Conclusions and recommendations
Innovation and growth
1.Government and local authorities could use space-enabled services far more to help them to achieve effective and efficient policy delivery. Slow progress in this area, however, has been compounded by the inward-looking approach taken by the space and satellite sector, which has failed to engage with a broad range of stakeholders. The Space for Smarter Government Programme (SSGP) provides a means to remedy this situation. It has successfully worked in partnership with Defra to ensure that the full potential of satellite data will be playing its part in helping the Department to deliver its policy objectives. Other Government departments, however, are trailing behind. The modest resources currently attached to the SSGP do not match the clear emphasis placed by the Space Innovation and Growth Strategy, the UK Space Agency, and the Government, on growing the space-enabled services market. The lack of a cross-Government roadmap for space services also presents a significant barrier to future progress. (Paragraph 25)
2.We recommend that the remit of the Space for Smarter Government Programme is broadened so that it is able to work, in conjunction with Government departments, to establish a cross-Government roadmap for using satellite data and developing space services. The roadmap should identify areas where the application of such services could help the Government deliver its policy objectives more effectively and where it would benefit from aggregating demand to reduce costs. This expanded remit must be supported by adequate resources. (Paragraph 26)
3.Through its promotion of the establishment of a UK Spaceport by 2018, the Government has placed the UK in a prime position to take advantage of the next leap forward in space technology—the development of re-usable, commercial spaceplanes. The focus on a horizontal-only launch capacity, however, may be too narrow and risk limiting the use and value of a UK spaceport to the industry. (Paragraph 35)
4.Before publishing its final ‘technical requirements’ for a UK spaceport, we recommend that the Government sets out the rationale, with supporting evidence, for limiting the scope of the proposed spaceport to accommodating only the horizontal launch of suborbital flights. The Government should also explain how it is ensuring that the spaceport plans will be further refined to meet the needs of UK space and satellite businesses, and what it will do to ensure that the proposal attracts the necessary private investment. (Paragraph 36)
5.Major Tim Peake, the UK Space Agency, the European Space Agency, and countless others have, together, inspired a nation through their excellent educational outreach and public engagement work around the Principia mission. It is vital that this enthusiasm for space is harnessed and is used to foster an enduring public interest in the UK’s space sector, and the opportunities it holds. (Paragraph 40)
6.We ask the Government to outline its plans to ensure that the legacy of the Principia mission continues to raise public awareness of the UK’s leading role in the global space sector, while also inspiring the next generation of scientists and engineers, long after Major Peake returns to Earth. (Paragraph 41)
Barriers to further growth
7.We were clear in our reports on Big Data and, most recently, Digital Skills, that the UK is facing a digital skills crisis. This crisis is already apparent in the space and satellite sector, where the need to process and analyse large amounts of data from satellites, and transform them into valuable insights, is a pivotal component of the Space Innovation and Growth Strategy. Without urgent action, data skills shortages could undermine, and potentially stall, the industry’s progress towards its ambitious 2030 growth target. Existing initiatives, and the inspirational value of the Principia mission, are insufficient to tackle the magnitude of the problem. (Paragraph 48)
8.The Government should, as we recommended in our recent Digital skills crisis report, commit to addressing this crisis through a Digital Strategy published without further delay. (Paragraph 49)
9.The Government, Innovate UK, the Satellite Applications Catapult and the British Business Bank have, by working with industry, helped to create opportunities for companies with a high growth potential to access much needed capital. While there is scope to improve access further, the establishment of the UK’s first dedicated investment fund for space is an encouraging and important step in the right direction. (Paragraph 53)
10.In response to our report, the Government should provide details of its progress on developing an export promotion plan for space. This should include information on export finance initiatives that will assist the space sector and how these compare with our international space and satellite competitors. (Paragraph 56)
11.A lack of flight heritage is a significant barrier that space and satellite SME’s must surmount if their products are to become a commercial success. (Paragraph 60)
12.Given the scale of this barrier, we recommend that additional resources are made available to Innovate UK, so that it is able to expand further its In-Orbit Demonstration programme. (Paragraph 60)
13.Timely access to finance is vital if innovative UK companies are to reach their growth potential and break into the global space and satellite market. We are disappointed, therefore, to hear that the £60 million investment in Reaction Engines and its SABRE rocket, announced by the Government in July 2013, had not reached the company by February 2016. Delays of this nature risk blunting the competitive edge of nascent players in the sector by increasing the financial uncertainty that they face. We were particularly concerned to learn that material changes were made by BIS to the conditions of the grant without giving prior warning or explanation to Reaction Engines. (Paragraph 65)
