Session 2010-11
Publications on the internet

To be published as HC 445-i

Science and Technology Committee

The UK Space Agency

Wednesday 8 September 2010

Dr David Williams, Andy Green and Richard Peckham

Evidence heard in Public Questions 1 - 22



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Oral Evidence

Taken before the Science and Technology Committee

on Wednesday 8 September 2010

Members present

Andrew Miller (Chair)

Gregg McClymont

Stephen Metcalfe

Stephen Mosley

Pamela Nash

Alok Sharma

Graham Stringer

Roger Williams


Examination of Witnesses

Witnesses: Dr David Williams, Acting Chief Executive, UK Space Agency, Andy Green, Chief Executive, Logica and Co-Chair, Space Leadership Council, Richard Peckham, UK Business Development Director, Astrium Limited and Chairman, UKspace.

Q1 Chair: I welcome you, gentlemen. Thank you for coming to see us this morning. As you know, we have decided, as one of our early inquiries, to look at the UK Space Agency. I think it is appropriate. Next year is the 50th anniversary of the first manned space flight by Yuri Gagarin, and I think that the whole issue of space is immensely important, not only in terms of the economy but of course about exciting young people in terms of future careers in science, which is another subject that the Committee is interested in. So we are very keen to look at your progress so far. With that in mind, perhaps you would be kind enough to outline what progress has been made, what problems you have encountered, how you have dealt with them and to look at how the Space Agency will ensure that future programmes remain competitive. I will leave it to you to decide the batting order.

Dr Williams: Thank you, Chairman. Perhaps I should start on the progress of the agency today. For those who were not around, the Government announced in December of last year that an agency would be created following a public consultation. The launch of the agency was in March of this year; and after that we immediately went recess and into the election period. But in terms of creating the agency in March, the key point was the written statement to Parliament which set out, in very simple terms, what we would be doing and what we would take over. Since then, we have put quite a lot of effort inside the Government in negotiating with the various Departments and organisations because the agency is actually going to take responsibility for activities that are not just part of BIS at the moment, through the Technology Strategy Board, through the Natural Environment Research Council and through the Science & Technology Facilities Council, but we are going to take responsibility for some activities of the Department for Transport, on Galileo, we are going to take responsibility for some of the Defra activities on Global Monitoring for Environment and we are going to take responsibility for some of the MOD activities in respect of the European Union’s Satellite Centre.

The broad structure of what was going to transfer was agreed quite quickly, but what we have then been looking at are the details of the boundary condition between the agency and the partners that were part of the British National Space Centre. I think it is very important to recognise that in creating the agency we are not going to bring everything into the agency because, if we did that, we would have to bring an enormous amount of activity into the agency. But we don’t want the agency to be a silo, so we do need to work very, very closely across Government and across industry to make sure that, as we go forward, we continue to work with these people. So we expect the Technology Strategy Board to continue to interact with industry in terms of applications. We expect NERC to do it for the science, and we are getting written agreements on this, and the same with the science and technologies. On the industry side, we are working with them on how we have advisory bodies going forward in terms of decisions we are making in future commitments. So we are at that point where we have got that broadly agreed. There was quite a dead period during the election. We got back into activity in June and July. A lot of the devil is in the detail, because with the spending review coming up we’ve got to continue working on that in parallel. We have the programmes that continued. They didn’t stop because we created an agency. We have a day job to run the agency, as it were. We have a day job to look at the spending review. And simple things like the creation of administration budgets in non-departmental Government bodies are impacting on the creation of the agency because we have to deal with that issue in relation to the budgets that we want from April 2011.

The plan now is that we get all that together and, at the end of the spending review when we know the forward budgets, we then write the framework document, which is a formal document, we write the corporate plan, finally-we’ve got those in draft today-and we place those before Parliament, as is necessary to create the agency, and the agency comes into full force with the new spending period in April 2011.

We decided on that date for two reasons. One is, it’s a new spending period, and secondly, in terms of closing accounts mid-year and creating an account for the agency, it seemed an unnecessary effort given that, with five, six or seven bodies involved, it would involve all those Departments part closing their accounts for the year, and it just seemed an unnecessary exercise. So that is where we are today. I think, as I say, the devil is in the detail and we continue to work on those details. I don’t know if my colleagues have anything to offer.

Richard Peckham: I represent the industry, so we are on the outside, if you like, so I can’t comment on the progress. We see, obviously, a lot of activity, but there hasn’t been too much apparent on the outside, particularly where the progress has got to. I think from our point of view we just see this as a tremendous opportunity. We think we’ve been missing a lot of opportunities in space with the old structure. The BNSC really just reflected, I guess, the Government’s attitude towards space, where space wasn’t really seen as a strategic opportunity. It was more seen as just a branch of science. I think it is probably only in the last few years where the economic value of space as well as the inspirational value of space, as you said, has been recognised, along with, I guess, the importance of space in our security and the importance of space in defence. I think all of these things have come together that suddenly raised the profile and we just need to join all of those together in some way. So we are very pleased that the agency has been created. We are certainly ready to support. We’ve offered staff to David so that we can second expertise to help build that critical mass of expertise and we are just looking forward to that progress.

