Documents considered by the Committee on 18 April 2018 Contents

1EU space programmes: Galileo, EGNOS and Copernicus

Committee’s assessment

Politically important

Committee’s decision

(a) Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy and Exiting the European Union Select Committees; (b) Cleared from scrutiny

Document details

(a) Commission Implementing Decision 2018/155 of 24 January 2018 amending, as regards the location of the Galileo Security Monitoring Centre, Implementing Decision (EU) 2016/413 determining the location of the ground-based infrastructure of the system established under the Galileo programme and setting out the necessary measures to ensure that it functions smoothly, and repealing Implementing Decision 2012/117; (b) Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions mid-term evaluation of the Copernicus programme (2014–2020) 13599/17

Legal base

(a) Article 12, paragraph 3(c), and Article 36, paragraph 3, of GNSS Regulation 1285/2013; QMV; (b)

Department

Business, Energy and Industrial Strategy

Document Number

(a) (39477), 2018/155; (b) (39161), 13599/17 + ADD 1, COM(17) 617

Summary and Committee’s conclusions

1.1On 18 January 2018 the Member States’ representatives on the European GNSS Programmes Comitology Committee voted to relocate the back-up Galileo Security Monitoring Centre (GSMC), currently hosted in Swanwick, to a new location in Spain, with the replacement back-up centre to be operational by exit day (March 29 2019). The Commission’s subsequent Implementing Decision provides the rationale.1

1.2Unusually, the Government did not initially submit an Explanatory Memorandum in relation to this document, despite its clear Brexit implications. The Committee contacted the officials who agreed to submit a memorandum. On 13 February 2018 the Minister of State for University at the Department for Business, Energy and Industrial Strategy (Sam Gyimah MP) submitted an Explanatory Memorandum on behalf of the Government.2

1.3In it, the Government states that the relocation of the back-up Galileo Security Monitoring Centre was “part of the wider process of relocating EU agencies and facilities out of the UK before the UK leaves the EU”; however the Implementing Decision itself supplies additional reasons “relating to the security of the European Union and its Member States, and in particular taking into account the rules on the protection of classified information and the restrictions on the export of cryptographic equipment and [Galileo] PRS technology” as to why “the GSMC should be located on the territory of a Member State of the European Union”.3

1.4The Minister states that the Government does not consider the implications of this decision significant, as the site is not yet operational and therefore only employs five people at present. The Minister notes that the site was hosted in a secure building by contract with UK air traffic navigation service provider NATS and could therefore have financial implications, but does not specify what these are.

1.5On 25 March 2018 the Financial Times reported that the Prime Minister was leading efforts to stop the UK being locked out of protected security elements of the satellite programme after Brexit, and that Gavin Williamson, Secretary of State for Defence, “hit the roof” when told about the EU’s strict approach to sharing confidential information, despite the UK having offered unconditional security co-operation after Brexit.4 Greg Clark, Secretary of State for the Department of Business, Energy and Industrial Strategy, was subsequently reported to have told the French ambassador that the UK wanted “complete involvement in all aspects of Galileo, including the key secure elements which the UK has unique specialisms in and have helped to design and implement”.5 It has also been suggested that the UK may turn off key Galileo infrastructure on the Falkland Islands and elsewhere if the EU Commission proceeds to exclude the UK,6 and that the MoD is in “early discussions” as to whether the UK could launch its own satellite navigation system to replace Galileo, although this would be “hugely expensive”.7

1.6On 19 March 2017, a week before news of this disagreement was publicised, an updated version of the draft Withdrawal Agreement was published which included text (Article 122, 7b) allowing the EU to exclude the UK from procedures and programmes which would provide access to security related sensitive information that only Member States were to have knowledge of.8 This text was highlighted in green, meaning that it was “agreed at negotiators’ level” and would “only be subject to technical legal revisions in the coming weeks”.9 Under this provision, the EU must merely notify the UK of any exclusion.

1.7In this report we consider the implications of Brexit not only for the Galileo Security Monitoring Centre, but also for UK involvement in the EU space programmes more generally. For this reason, a Commission report on the mid-term review of the Copernicus programme10 is considered alongside the GSMC Implementing Decision.

1.8We note the EU27’s decision to relocate the back-up Galileo Security Monitoring Centre (GSMC) from the UK to Spain in preparation for the UK’s departure from the EU. The Government’s representative abstained in the comitology committee on the basis that this was part of the EU’s wider relocation of its agencies to its territory as part of the withdrawal process. We note that, in line with a previous communication to the Government on the subject,11 the Commission cited additional factors for this decision including “rules on the protection of classified information and the restrictions on the export of cryptographic equipment and [Galileo] PRS technology”. The Government does not consider the implications of this decision significant, as the site is not yet operational, and currently has fewer than five employees, although we note that it would have employed thirty staff in due course.12 The Government states that the site was hosted in a secure building by contract with a UK public-private partnership, NATS, which could have financial implications.