14.Direct Government investment is an important element of space and satellite funding and should be conducted to the highest professional standards. The Government, however, appears to have fallen short of these standards in its dealings with Reaction Engines. (Paragraph 66)
15.We therefore ask the Government to explain, in response to this report:
a)why it changed the conditions of the grant made to Reaction Engines almost two years after announcing the investment;
b)why it estimated that the first £35 million would be made available in 2014/15 and did not foresee any delays that EU State Aid regulations might present;
c)whether any other space and satellite SMEs have been affected by similar delays in direct Government investment reaching them; and
d)the key lessons it has learnt from this project and what changes it will make to the conduct of any future direct investments in the UK space sector. (Paragraph 66)
16.Basic research is integral to building a successful space economy. The vibrancy and success of the UK space sector has resulted in more excellent research projects requiring funding than there are funds available. There is, however, a more deep-seated, systemic problem; namely that, under the current research funding structures, some satellite and space-related research proposals fall between the remits of the different Research Councils, creating “orphaned areas” of space research. Projects should not miss out on research funding because of inflexible administrative boundaries. (Paragraph 73)
17.We are encouraged by Sir Paul Nurse’s focus on establishing funding mechanisms to deal with cross-cutting issues in his review of the UK Research Councils. The Government must explain how the newly-established UK Research and Innovation, overseeing the UK Research Councils, Innovate UK and HEFCE research funding, will be structured to avoid perpetuating the damaging, cross-cutting funding gaps. We further recommend that representatives from the UK Space Agency are members of the Strategic Advisory Boards of the STFC and EPSRC, to help ensure a more comprehensive, joined up approach to delivering research funding for space and satellite science. (Paragraph 74)
18.The current licencing and regulatory regime has not kept pace with innovations in the space sector. While we welcome the changes made under the Deregulation Act 2015, the regulatory status quo risks stymieing a key growth area for the UK space sector, namely small satellites and constellations. The UK Space Agency (UKSA) is beginning to address industry’s concerns. Progress has been slow, however, and focused on the specific case of Cubesats, rather than small satellites more generally. It is vital that, while the UKSA maintains its reputation as a responsible regulator, it also does not adversely impede innovation and growth in the sector. We are concerned that the UKSA’s draft regulatory proposals, as they currently stand, risk complicating the process when the intention is to simplify regulation and make it more proportionate. (Paragraph 83)
19.We recommend that the Government, in response to this report;
a)clarifies whether its published draft regulations are intended to apply only to CubeSats, or to small satellites more broadly;
b)sets out exactly how the Government’s plans for a ‘traffic light’ approach will simplify regulation for small satellites, and make it more proportionate; and
c)outlines what work it is conducting to understand, and address, the debris risk posed by satellites, including satellite constellations and small satellites. (Paragraph 84)
20.To ensure that the pace of change does not slacken, the Government should commit now to a timetable for establishing regulations. (Paragraph 85)
21.We were reassured to hear that the relationship, and lines of communication, between Ofcom and the space and satellite sector are improving. We encourage the sector and the regulator to continue to work together to ensure that access to spectrum does not hinder the growth of the space and satellite sector. (Paragraph 91)
Looking to the future
22.Over three-quarters of the UK Space Agency’s expenditure is channelled through the European Space Agency which gives the UK a high return. An even greater return could be secured, however, through establishing a strong national space programme that builds on the foundations of the National Space Technology Programme. (Paragraph 98)
23.To place the UK space sector on a stronger footing globally we recommend that the UK Space Agency pursues an expanded national space programme, alongside its contribution to the European Space Agency. (Paragraph 99)
24.The UK space sector has historically suffered from a lack of strategic direction and purpose. The UK’s first National Space Policy, setting out the Government’s high-level objectives for the sector, has been over half a century in the making. Its publication last year represented an important milestone but it is regrettable that it failed to include a clear, detailed vision of the capabilities, missions, and technologies the UK should be advancing. This was a missed opportunity which should not be repeated in the UK Space Agency’s forthcoming Civil Space Strategy. (Paragraph 109)
25.We recommend that the forthcoming Civil Space Strategy sets out how the Government’s four, high-level objectives, outlined in the National Space Policy, will be delivered. We also expect the Strategy to address the problems we have identified in this report that could prevent the UK’s space and satellite sector from reaching its ambitious growth targets. (Paragraph 110)
© Parliamentary copyright 2015
13 June 2016