Andy Green: I think it is a very difficult question to answer right now. It is probably the most difficult moment to try and create something like this without the spending review being finished. So whether this is going to create any substantive impact or not, I think we have to wait and see. From my point of view, there are some disappointments. I think there are some critical things in terms of staffing the top of the organisation and making sure that it is focused on economic growth. As the IDT said, it seems to us that space has come out of science into the mainstream now. It is a very significant economic issue. It is a very significant global and political issue as well, which is why I think Government and industry have to work together. And it is getting a refocus of the agency to do the very best, with whatever money we have, around ensuring that we are able to grow jobs and economic growth here in the UK with it, and a rebalancing, not away from the science agenda, but to make sure that the science agenda is integrated into a growth agenda. I think it couldn’t have been a more difficult period to begin this process, but the difficulties are significantly external. I think it is going to need tremendous political will to bring a space agency into place in the UK which has a real impact and makes a real difference, because if you’ve got a lot of money you don’t need so much political will but if you’re having to do the very best with a small amount of money, then you need to be able to align all branches of Government and industry together to make the very best out of everything that we’ve got. That makes it a tough political task. Obviously, I am doing everything I can to help the Minister, as co-chair of the Space Leadership Council, make that happen, because it must be, I think, the right thing to do.

Q2 Chair: You said that there had been some disappointments. What’s the biggest one?

Andy Green: I think it’s just a sense of a lack of momentum. It is extremely difficult. David is the Acting CEO. We need to know whether he is going to be appointed formally or not. Are we going staff the people underneath? Industry, I think, is ready to provide more resources into the space agency, but because of the difficulties of, first, the election and changes of leadership that go with that, and then waiting for the spending review, from our angle it is very difficult to see any concrete progress as we go through. Again, I am not particularly being critical. It’s a really horrible time to try to do this. So I think we need to be realistic about it. But it is important. It is a PR issue within Government. The space agency needs to be widely respected by all the other Departments which are engaged in the needs for the application outputs of space. We need to get that on the front foot and, of course, momentum matters in those things. If it is seen to drift away, then the other Departments will start to ignore it and we will miss the benefit of really bringing it all together and helping to drive the economic growth story. So, from my point of view, what I am doing is trying to help as much as we can drive that momentum forward.

Q3 Alok Sharma: I was very pleased to hear that you are planning to work closely with the wider community. But I think it is the case that a number of organisations have raised concerns about the pace and extent of the changes and , actually , the lack of communication a bout the activities of the space a gency. How do you respond to that? Practically, are there any plans to have regular dialogue with the wider community going forward?

Dr Williams: I think we are in a society where everybody expects Twitter to tell you in real time what is going on on a day to day basis. When you are negotiating with Departments you have to have a little bit of confidence with the Department because, to put it in perspective, from the beginning of June we’ve had new Ministers in our Department, and the Minister has been very supportive and very good. We’ve also got new Ministers in the other Departments. So, for example, with transport, it was only 10 days ago that we got agreement that they would continue the policy, so we have been through a cycle of internal discussions. Externally, we have set up the Space Leadership Council, which has now met three times. It has got something like 25 people on it, and a large number are industry people. So I feel that we are engaging at that level.

We’ve got one or two activities through the innovation and growth strategy moving ahead as work in progress, the technology road mapping, which involves a whole community. It is currently being led for us by the Technology Strategy Board because that’s the legal framework, but that is an agency activity that is initiated. And we have got similar work on Earth Observation and sovereignty issues about Earth Observation that are moving.

In terms of public events, of course we had the one in March which was a full public event when it was launched. The minister spoke at Farnborough in July, which was his first major discussion speech on space, and he reaffirmed the position. We’ve met with various people. I’ve met with the Royal Astronomical Society. All the organisations you have asked to meet we meet with. I meet with industry regularly. Next week I am speaking at the Royal Aerospace Society in London. I am speaking at one or two events. But the big issue now is that we plan to have what we call a "town meeting" in Government, an open meeting, probably in London. We thought about when to do that but, clearly, it is only sensible to do that at the end of the spending review, when you can set out the way forward and say, "This is how we are going to do it. This is the internal structure of the agency now and this is the resource we’ve got to work with for the next four years."

In terms of momentum of change, many programmes are actually committed for the next year or so. Changing the content of the space programme within a year is very difficult because of the way the commitments are made. So I can see why some people might feel that they are not involved, because I can’t talk to everybody all the time. I think we make a good job of what we are doing and we’ve got the information on the Web, but it is only, really, a two-month window. If you take August out, and April and May, we’ve only really been working in an effective way for two months on the issue, which is very fast in Government terms.

Q4 Alok Sharma: Just turning a little bit to staffing, are you planning on taking on extra staff to deal with the extra responsibilities? What is the time scale for that? How you are going finance it? And I think Mr Green talked about the appointment of a permanent chief executive. What is the time scale on that?

Dr Williams: On that, there are two issues. One is that we are very close now, internally, to having a structure that we feel is right to run the agency when it is fully up and running in terms of posts. What we are going to do then is discuss that internally with the Minister in my Department, and we will talk with industry on it to see how they feel. That is to identify posts that we see are needed for the future which involves some secondees coming in from industry, because what we want to do is, rather than just asking industry to second people, we want to actually, more or less, advertise a job in industry, and say, "This is the type of thing we’d like you to lead on in industry for us. Can you, more or less, advertise it across the piece?"

In terms of new appointments, the rules are quite clear. The system says that once you create the agency you’ve got to migrate the posts into that, and legal are advising us on the mechanism. The individuals in post have the right to take that job, and overlaying that at the current time is the Government-wide ban on recruiting new people either from outside the civil service or, in the case of my Department, from other Departments of Government. So there are some interim issues that we are having to do "fixes" to get round, to make things happen in the short term. So it is quite a complicated picture, given the wider initiatives of Government, which I have to work with. I can’t ignore the fact that the Government have said, "No new recruitment," "No consultancies" and "No publicity," because we have had to stop producing public information. At Farnborough we couldn’t produce all the information we wished to because of that decision, which we abide by and work with. So it is, as Andy said, a difficult period, but I feel that we will be in a position by October to say, "This is how we see the agency running", and we hope somewhere between October and the end of November we will know the exact budget for the agency and be able to say, "This is, then, the programme we are going to do."