1.9Unusually, the Government did not deposit this document in Parliament for scrutiny until it was specifically asked by the Committee to do so. It is concerning that a decision with such direct Brexit implications was not deposited as a matter of course. We note the Minister’s assurance that he has subsequently instructed officials “to take steps to avoid similar situations arising in future.” We welcome this assurance, but will take any further non-deposit of EU documents with such immediate Brexit implications very seriously.

Brexit implications

1.10The UK currently receives approximately £200m annually13 in direct funding from the EU space programmes, which enables UK firms to play a key role in large-scale space projects. Because the Galileo and Copernicus projects are not standalone missions and involve creating space infrastructure with many civilian and Government applications, the UK’s involvement in the production of central aspects of these systems, notably the Galileo PRS, has placed it in a prime position to exploit the downstream commercial opportunities that they will create when fully operational. Doing so will be instrumental to the Government achieving its objective of taking 10 per cent of the global space market by 2030.14

1.11We note the Government’s preference to continue to participate in all aspects of the EU space programmes,15 including those which it has acknowledged are currently restricted to EU Member States.16 Numerous precedents exist which allow third country participation in aspects of the space programmes; however, such participation is not automatic and would require a UK-EU agreement regarding the terms of participation.

The Galileo Public Regulated Service

1.12We note concerns that UK stakeholders may be excluded from participation in some elements of the space programmes, most notably the Galileo Public Regulated Service (PRS) which is unlikely to be fully operational until 2022 or later. This appears increasingly probable, given that the Commission has suggested limiting information the UK receives about post-2019 PRS plans,17 has required the relocation of the Galileo Security Monitoring Centre from the UK to Spain, and has included text (highlighted green to indicate the Government’s agreement) in the draft Withdrawal Agreement which grants it the right to exclude UK firms from involvement in EU programmes which involve the exchange of sensitive information from exit day (29 March 2019), and requires it only to notify the UK that it is exercising this derogation for it to do so.

1.13Despite these concerns, we do not consider it likely that the UK will in the long-term be excluded from accessing the Galileo Public Regulated Service (PRS). An EU Decision18 clearly establishes that it is possible for certain third countries and international organisations to access the PRS if they conclude the necessary agreements with the Union; the EU is currently negotiating access to the PRS with the US and Norway; and it is in the EU’s strategic and commercial interests to promote PRS usage among its NATO allies.

1.14In terms of future UK industrial involvement in contractual work on the PRS programme, we observe that the framework for third country access states that stakeholders in third countries with which the EU has put in place the necessary space programme and security agreements may be involved in the production of PRS receivers, but not in “particularly security-sensitive matters such as the manufacturing of security modules”.19 This appears to be broadly in line with the Government’s own assessment in its sectoral report on the implications of Brexit for the space sector, which accepted that “some security elements of these EU space programmes are restricted to EU Member States … creating markets exclusively for EU companies.”20

1.15We conclude that it is in the EU’s strategic and commercial interest to allow the UK to continue to access the service. We also observe that, while existing EU law and the draft Withdrawal Agreement enable the EU to exclude UK industry from the Galileo PRS, doing so would involve the loss of unique expertise, cause further disruption and delays to the programme, and have a detrimental effect on infrastructure which is of some importance to UK, EU and European security, potentially weakening the security that both the UK and the EU desire to protect.

Immediate contractual and procurement implications

1.16The lack of certainty regarding the UK’s future relationship involvement in the EU space programmes is causing businesses immediate difficulties. In addition to UK firms working on security-related aspects of the space programmes being faced with the possibility of contract termination during the implementation period, UK firms participating in ongoing EU space programme procurement rounds are at a disadvantage because it is unclear whether there will be a legal basis for them to fulfil these contracts when the implementation period ends. If this situation is not resolved soon, even if continued UK participation in the space programmes is subsequently agreed, firms may find themselves effectively locked out of the implementation of large parts of those programmes for several years. We urge the Government to continue its efforts to resolve this situation at the earliest opportunity.

Questions

1.17We request that the Government provide us with a detailed update regarding reports that the EU intends to exclude the UK from accessing the Galileo PRS service and to prevent UK-based entities from continuing to participate in its production during the implementation period. We ask the Government to summarise what action it has taken to address this issue, how it proposes to do so, and what progress has been made to date.

1.18As this will be the principal file through which we scrutinise the implications of EU exit for the space sector, we also ask the Government to respond to the following questions in detail:

1.19We also ask the Government to provide us with an update on reported MoD “early discussions” on whether Britain could launch its own satellite system to replace Galileo.24

1.20We clear the Copernicus Mid-Term Evaluation from scrutiny. We retain the Galileo Implementing Decision under scrutiny and ask the Government to respond to these questions by May 23 2018. We draw this report to the attention of the Select Committees for Exiting the EU and Business, Energy and Industrial Strategy.

