial success of UK industry that this chain: national investment—ESA collaborative development—UK-led commercial exploitation—be maintained and enhanced. The strength of a national programme significantly influences the return on investment in ESA. A strong national investment enables government and industry to develop properly co-ordinated national approaches to ESA and EU programmes, enabling BNSC to influence the definition of ESA projects and permitting the UK to obtain key roles and compete for key contracts. It also secures IP for future commercial exploitation. However, lacking sufficient funding, the current UK position is reactive rather than proactive and takes a defensive stance in responding to other nations' initiatives. UK involvement in the mandatory science programme is excellent, but commitment to the application targeted optional programmes is in many cases very difficult for the UK.

  22.  ESA's programme is complemented (and sometimes co-funded by) the EU's Framework and related programmes, which are more directly end-user application focused. These have helped UK industry to an extent, but to date have not been as useful, or well managed, as those of ESA.

  23.  ESA needs to encourage pseudo-commercial public and private sector organisations to take over operational service delivery, with transfer of ownership as soon as practicable. ESA should be encouraged to focus on service delivery requirements to drive provision of space assets.

  24.  Transferring ESA responsibilities to national Agencies (as proposed by some) will work for UKspace only if the UK plays its full part with full funding, otherwise the UK will lose out. To strengthen the UK position, industry recommends seeking placement of a major ESA facility in the UK, aligned with UK strength in science, technology or commercial and public sector applications for example. The UK could thereby correct current unresolved under returns and benefit even more from its membership of ESA.

  25.  Effective and early engagement in ESA programmes and maximum influence from the UK in support of its goals and priorities should be a major policy objective.

Maximising commercial benefits and wealth creation, innovation and knowledge transfer

  26.  Space related revenues in downstream services are projected to accelerate, growing by up to 15% pa. To maximise commercial benefits and wealth creation it is essential that the UK obtains a significant share of export markets for UK companies, rather than becoming dependent on non-UK suppliers for UK user needs.

  27.  Ownership of key areas of upstream IP that will enable the UK to lead such enterprises has been secured in satellite platforms, payloads, communication technology and operations. Without this strong upstream base, UK downstream providers will be at a disadvantage, being dependent on others for the necessary expertise.

  28.  The UK can harness its lead in innovative technology and financing to build competitiveness. It has already shown a high level of enterprise in smallsats and financing through SSTL and Avanti (with HYLAS). In each case government investment, complementing private sector risk taking, has been essential at critical stages.

  29.  UKspace has identified opportunities where modest increases in space technology investment should generate much greater returns from innovative public and commercial space-related services. Successful exploitation will expand UK high-value manufacturing capacity, help to achieve government objectives and facilitate creation of world-class commercial service enterprises.

  30.  The focus is on new satellite services...

    —  television and multimedia to mobiles;

    —    high-definition TV;

    —    emergency communications for security services and the public; and

    —    next generation dual-use military/civil support

  ...exploiting advanced technologies and equipment, providing...

    —    lower entry costs for new operators;

    —    higher capacity and lower running costs; and

    —    in orbit reconfiguration to increase utilisation.

  ...creating and participating in collaborative programmes, such as...

    —    Meteosat 3rd Generation, GMES;

    —    A real-time radar imaging constellation; and

    —    Location based services (eg road tolling).

  ...and establishing UK led Commercialisation Initiatives.

  31.  Satellites are already the cheapest way to provide digital TV, communications to ships and navigation. It is important to correct the common, false perception that space is too expensive for everyday use.

  32.  Novel, imaginative services will increasingly disrupt conservative commercial structures, creating new supply chains delivering greater economic activity and benefit, enabling the UK to make better use of its limited resources. It can even reduce the communications industry's carbon footprint.

  33.  The UK cannot afford the US "brute force" approach based on huge spending on strategic defence, and since the UK has international commitments dependent on maintaining at least some industrial capacity in satellite communications and Earth observation, it must (a) specialise where the UK has leading capabilities and (b) maximise leverage from other public expenditure. This requires intensification of knowledge transfer between academia, defence, government and industry.

  34.  Effective collaboration can be aided by the following strategies:


    By fostering innovative commercial businesses—in areas where UK is already world class, driving down costs for space infrastructure and services. Maintaining world-class industrial capacity enables low risk adoption of dual-use technologies and their adaptation between civil and military applications.

  In Europe...

    By exploiting committed European investments and ensuring maximal leverage from ESA and the EC. By seeking also significant returns from ESA through establishment in the UK of a European facility and ensuring that the UK is the centre of a virtual applications network for the whole EU. HMG has undertaken many studies looking at benefits of ESA membership, including by the NAO, which show demonstrable quantitative benefits.