Q5 Alok Sharma: And the chief executive role?

Dr Williams: I am the Acting CEO because the agency is in shadow form. I’m there until the Department decides what to do.

Q6 Roger Williams: Many public bodies are taking action on expenditure, on the assumption of what the financial climate is going to look like after the spending review, to carry out the day job, as you put it, of the a gency. Have you had any discussions with BIS as to what the funding is going to look like for the a gency over the years to come?

Dr Williams: We have had discussions which are very difficult because the spending review is a confidential area of interaction with Minister and Government in general, but we are exactly like any other part of Government. We have been asked to say where we can do with less money-25%, 40%-and we have been asked, "What is your growth agenda that we can look at to see whether you grow?" and we have provided information on that. As I say, what the Government make of that and what the Minister makes of that, I do not know at this stage because the settlements have not been made.

Q7 Roger Williams: I think the exp ectation is that organisations-public bodies- like yourself , will, perhaps, have less public money but be looking to the private sector for more funding. Have you examined any of those avenues?

Dr Williams: We are looking, quite rightly. There is a certain expectation but there is also a belief that Government is looking at it and making sure they make the right decisions for the future, and my job is to look at that. The next phase will be one of those areas that is the right decision for the future, and that’s why the interaction is ongoing.

In terms of industry involvement, we do quite a lot of work with industry. Whether we can get more private money in in the short term is difficult, but we have some very notable successes. So there is a telecommunications satellite, Hylas, going up this year, where the private capital to Government is of the order of 10:1 to 11:1 private capital to Government involvement in funding terms. That is something we have done over the last three or four years. That is an example of how we really work with industry to try and, as I describe it, take out the technical risk of whether this satellite is capable of being built so the market risk can take over the funding responsibility. Because in the commercial markets the capital is there and that is the area to look for, but they will only put money into projects where they feel the technical risk has been reduced to the level where it is sensible, and getting that boundary condition right is a very important point in the Government/industry interface. We have done it successfully on a couple of projects already.

Q8 Roger Williams: So perhaps I could ask the other members of the panel, from your perspective, do you think the economic climate is going to be more conducive to private investment in these sectors?

Andy Green: When I was asked to look at the space industry-I’m not a space person; I run an IT service company that works across Europe and works in all sectors-my natural reaction was to question why Government would need to support a modern, vibrant industry like space. It’s not obvious from the get-go. But whereas in most industries, IPR, when it’s created, is freely available on the marketplace so you can bring the skills of the City of London and the technology skills of the people in the UK to bear and create the commercial cases freely, in space that is not true. There is such an overlap between defence and intelligence that it becomes a political issue. So you can’t wander into Brazil and work out what they are doing and then take the IPR and deploy it in a commercial way. Therefore, if there is not a connection between what Government does around de-risking the technology and working together on the things we do, we’ll find it very, very difficult to do what we have said we want to do, which is to grow from a 6% to a 10% share of the global marketplace and, therefore, generate jobs, wealth and taxes here in the UK.

That’s why I came out committed to the idea of collaboration, in that we need to collaborate together in that sense. I think the risks we have right now remain to do this in a way which works with the agenda. The point we would make about space is that there are a whole set of things in which Government needs to invest, in which space can help to deliver. You can either subsidise rural broadband by putting fibre everywhere or you can take that satellite that David was talking about and use it, very quickly, to give broadband capability to everybody. Now, it is not identical. There are issues. People say you can’t run the best games over it because there is a latency issue. But we do steer real life unmanned vehicles with great precision in real war over it, so it can’t be so terrible, I don’t think. I think we need to be realistic about cutting our cloth and doing the things that we can do that cost-effectively use space to deliver other objectives.

So a lot of what we have talked about is this point about, as we get through the spending review, using the space agency to engage in those key areas of funding that other Departments need to do and deliver cost-effective solutions. So in that way we rather hope that we can stop all the burden of the cuts coming on space, if you like, because it is helping with the important national agenda of cutting debt in other ways.

The second thing is, increasingly, of course, the European Union is beginning to directly fund space. If we are not prepared to have a really powerful space agency that can stand alongside the French, the Italians and the Germans, then all that funding, which we are paying for anyway whether we like it or not-this is not contributions to ESA, which we have a right to make or not to make and therefore we can cut it if we want to-this is European Union funding which, effectively, we have to. We need to be playing hard and seriously in that game to ensure that as much economic benefit of that flows back to the UK. And actually we have a lot of allies, because we are very good at working with what ESA calls "the small nations", the Netherlands (although you could probably argue that they are not small) and these other places which are not the big powerful players. We are very good at collaboration with them. We have an opportunity, I think, to work, but it does rely on having this strong Government belief in this as an economic driver, a strong political will and a strong space agency.

Richard Peckham: Perhaps I might just add that industry is certainly ready to invest-an industry that, as you heard from David, does already invest quite strongly. We believe that the agency, by being a little bit smarter about some of the things that we do, can leverage more of that. In particular, that is trying to aggregate Government needs, because Government is a big user of space and a lot of people probably don’t even necessarily realise they are using space. They are buying, perhaps, imagery to help with flood prediction or even the private sector insurance companies are using it to see if the floods actually happened. There are a lot of users out there who use the "products" of space.

One of the great hopes we do have for the agency is if they can pull all of those Government needs together, and they have got the ability to actually act as a procurement agency, we think there is a lot more private sector capital that could be brought into the market, when they see an anchor tenant, if you like; there is a big enough anchor tenant that will justify us making an investment and then we believe we can sell the rest of the services on the market. So I think there is plenty of appetite out there if we get the agency right and can leverage it.

Q9 Roger Williams: I think Sir Martin Sweeting said that setting up the agency would be appropriate if there was going to be a tenfold increase in activity in the sector. Do you agree with that and is that going to be achieved?