Full details of the documents

(a) Commission Implementing Decision 2018/155 of 24 January 2018 amending, as regards the location of the Galileo Security Monitoring Centre, Implementing Decision (EU) 2016/413 determining the location of the ground-based infrastructure of the system established under the Galileo programme and setting out the necessary measures to ensure that it functions smoothly, and repealing Implementing Decision 2012/117/EU: (39477), 2018/155; (b) Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee of the Regions Mid-term evaluation of the Copernicus programme (2014–2020): (39161), 13599/17 + ADD 1, COM(17) 617.

Background

Galileo

1.21Galileo is the European Union’s Global Satellite Navigation System (GNSS). It provides radio signals to users equipped with Galileo-compatible receivers for position, navigation and timing purposes. The programme has three roles. It is intended to provide a European alternative to the United States’ GPS programme (with which it is interoperable), China’s Beidou, and Russia’s GLONASS, so that the EU is not reliant on these military-operated systems. It is also an industrial policy tool designed to support economic growth and innovation in the Member States’ economies, as the transport, logistics, telecommunications and energy sectors all become increasingly dependent on services of this kind. The services themselves are also intended to bring specific benefits.

1.22Following a testing period, Galileo is currently offering three Initial Services:

1.23Additional services which will become available in the future are:

Historic US and UK opposition to Galileo

1.24One reason for the EU’s proposal to develop the Galileo system was that the US GPS system was operated by the military, and intentionally degraded the quality of signal that was available for civilian use (“selective availability”). The EU considered that civil infrastructure, including airplane landing, should not rely solely upon a system with this vulnerability. The US opposed the EU proposal to develop its own satellite navigation system for a range of reasons,26 including its intention to use the same frequency as the US GPS, which would have made it impossible for the US to block the Galileo signals without interfering with its own GPS signals. This conflict was subsequently addressed. Initially, the Government opposed the project, but when a qualified majority in support of the proposal emerged, the Government dropped its opposition.27 In recent years both the US and the UK have become more supportive of Galileo, as the UK has been successful in securing contracts — particularly related to the Public Regulated Service — worth more than it invests,28 and the US has come to the view that having the encrypted PRS service would provide a useful improvement to the robustness and resilience of its own system.

The European Geostationary Navigation Overlay Service (EGNOS)

1.25EGNOS is a satellite-based augmentation system which supplements GPS, GLONASS and Galileo by reporting on the reliability and accuracy of their positioning data and sending out corrections. Developed by the European Space Agency and EUROCONTROL on behalf of the European Commission, EGNOS consists of a network of about 40 ground stations and three geostationary satellites.

Copernicus earth-observation programme

1.26Copernicus is the EU flagship programme which provides satellite-based monitoring services of the atmosphere, land, water and forests to help environmental research. It delivers data and information in areas of atmosphere monitoring, marine environment monitoring, land monitoring, climate change, emergency management and security. Copernicus was designed to support decision makers in the EU and its Member States, as well as stimulate growth in the private sector use of earth observation, which is particularly useful in agriculture. The data it generates is provided freely worldwide, not just to EU Member States.

1.27The Government’s sectoral report on the implications of EU exit for the space sector29 states that UK firms currently hold Copernicus data processing contracts worth €23m, the European Centre for Medium-Range Weather Forecasts in Reading operates the Copernicus Service Climate and Atmospheric Monitoring System, and handling service budgets in excess of €60m per annum.

1.28The Copernicus project is managed by the European Commission. The space segment of the programme is operated by the European Space Agency and the ground segment by the European Environment Agency and the Member States.

The European Global Navigation Satellite Systems Agency (GSA)

1.29The GSA is the EU agency that aims to ensure that essential public interests are properly defended and represented in connection with satellite navigation programmes of the union: Galileo and European Geostationary Navigation Overlay Service (EGNOS). It manages the day to day operations of these programmes.

Horizon 2020

1.30In addition to the general funding programme for research under Horizon 2020, the EU also operates sector-specific research programmes for areas with military or national security implications, including the EU space programme.30 Horizon 2020 grants are used to develop technology that will form the basis for future evolutions of the EU space systems.

EU Funding

1.31In the Government’s sectoral report on the implications of exiting the EU for the space sector,31 the Government stated that the EU had allocated “around €12bn” on space initiatives and projects between 2014–2020, including €7bn for Galileo and EGNOS, €3.4bn for Copernicus, and €1.5bn for the Horizon 2020 space element. The Government stated that €3.5bn of contracts to design, build, operate and replenish EU space programmes were out to tender at present, and that, after 2020, up to €5bn could be spent on contracts for the next generation of Copernicus satellites.

The European Space Agency (ESA)

1.32The ESA is not an agency or body of the European Union (EU), and has non-EU countries (Norway, and Switzerland) as members. Although Galileo and Copernicus are funded and owned by the EU, they are managed in partnership between the European Commission and the ESA. The European Space Agency effectively serves as the technical and procurement agent for the European Commission, in relation to its space programmes.32

1.33More than three-quarters of Britain’s space spending is sent to the 22-nation European Space Agency.33

The proposal

1.34On 18 January 2018 Member States’ representatives on the European GNSS Programmes Comitology Committee voted to relocate the back-up Galileo Security Monitoring Centre (GSMC), which is currently hosted in Swanwick (UK), to a new location in Spain.