    By increasing understanding of space across government, ensuring that procurement decisions are well informed, taking into account alternative and often lower-cost space alternatives and by creating a joint Government/City investment fund to bring space projects to market.


    By encouraging use of space applications, services and technologies by RDAs for regional economic growth, taking advantage of proposals for UK-hosted European facilities.

Delivery of public benefits from Government space activities and their co-ordination

  35.  Public benefits from the use of space and satellites are widespread and increasing, ranging from:

    —    broadcasting and mobile communications, particularly in remote areas, at sea and in the air, to secure military communications (Ref: Defence Industry Strategy, Cm6697 #§B8.45/47);

    —    to synchronising financial transaction in the City;

    —    to helping farmers manage their fields and crops;

    —    monitoring and evaluation of pollution, environmental damage and climate change;

    —    to the use of satellite navigation for finding your way and managing air, rail and road transport;

    —    surveillance of terrorist and criminal activity; and

    —    to assistance with disaster relief and distributing humanitarian aid.

  Space is also used as a platform for scientific research.

  36.  The UK is unusual among nations involved in space in pursuing an entirely user-led strategy for both choice of activity and funding. It does not have a Space Agency as such; rather it co-ordinates and operates through the British National Space Centre, which is a Partnership between public bodies engaged with space. A principal role for BNSC is the co-ordination of activities, dialogue and funding with the European Space Agency and its collaborative programmes, through which the UK achieves many of its aims in space.

  37.  This user-led approach has the advantage that strategy remains firmly focused on practical, valuable uses of space rather than on involvement in prestigious projects and the exploration of space for its own sake. This model works very well for science and the Research Councils are by and large fully engaged as primary funders of UK space efforts. However, the user departments of government, such as DfT, DEFRA, the Home Office and the FCO struggle to find funding for space as it is seen as too long term and early stage, in spite of the considerable potential benefits downstream. The DTI also struggles to bridge the gap between science and commercial exploitation and to the government's own future needs for satellite-based information and services. This leaves the UK vulnerable to becoming ever more dependent on key services that have been developed and provided by others and over which the UK has no control.

  38.  Industry supports the BNSC Partnership, but is concerned that the weaknesses outlined above will result in loss of a significant global market opportunity and failure to deliver important social benefit and political influence for the UK.

  39.  Industry is confident that BNSC would operate with more effectiveness and cohesion if industry was a full partner. Industry invests £300 million per annum in space R&D alongside the government's own £190 million per annum, frequently on co-funded programmes. Industry's status outside the Partnership makes co-ordination of investment for maximum impact even more difficult. Industry's involvement as a full partner would bring greater focus and resources to the problems of co-ordinating public and private responses to user-led opportunities for the UK and to developing solutions for the departments of government that presently find it difficult to engage. It is also recommended that the involvement of these user departments be strengthened and that a cross-departmental budget be provided to BNSC's DG for the development of applications with the greatest public benefit.

  40.  To bring this about, and given the strategic importance to the UK, the Government is urged to take action at Cabinet level.

Space research and skills development

  41.  To maintain a long-term, credible UK scientific skills base, each science discipline has to provide an environment that attracts and stimulates scientists and engineers. Space has plenty of appeal in this respect, pushing at the very boundaries of engineering, teaching the excellent management skills that industry needs, providing opportunities for international collaboration and producing opportunities for commercial spill-over. Support for UK space-based scientific research has been good, from both PPARC and NERC; PPARC in particular has taken modest but excellent steps to work with industry on long-term planning and technology development, but this on its own will not sustain a UK industrial base.

  42.  ESA's space and Earth science programmes are very successful, providing good value if the industrial return can be secured. Many projects and specialist measurement missions require complex observational facilities and sophisticated satellites, taking 10-15 years from design to realisation. Support is needed also for additional, more frequent, smaller missions to deliver rapid results for nearer-term challenges, for example, in understanding changes to the Earth system and for natural resource monitoring and management as natural resources are become depleted at an accelerating and unsustainable rate. This would also accelerate career and skills development for researchers and is an area in which the UK excels.

  43.  Importantly, modern components, rapid development miniaturised instrumentation, and more flexible operational approaches mean that capable smallsats can potentially be funded by the UK on a national or bilateral basis, increasing the body of scientific knowledge in the UK and raising the status of UK science internationally. Such projects should be tasked to include STEM skills development and educational material for schools and undergraduate students, enhancing the profile and understanding of space-related research and science as a whole.

October 2006

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2007
Prepared 17 July 2007