Richard Peckham: The last time there was a review on the space agency, I guess industry-we--thought long and hard about, "Are we going to come out and firmly say, ‘We want an agency’?" I guess we did duck the issue a little bit. I know Sir Martin came in and said that a poorly funded agency could end up worse than not having an agency at all. That was the risk we felt at the time. I think what has changed since then is just that the political environment has changed, that space is now recognised much more broadly across Government as being really important-that it is a critical national infrastructure, that it is important to our defence needs and so on. So I think the political climate has changed enough that that danger has gone away. I think an agency with no more money would be weak and, as the economy recovers, clearly, we have hopes and expectations that funding will increase because, with the best will in the world and however clever we are, if you’ve got people like the French spending eight times more than us, even the Italians spending three or four times more than us, and obviously people like China and India coming on quickly, if we are going to keep ahead of those people, which we are at the moment, then we’ll have to invest. But in the short term I think we can be clever and not have to spend too much.

Q10 Roger Williams: I think Dr Williams said that you have made representations to BIS in terms of reductions in expenditure. I know it is very difficult for you to say anything in advance of the spending review, but what would be the impact of a 20% reduction in your spending? Would it make the a gency viable at all?

Dr Williams: Twenty per cent. on the overall budget would be very difficult, but I think we aren’t in that situation yet. We’ve just given advice to Government on the range of options because that’s where it is at the moment. That is the debate. Because of the way we are heavily committed into the European Space Agency with budgets, which are long-term, there are two issues. One is how you cut it, if you were to, and the other is the effect of those cuts, given that some of that programme is mandatory. At this stage, I don’t think we have gone beyond the point of engaging in the round about, "These are the scenarios". Because the other scenario is that its base has grown way above the average of the economy over the last ten years. I have just seen the draft review of the health of the UK space industry, which we did this year and got delayed because of the election. That is showing that it grew again through the last three years, so we are growing.

The bigger growth is in the downstream sector, the service sector, and the upstream sector, but none the less the technology sector has also grown over the last three years, which is no mean achievement in the climate we are in. So I think we are trying to use that to show that this is an area in the growth agenda of the Government and the Department.

Going on to some other areas, my view, certainly last time, was whether an Agency was sensible. I have changed as well, because I think what you do in government and what we would need to do going forward is to have core areas where you have commitment to enable you to ensure the technologies are in place, because there are some businesses you can’t do without, the certain right technologies, the right infrastructure. Space is one of them. By bringing the budgets together we can ensure that, going forward, there will be a technology base and an infrastructure base regardless of its size in the UK, and that will be tailored to trying to do things which are good science, good public service and good economic growth. So that is why an Agency is important, and why we have got to work across. The trick of the future is to avoid the silo approach, that the Agency does everything.

Chair: That leads us very neatly on to Pamela Nash.

Q11 Pamela Nash: You were saying you have discussed the UK Space Agency’s relationship with a variety of Departments. I was wondering if you could comment on the specific discussions that have taken place with the MOD and the Home Office with regards to transfer of their budget and responsibilities.

Dr Williams: With the MOD we had long discussions with, basically, four areas of activities that could transfer. One was research. They had no research budget. Two was the European Satellite Centre, which is a European facility to collect data from around the world. They bring satellite data from around the world together and do intelligence analysis that is then available to all Member States. The third area was the telecommunications system, Skynet or Paradigm, as it is now called. And the fourth was the weather forecasting service, which the UK funds from the MOD to the Met Office through a European organisation called EUMETSAT. The discussions concluded that those areas of MOD activity that are supporting frontline activities operationally should remain MOD-that means Paradigm and the weather forecasting system-and that those areas that are not, the European Satellite Centre, could transfer across. There are lots of arguments and discussions around that, but the most important one is stability of operational capability in the short term and making sure that you don’t lose anything, because transferring something like the Paradigm programme across would be quite disruptive in some senses and they could not afford to have that disruption in their operational service. So we agreed that boundary condition. We have since had discussions with them about next generation Skynet and next generation Paradigm and how we can work together on the technology that needs developing to make that happen. I think that can be done in the Agency.

On the Met Office side with the weather satellites, we are going to have an agreement, which will be written down and codified for the first time, that says that the agency will take responsibility for ensuring the technology developments for future weather satellites. They will be responsible for funding the operations of those services. Then when it comes to bidding for money for future requirements in the Met service, they will support us in our approach. So that is making the agency more than one Department.

On the Home Office side, and it’s not just the Home Office but the Cabinet Office, there are two or three areas. One is security. One is space situational awareness, which is: "Do we know which satellites are going around? What is the resilience of the satellite network? What would happen if the telecommunications satellites disappeared tomorrow for six months? What’s the impact on the economy?" The Cabinet Office did a study on that. That’s not been publicly released but we are working on it, and we’ve agreed, not formally yet, but it is agreed in the background that in the next 12 months we will have a virtual team, led by the Cabinet Office, with MoD, the Home Office, the agency and one or two other people, to look at the resilience and security impacts of space on the UK as a whole, because there are some quite important areas, not just the economy but the way we operate in the country, that would have severe problems both short-term and long-term. The one example I give, which is public, is that international shipping no longer need to carry charts on board, and many of the international lines no longer have people capable of using theodolites. So if the navigation network went down, they would all be relying on local radar.

Q12 Chair: Interestingly, the Royal Navy have not followed that model .

Dr Williams: And that’s why I said some of the international lines, because, of course, many shipping companies employ ex-Royal Navy staff, and therefore you have a back-up capability built in. But it is an example. The National Grid, the timing of the transfer of electricity, is now governed by satellite signals. The Ordnance Survey mapping base is now determined by Ordnance Survey GPS signals. So an enormous number of things are dependent on space, some of which have just a short-term problem and some of which will be a long-term problem. We need to deal with those.