1.35The reasons given were that:

“On 29 March 2017 the United Kingdom notified the European Council of its intention to withdraw from the European Union under Article 50 of the Treaty on European Union. For reasons relating to the security of the European Union and its Member States, and in particular taking into account the rules on the protection of classified information and the restrictions on the export of cryptographic equipment and PRS technology, the GSMC should be located on the territory of a Member State of the European Union.

“In the guidelines adopted on 29 April 2017 following the notification by the United Kingdom, the European Council stated that the matter of the future location of the seats of EU facilities located in the United Kingdom should be settled rapidly and that arrangements should be made to facilitate their transfer. It is thus important to make provision without delay for the transfer of the United Kingdom GSMC to the territory of another EU Member State.”34

1.36It is notable that a number of reasons are given for the decision: one relates to EU rules regarding security and classified information including Galileo PRS technology in particular; a second reason relates to the relocation of EU facilities from the UK to the EU.

1.37The EU27 supported the proposal while the UK Government abstained. Formal adoption by the College of Commissioners took place on 24 January 2018.

1.38On 25 October 2017, the Commission published a mid-term evaluation report on the EU’s Copernicus space programme during the period 2014–2020.35 We are considering this report alongside the Implementing Decision regarding the Galileo Security Monitoring Centre (GSMC) in order to allow us to consider the Brexit implications for the UK space sector’s participation in the EU’s space programmes as a whole.

1.39The evaluation found that the Copernicus programme was considered a success: it was on track, within budget, and meeting its objectives, which remained relevant. The large amount of data the project generated, coupled with advances in ICT and cloud computing, was judged to have created “unprecedented business opportunities in many sectors of the economy and across the EU Member States.” The main limitations identified were that the use of Sentinel data was not intuitive, and that there is a lack of awareness of the programme among non-specialists which is seen as a barrier to market uptake.

The Government’s view36

1.40The Government did not submit an Explanatory Memorandum on this Implementing Decision of its own accord. Although implementing decisions are not automatically depositable, in cases where there is political importance the Government should consult the Committee as to whether the document should be deposited. On 24 January 2018, after being asked to do so by the Committee, the Minister of State at BEIS (Sam Gyimah MP) submitted an Explanatory Memorandum, in which he stated that:

“Unfortunately, given that the decision was taken at Committee level, BEIS did not submit an Explanatory Memorandum ahead of the decision. I have instructed my officials to take steps to avoid similar situations arising in future.”

1.41Regarding the financial implications of the relocation, the Minister noted that the back-up GSMC site in Swanwick was managed by the European GNSS Agency and was “not yet operational”. He said that “there are less than five employees currently based at the Swanwick GSMC site, all of which are employed by the GSA and will need to be relocated in the coming months.” The Minister said that “no additional impact on jobs in the UK is foreseen as a result of this decision.” However, he noted that the back-up GSMC site was hosted in a secure building by contract with a UK public-private partnership, NATS, which could have financial implications.

1.42The Minister explained that this relocation “is part of the wider process of relocating EU agencies and facilities out of the UK before the UK leaves the EU” and that UK representatives abstained from voting in the Comitology committee, “as the location of EU infrastructure is a matter for the remaining Member States of the European Union”. and that the other Member State representatives present endorsed the European Commission’s recommendation.

1.43In the Government’s Explanatory Memorandum37 regarding the Commission’s mid-term evaluation report of the EU’s Copernicus space programme during the period 2014–2020, the Minister said that the report did not have direct policy implications as it was merely an evaluation report, and reiterated the Government’s desire to continue to participate in the Copernicus space programme post-exit.

UK-EU participation in the space programmes after Brexit

Government policy: continued UK participation

1.44 In the Government’s February 2017 White Paper “The United Kingdom’s exit from and new partnership with the European Union” the Government expressed support for the UK space programmes, Galileo and Copernicus, in which the UK had played an important role, indicated that the UK would “welcome agreement to continue to collaborate with our European partners on major science, research and technology initiatives.”38 On 9 September 2017 the Government published a “future partnership paper”39 on collaboration on science and innovation which also noted the important commercial opportunities the space programmes provided to UK industry, and concluded that “given the unique nature of the space programmes’ applications to security in addition to science and innovation, and the extent of the UK’s involvement, the EU and UK should discuss all options for future cooperation, including new arrangements.”

1.45As noted above, when it became apparent that the Commission was serious about excluding the UK from the Galileo PRS programme, Greg Clark MP, the Business Secretary, was reported to have told the French ambassador that the UK wanted “complete involvement in all aspects of Galileo, including the key secure elements which the UK has unique specialisms in and have helped to design and implement”.40

Non-participation is the legal default

1.46Only EU Member States have the automatic right to participate in the EU’s space programmes. The Galileo and Copernicus space programmes include provisions which permit participation by third countries which conclude agreements with the EU (see Precedents for third country participation) but there is no template for these agreements and they must be negotiated on a case-by-case basis. In the absence of alternative arrangements, the legal default is therefore that when the UK leaves the EU it will no longer be able to participate in these programmes. On this basis, the head of the European Space Agency’s EU policy office has stated that “If nothing changes (and Brexit goes ahead), we would have to stop these contracts”.41 If the draft Withdrawal Agreement as currently drafted is concluded and enters into force, it would extend the ability of the UK and its industry (with the exception of certain sensitive programmes) to participate in the programmes until December 31 2020, when UK firms would cease to be able to participate. In the event of a non-negotiated exit on 29 March 2019, the UK and its firms would, in the absence of alternative arrangements, immediately cease to be eligible to participate in the programmes.

Third country participation

1.47The EU Regulations governing the operation of the Galileo42 and Copernicus43 programmes both permit third country participation subject to the conclusion of agreements with the EU. There is no standard framework for participation.

1.48In the Government’s future partnership paper on research and innovation,44 it observes that, for Galileo, the EU has Cooperation Agreements on satellite navigation with countries including China, Korea, Israel, Morocco, Norway, Switzerland, Ukraine and USA. Many of these agreements focus on technical cooperation: for example, the 2004 US-EU Agreement on GPS-Galileo Cooperation laid down the principles for cooperation in the field of satellite navigation, and has focused on maximising interoperability between the services, and agreements with Korea and Ukraine cover a wide range of cooperative activities. However, a number of agreements entail more extensive participation in the EU space programmes:

1.49In terms of third country participation in the Copernicus programme:

1.50The EU’s guidelines for the framework for the future relationship suggest that in “certain Union programmes, e.g. in the fields of research and innovation and of education and culture, any participation of the UK should be subject to the relevant conditions for the participation of third countries to be established in the corresponding programmes.”47

Implementation period provisions on sensitive information

1.51The transitional arrangements outlined in Article 122 of the draft Withdrawal Agreement, which have been provisionally agreed by both parties, would allow the UK and its industry to continue to participate in most of the EU space programme during the implementation period, albeit without representation on the EU’s institutions or agencies.

1.52However, the EU is permitted during the implementation period to exclude the UK from participating in those elements of the space programme which involve access to “security related sensitive information”. Article 122 (7b) of the Draft Withdrawal Agreement48 states that where EU law provides for the participation of Member States or their nationals participating “in an information exchange, procedure or programme which continues to be implemented or starts after the end of the implementation period, and where such participation would grant access to security related sensitive information that only Member States (or nationals of Member States, or natural or legal persons residing or established in a Member State) are to have knowledge of”, these references will be understood as not including the UK, and the EU will notify it of “the application of this derogation”.

1.53That access to security-sensitive aspects of the space programme might be affected by exit has been evident by a number of developments:

Future UK access to the Galileo Public Regulated Service (PRS)

1.54EU Decision 1104/201152 establishes the rules governing access to the Galileo PRS. Article 5 of the decision establishes that it is possible for certain third countries and international organisations to access the PRS if they conclude two agreements with the Union: one laying down the terms of access, alongside a separate security of information agreement.

1.55The Decision states that these agreements could permit the manufacturing of PRS receivers, subject to an agreement being reached, but not “particularly security-sensitive matters such as the manufacturing of security modules”53 (Recital 8) — the part of a PRS receiver that enables it to decrypt the PRS. The Decision states that the Commission should analyse whether a charging policy should be put in place for the PRS, with respect to third country participants. Participation in the PRS for third countries is not automatic, and is subject to negotiation.

1.56To date no third country participates in the Galileo PRS, although Norway and the United States have submitted requests for PRS access, and negotiations with the US are underway. Recent coverage suggests that the delay in dealing with Norway and the US’s requests has partly resulted from the fact that sorting out access to PRS even among the EU 28 has been complicated.54

1.57Given the lack of precedents for third country participation in the Galileo PRS to date it is not possible to be definitive about what the implications will be for the UK. However, there are reasons to be optimistic that the UK will retain access to the service. In addition to Decision 1104/2011 making provision for third country access, the EU is likely to want to promote the access to the Galileo PRS among its NATO partners, not least so that European industry can develop and sell technologies based on the system more widely.

1.58The extent to which the UK can continue to participate in contracts associated with the PRS programme is likely to prove more challenging. Decision 1104/2011 raises the possibility of a certain degree of involvement in the production of PRS receivers, but excludes involvement in the most sensitive security-related aspects, such as the manufacture of the security modules. The manufacture of the infrastructure that provides the PRS system itself is likely to fall within this category.

Mutual interest in continued UK involvement

1.59Nonetheless, it is not inevitable that the EU will choose to prevent the continued involvement of UK operators from involvement during the implementation period. Doing so would involve disruption, which could potentially lead to delays in the rollout of the PRS service.