There are also threats. We may be asked, "Can you take out satellites in the short term?" The answer to that, in some cases, is probably yes. We need to know how to address that, and quite cheaply in some cases. So we need to deal with how to address that. And that then becomes a complicated issue because you have got the USA, who we have a good relationship with, we have got Europe wanting to be independent, and we are, as the agency, trying to work that interface. If you want to know where the satellites of the world are, you can map them quite easily. If you want to know whether they are going to crash into each other, there is some very complicated mathematics involved and we are trying to get the UK heavily involved in that activity, because that is a key area.

Q13 Pamela Nash: My next question- this is for each of you-is, do you think that the UK S p ace A g ency can remain solely a civil space a gency? You are already speaking about a few overlaps from what you have just said, particularly when there will be financial pressure on both commercial and military ventures in the near future, which may make dual missions more popular.

Dr Williams: Dual missions are strange. You either have missions that everybody can use or missions that only the military can use. "Dual use" is a funny phrase for me, but the weather satellites are a classic example of a system that is paid for by the military but used extensively by the civil world. The Global Monitoring for Environment and Security systems of Europe will be used by the military. They will use all services to get background information. But, looking forward, I think it is getting into the technology requirements of future systems where the technology road mapping exercise, I hope, because I am not involved day to day, will come out with some important statements about technologies that are needed that are independent of whether it is civil or military, and where we can get the UK position in technology terms to take the lead regardless of how the satellite is then funded. So I think, yes, there are areas in the background that we can do.

The question you ask is: Will this military funding stay separate? I think for the foreseeable future, yes, because they are running those out of operational requirement needs; it is the research side that comes in.

Andy Green: From our point of view it’s not ideal but it’s understandable. In a way, you can decide any way of running it as long as there is this commitment, which is where the political will comes in, to really think through how you can take an anchor tenant. Remember the sort of thing we are talking about. There was an INMAS press release the other day which stunned me. They were waving $500 million for new satellites, and I think they were expecting revenues in 2015, which gives a sense of the sort of risks that people are prepared to take in the commercial world.

The role of an anchor tenant in enabling that business case and allowing the funding to come in and therefore allowing the UK to build successful businesses is very important. If you have a complete split between the intelligence and the military funding and the civil funding, then we will miss opportunities because, actually, if you think about what they will take in however many years’ time to be sure that somebody in Afghanistan has complete video surveillance around them and is able to spot people and keep themselves secure, that has massive commercial applications at the same time. The same technology can do these things and can do important commercial things and important military things. That is the essence, I think, of what we need to get done: to recognise that there is a weakness, for good reasons; the decision has been made that there will be separate funding around those things for operational certainty and all that. It is perfectly understandable. But, having done that, we need to manage it. We need to absolutely make sure that we have got a strong space agency, respected by the Home Office and the MOD, who can bring forward these cases for multi-use capability going forward. If we can do that, then I think we can make the absolute best of the funding that is going in again for other purposes that can develop a strong space agency in the UK.

Richard Peckham: I think industry, by and large, agrees with the decision to keep the operational running of a purely military thing in the hands of the military. I think where we have been disappointed is that we just haven’t seen the engagement yet of the military with the space agency. I think it really does need staff to be working in the space agency, to be looking for those synergies wherever they are. And probably, from the security side as well, that there should be Home Office and MOD staff embedded in the agency. Certainly with Earth Observation, we would see a dual use or a multi-use system where the military do want pretty much the same thing as international development need or environment and agriculture need. There is so much commonality, so there is a concern from our side, I think, that we are not seeing as much engagement as we would have hoped.

Q14 Stephen Metcalfe: Your predecessor organisation laid out its objectives in the " UK Civil Space Strategy 2008-2012 and beyond . " Do you endorse those objectives, and what would your priorities be for the next five years?

Dr Williams: I think that that strategy was the document that was produced when I took up the job in the British National Space Centre because I was appointed from outside Government on competition to that post. So I feel quite happy with the strategy. I think most of those objectives are still valid. It was a generic document, as strategies are. It set out areas. I think two things have changed. One is that we have had the innovation and growth strategy and we are working through the recommendations of that and seeing what we should do with them, and we have mentioned one or two of them-sovereignty and the Technology Board.

One of the things I want to try and do by next April is to recast that strategy to take on board the innovation and growth strategy recommendations, and that will give a bigger feel, I think, for the economic side of the equation in the going forward strategy, because the public good is there, the science is there and I think the economic side needs a little bit of strengthening. So I think on the economic side it is quite a broad thing. One is regulation. We have some problems with the Outer Space Act. We have to sign a licence for a UK satellite to be launched, and that involves the companies paying insurance on operations and services, which for very large satellites, is probably "in the noise" but, for smaller satellites and for education satellites, is actually a burden. But unfortunately it is in the primary legislation so we need legislative time to change it. But we have to address that issue. I think that is an issue. We have legislation if people like Virgin Galactic want to operate in the UK. So we are going to address all those sorts of problems, working with them.

I think the other area is on bilaterals with other countries. This year we are signing agreements with Peru, Russia and the USA, we’ve got one going with China, Algeria and we’ve worked with Nigeria. The purpose there is that when a company wants to try and sell into a country, as Andy mentioned earlier, it is not always a straight commercial deal. Governments need to be involved. My job, then, is to have the team go in there and make sure we set the right framework for that co-operation and set the framework that allows it to happen and allows the contracts to flow. So we are doing quite a bit in that area to try and help industry on the export side.