1.60Professor John Remedios recently told the Lords EU Internal Market Committee that the existing systems were built around unique research capabilities in the UK and that “the systems will suffer in some areas because they will no longer be able to use our research capability if we are unable to participate fully in the programme.”55 The chief executive of the European Space Agency has also warned that the absence of UK companies could lead to delays in Europe’s flagship space programmes.56

1.61While the sensitive nature of security-related information is often cited as the reason to exclude the UK from the PRS, the importance of security, and the UK’s strength in this area, has also been cited as a reason not to do so. Tom Enders, the chief executive of Airbus, recently said that “the UK’s continued participation in the EU Galileo programme will ensure security and defence ties are strengthened for the benefit of Europe as a whole, during a period of increasing threats to our security and geopolitical instability”.57

Immediate contractual and procurement implications for UK industry

1.62Nonetheless, the potential exclusion of UK industry from aspects of the space programme during the implementation period, and the legal default of UK non-participation in the space programme after the end of the implementation period (or in the event of a non-negotiated exit), is already having consequences for some UK operators.

1.63The two principal concerns are that:

1.64Industry stakeholders have been vocal about the difficulties that they face, including:

1.65Stakeholders are particularly concerned that, even if the UK does secure continued participation in Galileo in due course, if UK firms are unable to compete effectively in procurement processes that are currently taking place, they will effectively have been locked out of delivery for a period of several years. Professor Sweeting said that “the real danger is that, even if the UK negotiates a position to participate in Galileo, the die will have been cast; the industrial consortia for the next generation will have been destablished and, even if we were to try to re-enter later in the game, it would be an almost impossible uphill struggle.”64

Funding implications of UK non-participation

1.66As previously noted, the Government’s sectoral report on the implications of exiting the EU for the space sector65 stated that the EU had allocated “around €12bn” (£10.6)66 on space initiatives and projects between 2014–2020, composed of €7bn for Galileo and EGNOS, €3.4bn (£3bn) for Copernicus, and €1.5bn (£1.33bn) for the Horizon 2020 space element. In terms of how much the UK receives of this funding, Phillip Davies, Chair of the Space Specialist Group at the Royal Aeronautical Society, told the House of Lords EU Internal Market Committee that the UK was currently receiving around £200 million per year from the EU space programmes.67

1.67The benefits which accrue to the UK through its participation in the space programmes extend beyond those of funding from the EU, as firms that win space programme contracts acquire UK firms expertise which they can then exploit commercially. In this respect, Professor Alan Smith describes the programmes as “major commercial enablers for the UK”.68

1.68The ability to effectively exploit the downstream commercial opportunities created by Galileo and Copernicus will be particularly valuable to the UK industry, given the extent of UK involvement in both — particularly the Galileo PRS. According to the Commission, the cumulative direct benefits emanating from the GNSS downstream market are estimated to amount to €14bn (£12.38bn) over a 20-year period.69 UK Government estimates the potential market for Galileo-related applications and services could amount to €6bn by 2025.70 The Government has estimated the downstream market potential of the Copernicus programme to be worth €1.8bn (£31.6bn) per annum by 2030.71

1.69If there is a loss of EU procurement funds for the UK space sector, the extent to which the Government directly replaces this funding will be of primary importance, as state-sponsored procurement processes in other countries, including the US, are generally closed to operators from other countries.72

1.70In the aftermath of concerns about the UK being excluded from the EU, an unnamed official told the Financial Times that the UK defence department was having “early discussions” on whether Britain could launch its own satellite system to end its dependence on the US system and avert exclusion from the Galileo military application, although the official noted that this “would be hugely expensive — our priority is to sort this out with Brussels”.73

1.71If the UK were unable to participate in Horizon 2020, that would potentially also have significant implications for space-related research funding. A quarter of all Horizon 2020 space funding reportedly74 goes to the UK, which enables UK universities to lead in space research and innovation. We are separately scrutinising future UK-EU cooperation on research.75

Loss of space programme services

1.72Apart from the Galileo Public Regulated Service (PRS), the other Galileo services are all publicly available and so the UK would enjoy the same access as any third country. Loss of access to the Galileo Public Regulated Service (PRS) is possible, although the service is not yet fully operational and is not expected to be before 2020 at the earliest, although officials anticipate that further delays until 2022 or later are possible. Loss of the PRS would be a loss for the military as it provides a higher-quality alternative to the US GPS encrypted signals, and having access to two systems would provide enhanced resilience. The many potential uses of the PRS in non-military areas of Government activity — for example, for accurate tracking of vehicles by customs, police and ambulance services — would also represent a loss.

1.73Earth-observation data generated by Copernicus is freely available worldwide, and so the UK should be able to continue to access this information as a third country. The one exception is the Copernicus security-related service whereby the Commission provides additional data processing and intelligence, to produce intelligence regarding borders and migration. However, there are concerns that the underlying open data policy may change in time, if the EU takes the view that its services should be made available to EU-based businesses rather than global ones.

The European Space Agency (ESA)

1.74ESA is a non-EU organisation and the UK’s membership of it will not be affected by Brexit. ESA differs from the EU in that it funds a large number of smaller projects which are designed to develop European science capability and to support the European space industry: for example, Mars Explorer, the international space station, an earth observation satellite, and various navigation programmes. The principal benefit is one of economies of scale, as space activities are prohibitively expensive for all but the largest nation states. Countries which invest receive a proportionate share of contract work in return.

1.75The EU, in contrast, invests in much larger programmes which seek to provide infrastructure and services for states and civilians, and contract work is secured on the basis of competitive tenders, meaning that countries which are competitive and have expertise in particular areas, like the UK, can secure a disproportionate share of the contracts.

1.76Two concerns have been identified about how the UK’s role in ESA will be modified by its withdrawal from the EU.

1.77First, much of the research and development phase for the Galileo space programme was conducted through ESA, and the UK could in principle continue to participate in this type of research; however, when it came to producing the satellites, which are EU-owned infrastructure, EU funding was used, and, in the absence of an agreement, the UK would in future not be able to participate in this work. The UK could thus end up in the perverse situation of funding the product development but being excluded from the implementation and exploitation of the research in which it had been involved.76

1.78Secondly, concerns have been expressed that ESA could converge with the EU in order to reduce its dependency on the UK. Professor Alan Smith commented that the EU has on a number of occasions made approaches with a view to absorbing ESA. He said that, at the moment the UK needs the EU as much as the EU needs the UK, but that once Brexit has occurred, the EU will seek to remove that dependency: “Just as ESA has many schemes to reduce the dependency of the European space sector on the US space sector, there is a danger that the EU and ESA will have similar schemes to disadvantage the UK.” He said that if ESA was absorbed into the EU, and the UK’s role in ESA were threatened, “we should be very concerned”.77

Previous Committee Reports

None.


1 Commission Implementing Decision (EU) 2018/155 of 24 January 2018 amending, as regards the location of the Galileo Security Monitoring Centre, Implementing Decision (EU) 2016/413.

2 Explanatory Memorandum from the Minister (BEIS) to the Chair of the European Scrutiny Committee (13 February 2018).

3 Commission Implementing Decision (EU) 2018/155.

4 FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

5 Belfast Telegraph, Brexit means ‘adjustment’ to UK involvement in EU space programme (March 26 2018).

6 Open Europe, Theresa May: UK’s participation in Galileo satellite programme after Brexit is in the interests of the EU (27 March 2018).

7 FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

8 This text had been included in the earlier 28 February 2018 version of the draft Withdrawal Agreement, as well as the Commission’s proposed text in its position paper on transitional arrangement on 7 February 2018. In a Government paper raising issues with and proposing amendments to the Commission’s position paper, the UK negotiating team sought clarification of what the text on sensitive information meant.

9 HM Government, Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (19 March 2018).

10 Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions mid-term evaluation of the Copernicus programme (2014–2020) 13599/17.

11 The Financial Times refers to a letter sent to the Government in January in which the Commission expressed the view that it would be inappropriate to divulge sensitive information to the UK about post-2019 PRS plans, on the grounds that this would “irretrievably compromise the integrity of certain elements of these systems for many years after the withdrawal of the UK”. FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

12 Politico, UK loses space data center to Spain amid post-Brexit security concerns (18 January 2018).

13 Philip Davies, Chair of the Space Specialist Group at the Royal Aeronautical Society, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

14 FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

15 See HM Government, Collaboration on science and innovation — a future partnership paper (6 September 2018) and Greg Clark in Belfast Telegraph, Brexit means ‘adjustment’ to UK involvement in EU space programme (March 26 2018).

16 For a list of those aspects of the space programmes restricted to EU Member States, see Department for Exiting the European Union, Sectoral Report — Space, paragraph 57 (21 December 2017).

17 The Financial Times refers to a letter sent to the Government in January in which the Commission expressed the view that it would be inappropriate to divulge sensitive information to the UK about post-2019 PRS plans, on the grounds that this would “irretrievably compromise the integrity of certain elements of these systems for many years after the withdrawal of the UK”. FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

18 Decision 1104/2011 of the European Parliament and of the Council of 25 October 2011 on the rules for access to the public regulated service provided by the global navigation satellite system established under the Galileo programme.

19 Decision 1104/2011.

20 Department for Exiting the European Union, Sectoral Report — Space (21 December 2017).

21 Department for Exiting the European Union, Sectoral Report — Space (21 December 2017).

22 HM Government, Draft text for discussion: implementation period (7 February 2018).

23 HM Government, Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (19 March 2018).

24 FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

26 See, for example, Guardian, Europe and US clash on satellite system (8 December 2003).

27 The Independent, Galileo satellite project goes into orbit (10 March 2002).

28 The UK has funded roughly 12 per cent of the annual budget for Galileo and received a work share of more than 15 per cent (FT, Airbus says UK participation in Galileo after Brexit is critical, 28 March 2018).