One of the things we are strengthening is our links to the UKTI system. Although we have a network round the world, we don’t want to duplicate that work. We are trying to establish formal links. There is a Science and Innovation Network that is global. We are working in to that. There is the Embassy Network. One of the things we have already got is two or three people working specifically on that issue of how to build bridges across to these bodies and use those bodies to help us when we go to foreign countries. I have to be honest: they have done a tremendous job with the Indian one, with the Peruvian one and with the Russian one in making sure that the way we write it is consistent with the way the country wants to work and we get the right messages. So I think all those are very important. I think we have talked about the selective support. That is a change of thrust that we want to embed and we will do, and that’s an area where I expect to be able to say that it is an area where we would like to advertise for an industry post to come in and take a senior position in that area.

The other two key areas, of course, are the European Space Agency with the 2012 ministerial, and the European Union with what we call the "Post Lisbon" and the preparations for the next financial perspective. They are enormously important. It’s been mentioned. We have small teams on that, and we are working it. We do have a good reputation in the European committees and we’ve got to keep working that position.

Richard Peckham: Just a comment on the Civil Space Strategy. I think the biggest disappointment in that when it was issued was that it didn’t actually commit us to doing anything. So it was quite a good document. I know a little bit about the history of it being produced and some of the earlier drafts did commit us to doing things, and by the time they had it circulated round all the BNSC partners, all the commitments were taken out. I think, from the industry side, that was really disappointing because you read it and you said, "What’s the UK going to do?" and you weren’t really any the wiser at the end. Obviously, we do hope that the agency, now with a budget, when they write a strategy, can actually say, "We will be doing these because we have a budget to do it," rather than acting just as a co-ordinating body where the budgets were all held somewhere else, so they could never commit a budget; they had to go and ask somebody else.

Q15 Stephen Metcalfe: You mentioned budget. How much do you think you need in terms of budget to make this happen? Secondly, who else will you be consulting with to actually tie down that strategy, which sounds, on the face of it, great, but will you be consulting with anyone else to find out what their views are as well?

Dr Williams: Yes. When we revamp the strategy, as we wish to, the fact that we’ve got the innovation and growth strategy to work from takes a big piece of that equation away because that was a very, very intensive effort, primarily by industry and academia, to do that work with some Government involvement. But as the document iterates, we then iterate with UKspace, we iterate with the trade associations and we iterate with the academic groupings. So there is an iteration that goes around before it comes out. But a strategy is about direction. The implementation plan is what you do. I think if you look at the strategy you mentioned, if you go through the areas where we said we would do it, we have actually done about 95% of them on time and persuaded, even in the climate we were working in, that we should put money into programmes like GMES in the European Space Agency that hitherto we hadn’t really been involved in. So I feel confident that we’ve followed up on the specific statements in that strategy about what we will do, very, very successfully over the last four years.

Andy Green: In the innovation and growth strategy you made an economic case for doubling the amount of money we spend on space in the country. We are 22nd in the world on the amount we spend on space, and yet we probably have, outside the United States of America, the strongest set of scientists and capabilities and a real belief in an ability to generate a lot of economic growth. So it was an investment case, not a spending case that we made. It is clearly very difficult to know when we might start on that journey because we need a non-bankrupt country to start from, so we’ve got a lot of work to do. We recognise that, and we’re all going to work seriously together on that.

The point about the space strategy that the IGS made, which I feel very strongly about, is that it needs to be a Cabinet-owned strategy. The reason is, for the ones we’ve been discussing all the way through here, that it needs to coalesce what we are doing in defence and intelligence in the various civil Departments if it is to be effective. This is what I meant by needing more political will with less money. Yes, we believe that space is one of the sectors-I emphasise, one of the sectors-that the UK should invest in and promote for future economic growth, and as a result of that, we will put the political effort in to co-ordinate across these very different Departments, and actually seek to positively favour creating investment cases that will develop UK industry. That’s what we are asking for and it is quite a tough thing to ask for. So when we look at the strategy as it comes through, what we will be looking at is: Does it show that political will across Government? It doesn’t matter where it started from, but it needs to get endorsed in that sort of way.

Dr Williams: That is a good point because the strategy you referred to, the previous one, was only signed up to by the Ministers in the Departments of the British National Space Centre, but they all individually signed up to it through a write round. In the new Government there are Cabinet Committees now that we are supposed to use more because of the Coalition angle to it, and it’s clear that something like a new strategy would go to a relevant Cabinet Committee for endorsement. The directive is that once it’s endorsed by that Cabinet committee, it is Government policy, and that’s the advice we’ve been given. So the new Cabinet Committee structure looks like it will be more helpful in being able to send documents that need both Cabinet and Coalition endorsement to get through. I think that is a change that, from the perspective of what Andy said, will be very helpful on revising this document-because even for the agency we’ve got to go back to Cabinet Committee.

Richard Peckham: May I add a little bit to what Andy said, just to reinforce it? In a lot of countries space really is a big deal. Obviously, in this country for a long time it really hasn’t been. So in a lot of countries it is the Prime Minister or the President who looks after space. Countries like China, as an example, are very much using space now as an instrument of foreign policy. They will do deals for minerals if you give a free satellite. So it is not always a real competitive market for a telecom satellite. It is, "You can have a satellite. We will extract your copper." At the highest level we need to be considering this. I am not suggesting that we should necessarily follow their lead there, but we just need to recognise that these things are happening and be ready to have our own policy at an appropriate level.

Q16 Chair: So , in a sense , this is moving us on . Mr Green, in your industry, 15 years ago the industry was arguing for a Cabinet Minister to take direct responsibility for IT. You are now saying that needs to go furthe r. It’s a Cabinet Minister for s pace , somebody to take direct hands- on responsibility ?