29 Department for Exiting the European Union, Sectoral Report — Space (21 December 2017).

30 See the Committee’s recent report on EU research funding (28 February 2018).

31 Department for Exiting the European Union, Sectoral Report — Space (21 December 2017).

32 European Space Agency, Procurement of full Galileo programme begins (1 July 2008).

33 Space News, Britain’s quitting the EU, but will it be forced out of EU space programs? (24 June 2016).

34 Commission Implementing Decision (EU) 2018/155.

35 Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions mid-term evaluation of the Copernicus programme (2014–2020) 13599/17.

36 Explanatory Memorandum from the Minister (BEIS) to the Chair of the European Scrutiny Committee (13 February 2018).

37 Explanatory Memorandum from the Minister, BEIS, to the Chair of the European Scrutiny Committee (10 November 2017).

38 HM Government, The United Kingdom’s exit from and new partnership with the European Union (2 February 2017).

39 HM Government, Collaboration on science and innovation—a future partnership paper (6 September 2017).

40 Belfast Telegraph, Brexit means ‘adjustment’ to UK involvement in EU space programme (March 26 2018).

41 Phys.org, Brexit will change UK role in Europe’s space programmes: ESA (14 September 2016).

42 Article 49 of Regulation 1285/2013 of the European Parliament and of the Council of 11 December 2013 on the implementation and exploitation of European satellite navigation systems and repealing Council Regulation (EC) No 876/2002 and Regulation (EC) 683/2008 of the European Parliament and of the Council.

43 Article 26 of Regulation 377/2014 of the European Parliament and of the Council of 3 April 2014 establishing the Copernicus Programme and repealing Regulation (EU) No 911/2010.

44 HM Government, Collaboration on science and innovation — a future partnership paper (6 September 2017).

45 OJ L 15, 20.1.2014, p. 3–17, Cooperation Agreement between the European Union and its Member States, of the one part, and the Swiss Confederation, of the other, on the European Satellite Navigation Programmes.

46 OJ L 283, 29.10.2010, p. 12–20, Cooperation Agreement on Satellite Navigation between the European Union and its Member States and the Kingdom of Norway.

47 European Council (Art. 50) guidelines on the framework for the future EU-UK relationship, 23 March 2018.

48 HM Government, Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (19 March 2018).

49 Department for Exiting the European Union, Sectoral Report — Space (21 December 2017).

50 FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

51 HM Government, Draft text for discussion: implementation period (7 February 2018).

52 Decision 1104/2011 of the European Parliament and of the Council of 25 October 2011 on the rules for access to the public regulated service provided by the global navigation satellite system established under the Galileo programme.

54 SpaceNews, U.S., Norwegian Paths to Encrypted Galileo Service Open in 2016 (18 December 2015).

55 Professor John Remedios, National Centre for Earth Observation, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

56 Financial Times, Space chief urges UK firms to set up EU subsidiaries (May 31 2017).

57 Financial Times, Airbus says UK participation in Galileo after Brexit is critical (28 March 2018).

58 Department for Exiting the European Union, Sectoral Report — Space, p. 17 (21 December 2017).

59 Financial Times, UK cries foul over exclusion from EU satellite plan (26 March 2018).

60 Professor Sir Martin Sweeting OBE, Executive Chairman, Surrey Satellite Technology Ltd (SSTL), to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

61 Andrew Stroomer, Business Development Director Space, Airbus Defence and Space, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

62 Financial Times, UK cries foul over exclusion from EU satellite plan (26 March 2018).

63 Dr Chris Mutlow, Director, RAL Space, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

64 Professor Sir Martin Sweeting OBE, Executive Chairman, Surrey Satellite Technology Ltd (SSTL), to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

65 Department for Exiting the European Union, Sectoral Report — Space (21 December 2017).

66 €1 = £0.88415 or £1 = €1.13103 as at 28 February.

67 Philip Davies, Chair of the Space Specialist Group at the Royal Aeronautical Society, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

68 Professor Alan Smith, Director Space Domain, University College London, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

69 GSA, Galileo, the European Satellite Navigation system, opens up business opportunities (25 July 2013).

70 FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

71 Department for Exiting the European Union, Sectoral Report — Space (21 December 2017).

72 Richard Peckham, UK Strategy & Business Development Director, Airbus Defence and Space, and Chair, UK space, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

73 FT, Theresa May fights to keep UK in EU satellite project (25 March 2018).

74 Dr Lucy Berthoud, Senior Teaching Fellow, University of Bristol and Chair of Space Universities Network, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

75 Twentieth Report HC 301–iv (2017–19) chapter 10 (28 February 2018).

76 Stuart Martin, CEO and Executive Director, Satellite Applications Catapult, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).

77 Professor Alan Smith, Director Space Domain, University College London, to the House of Lords EU Internal Market Sub-Committee (15 March 2018).




Published: 24 April 2018