Andy Green: I think it is clear that there are two ways forward. There is the agency, and when you’ve got a very well-funded agency it can work on its own. But I think you also see in other countries, Germany in particular, a very direct connection between the top leadership of the Government and the space agenda, and therefore somebody is able to go around and do all this difficult political work that we’ve been talking about in order to get the best value for money for the country. And I have said to David Willetts and a number of other people that we need to think seriously about making sure that that political capability is in place.

Dr Williams: I think, to be fair to our Minister, he does attend Cabinet.

Q17 Gregg McClymont: I have a quick factual question about the Space Leadership Council. How often has it met since it was inaugurated and what was discussed?

Andy Green: I will take this one. It met once under the previous Government and twice under this Government. In three meetings, what have we managed to achieve? Well, there are 16 recommendations in the investment and growth strategy. Every one of those now has an owner at the Space Leadership Council who is going to work on progressing that; deciding whether we are going to do it or not; working the data. We agreed at the last meeting that we would put much more oversight into what’s happening with the setting up of the Space Agency, and you have got much more clarity there. I think it has brought together-the Home Office are there, Defence are there-all the Departments with the big players in the commercial side, Avanti, Inmarsat, Astrium, all the big commercial players and a number of the key universities, in an effective way to begin to build that political consensus and to begin to steer the agenda away from being strictly academic to being academic and growth-driven. The critical thing, I think, is to steer the space agenda more and more towards economic growth. I think that is going to be necessary for academia, if the press are right about what Vince Cable is going to say today. We’re going to have to find more and more ways to commercially exploit the work we are doing in fundamental research. So it is there, but in three meetings you don’t get a lot done, to be honest with you. You get some momentum. This is an early inquiry, I think, to see where we are going.

As I said, my advice to everybody, and the energy I am putting in is to try to make sure there is a momentum around this so that we see this becoming a moment where we are switching to a more front foot-driven approach to space and really taking it up the agenda, because I firmly believe that finding the growth sectors for the future is going to be absolutely essential for repairing the economy.

Q18 Stephen Mosley: You have all mentioned the European Space Agency a number of times, and something like 76% of the £270 million that we spend on s pace is as a contribution to ESA programmes. Do you think that the UK gets value for money from its contribution?

Dr Williams: Do you want to answer first and then I will tell you what I think?

Richard Peckham: I’ll have a go. Yes, I think we do, broadly. You can always look at ESA and see ways that they could save money and do things a little bit more efficiently but, overall, we get involved in very valuable programmes, excellent science, good technology development, that we just couldn’t afford as one nation. So as a means of bringing nations together to play at a world level, to be able to work with NASA and people like this on global programmes then, yes, it’s pretty good and it’s a good model for European co-operation.

Dr Williams: ESA is at the top end of all international organisations in terms of delivering. There is what I always call a "frictional cost" of co-operation, and ESA has its frictional cost, but I don’t think that is outrageous. It’s a constant battle to work with it. One of my pleasures is that I am now Chairman of the Council of the European Space Agency. One of the constant battles for Member States is to get their just return out of the programme. To put that into perspective, the ideal return is 1. Four and a half years ago, when I took over, it was 0.93 for the UK. It is 0.98 now, which means that we have been returning at about 1.03 over the last two or three years. That is £100 million to £150 million more to UK industry than we would have got if we’d just sat back in the old regime. So I think that ESA is a good tool. It’s a tool that delivers programmes, but it is not a tool that will deliver if you don’t keep working at it. You have really got to work at the relationship, and that is what we spent quite a lot of time doing in the past and will do in the future. The big challenge is how ESA and the EU will come together.

Richard Peckham: Perhaps if I can just add a little more, I think where we have failed to get the best back from ESA is really where we have lacked consistency in programmes, because there has been quite a history in some programmes where we weren’t quite sure if we were in or if we weren’t in. Galileo was an example. GMES is another example. One year we made quite a good contribution and three years later, at the next ministerial, we put in a very low contribution because one of the partners, Defra, made a certain decision. Three years later we then got back in at quite a good level. We are hoping that the agency will put an end to that inconsistency in our approach. We should decide what we are going for, then go for it consistently with a proper level of funding and, obviously, in some cases, decide we are not going to play. We don’t have to play in everything, but where we have a policy, we should know what we are doing, negotiate hard, get the industry lined up and probably do a little bit nationally as well to pre-position ourselves. That is another thing we have probably failed to do. So I think we have got quite good value but we can do better and we are obviously hoping we do it.

Andy Green: Let me just pick up quickly on that. Seventy-six per cent. is a big number. It’s a big number because we have no national space programme. So, roughly speaking, the only place we can spend programme money is with ESA or something else. One of the things that the IGS asked for, at the right moment, is the establishment of a national space programme. In Italy, for example, about half the money they would put into programmes would go into ESA and half would be spent on a national programme, and we have no national programme. So the reason you want to do that is because you want to be in the formation mode with ESA and with other international collaborations you want a big chip to take to the table that is, if you like, your own IPR, your own capability to have your own programmes. Again, how we get there in the current climate we’ll have to see, but I am confident that that is the right answer-that we should start to establish a national programme alongside the ESA programme.

Q19 Stephen Mosley: Looking at the balance between ESA and the national programme, the Science and Technology Facilities Council has recently faced a series of problems caused by the decline in the value of sterling. Of course, our contributions to a lot of the ESA projects are in euros and the sterling fall is a cost in sterling-terms increases. Have you got any plans or any ways of mitigating the currency fluctuations to make sure that the balance between the ESA and the national contributions remains the same now or will ESA eat up the national contribution?

Dr Williams: It was very unfortunate that when we went to the ministerial in The Hague in 2008, it was in the middle of the change in currency. We had won quite a lot of money to put into space programmes in sterling at a rate of €1.43 to the pound, and we were committing to ESA at rates down to €1.12. Of course, all the existing commitments have to be paid at the €1.12 rate, so we didn’t quite achieve all our ambition against what we had actually agreed to do because of the exchange rates, but we did get the Government to then recognise the special risk involved in exchange rates and they did take some of that out of the equation. As you know, the exchange is now climbing slowly back up to something approaching a sensible level, but the current directive from the Treasury is that the programme has to take the currency responsibility. Whether that is right or wrong is not for me to decide but that’s the way it is. We have at least now got authority to buy forward on currency for programmes we know we have to commit money to, so we can buy stability over the short-term on programmes we know we have to commit to which we didn’t have in the past. So these are the more technical issues that we are having to address. We had a very long period of stability, eight or nine years, and then it fell off a cliff and now it is slowly climbing back up, but it did cause a lot of problems in the Department-and problems to which, in the end, one of the workarounds was to commit less money to programmes.

Richard Peckham: One of the differences with ESA and, perhaps, some of the other problems that STFC has had, though, is that about 85% of the money you spend on ESA actually comes back to the British industry and is spent in pounds. ESA take about 15% in terms of their management costs. So it is not like going to CERN where it’s all spent in CERN. Most of it is actually coming back, so you make it back a bit. The euros actually then buy more in value.

Dr Williams: We expect the UK industry to bid at lower rates, you mean?

Richard Peckham: Yes, basically. When you convert it, it will be cheaper in euros.

Q20 Graham Stringer: You have mentioned Galileo a number of times. Can you briefly say what your responsibilities for Galileo will be, whether it will have military implications, and what your involvement is with the ESA facility at Harwell?

Dr Williams: At Harwell?

Graham Stringer: Yes.

Dr Williams: On Galileo the Department for Transport currently lead on the policy for Galileo. The funding in the initial work was jointly through ESA and EU. That phase has now more or less come to an end. All future funding will be EU money from the civil side of the house. The proposal that is with us now is that policy, responsibility and management responsibility for Galileo, along with the resources that go with it, transfer across to the space agency from transport from next April. We work closely together with them, anyway, on a day to day basis. So that will transfer across. Therefore, it will be part of the agency. There are some issues to resolve in there around the cost of Galileo and a shortage of funding and so on, which we are working on, but that’s an issue about how that cost lands.

Galileo remains a civil programme under civil use. The debate about who will use it will roll on and on. I think the commitment is that it is a civil programme; full stop. The question is, "Would it be improper for a British Army truck to drive down the M6 using the Galileo navigation reception system? Where are we with that? Where is the boundary condition that transfers to really being military? The other side of the coin is, of course, that the NATO standard is to use GPS for its military systems, and that will not change. So from my perspective there is no intention of Galileo moving out of the civil framework-out of the civil framework in terms of funding, in terms of decision-making, in terms of authorities and oversight by the EU and from the EU, the UK and other Parliaments. There is always going to be a grey area on what you mean by "military use" because of this transition from the simple one of driving down a road to frontline troops using it to position themselves. And can you stop it even if you wanted to? That’s the other question.

Graham Stringer: And your involvement in the Harwell facility?

Dr Williams: The Harwell facility is, I think, one of the successes of the last year. What we have managed to do in the last two years is work with ESA-it is one of the things we took on when I came-to try and get an ESA facility in the UK. We’ve agreed that with them. It is now at Harwell. Alongside that we recognised, as we have mentioned in this inquiry, the need for a strong national capability. The first piece of that, the hub, as it were, is the International Space Innovation Centre at Harwell that has been funded with £12 million of Government money and a total funding envelope of some £40 million from other sources over the period of its early life. That has now been implemented. The building is in place; it has been fitted out and equipment is moving in. We are hoping to get an official launch towards the end of this year at the facility. Associated with that is an incubation centre for new industries which is jointly funded by ESA and the UK, because we are trying to drag things out of the space world into the other world. What is unique about Harwell in the space world is that it is the first ESA facility that sits in a general research facility. It is not dedicated to space. So we have broken the bubble of space. One of the things we want to do with it is transfer technologies and ideas both ways between what exists at Harwell through the academic and industry people into space and out of space. I think that really marks a change. I think the director general of ESA recognises and appreciates that change in thinking on that. So we were heavily involved in that.

The facility will not be part of the agency. The centre will not be part of the agency. That is because the way the agency operates, we try and stay small as a headquarters group with resources and place contracts where necessary, so that we can move things around and we don’t get committed to funding a big facility. We will remain with STFC. We expect it to get money from the agency. We expect it to get money from ESA. We expect it to get money from industry and become a real hub that works in a collective sense for UK plc.

Q21 Chair: A final question, if I may, Dr. Williams. You have mentioned your role as the Chair of the ESA Council. What impact do you think that is havin g on the development of the UK Space A gency at an international level?

Dr Williams: I think the fact that they appointed me for the year, is a recognition that they appreciate the efforts we are making in the UK with the Agency and they think the UK is now looking a better place from the outside. In a purely practical sense, it has very little impact on me. I go to all the meetings, anyway. It does not detract from the UK position, but it does give me more influence in the way that ESA operate at Council level in terms of intervention and direction of the debate and discussions. So I have a much closer relationship with the director general than I would do as a head of delegation, but we still have a delegation at the table to put the UK view across. I think it is a recognition from Europe, at both an institutional and personal level, of how good our place is in space.

Q22 Chair: T hank you for attending, gentlemen . You have raised a number of issues today that are going to be crossing our path s several times, not least of which is the CSR. We share joint interests in issues like exciting the next generation of potential scientists and engineers in the country , and we would welcome your continued feeding into the Committee of any information that you th ink is relevant not just to this particular investigation but the broader ones. Thank you for your attendance.