Second Report - UK space strategy and UK satellite infrastructure

We understand that, once fully launched, the OneWeb low Earth orbit constellation will provide broadband coverage, via broadband providers such as BT, to people in the UK and elsewhere, including those in remote areas. However, it is not clear to us what other benefits the Government’s purchase of OneWeb will bring to UK citizens and whether the purchase represents value for money for UK taxpayers. Given that the Government purchased OneWeb from bankruptcy, we believe its investment in OneWeb is unusual. This is exemplified by the purchase requiring a ministerial direction. We were pleased to hear the then Secretary of State confirm that this model of investment is unlikely to be used in the future. Further, it remains to be seen what the UK will gain from the investment compared to other nations who have not invested in OneWeb. As a considerable amount of taxpayers’ money was used to complete the purchase of OneWeb, the Government should report to Parliament on the state of the Government’s investment in OneWeb on a yearly basis. This should include information on how the company is contributing to scientific and technical advancements in the UK space industry. This unusual investment approach should be treated as exceptional and avoided in the future.

Since the UK’s purchase of OneWeb, the number of shareholders has continued to grow. Although the Government has provided assurances that the proposed merger with Eutelsat will not affect the UK’s shares and involvement in OneWeb, uncertainty remains over how the continued changing ownership will affect its management. The proposed merger with Eutelsat must be subject to proper scrutiny under the National Security and Investment Act and the Government must provide assurance that OneWeb’s operations in the UK will not be affected by the merger. Further, if the merger goes ahead, the National Audit Office should consider carrying out an assessment of the how well the taxpayer’s investment has been protected to date and review the economic viability of continuing to hold shares in OneWeb.

We acknowledge that OneWeb could bring additional benefits to the UK if it carried out satellite manufacturing for its Gen2 constellation in the UK, which would stimulate the UK space sector and create new jobs. However, where the Gen2 constellation will be manufactured is not yet confirmed. The Government must obtain assurances that OneWeb will manufacture its Gen2 constellation in the UK so that the UK space sector can benefit as fully as possible from the Government’s investment in OneWeb.

The UK has access to ‘open’ Position, Navigation and Timing (PNT) services, supplied through the US GPS system and the EU Galileo system, meaning that most users are not affected by the UK leaving the Galileo programme. The UK currently relies on the US GPS system for its secure PNT services that can be used for defence and critical national infrastructure purposes. The reliance on foreign systems is concerning due to the potential for the UK to be blocked from using them in the future. Reliance on space-based systems is also not advisable as these can be disrupted through jamming attacks or adverse space weather. The loss of UK space strategy and UK satellite infrastructure 75 PNT services would be detrimental to the UK, with power distribution, financial transactions, and transport systems all seriously affected, and the UK’s national security put at severe risk. Although the UKSA, UKRI and BEIS, told us that work is underway to evaluate options for the UK’s approach to gaining access to resilient and secure PNT, we understand that a significant amount of work, using large amounts of public funds, has already been carried out but a strategy is yet to be published.

We are concerned that the Government seems to be progressing towards plans to use OneWeb’s low Earth orbit (LEO) satellite constellation to provide PNT services in the future, despite suggestions from experts that there are many technical issues surrounding using LEO satellites for PNT signals. Ambiguity also remains about the development schedule for full PNT services from OneWeb and whether such services could be provided in a way that is appropriate for sovereign military and critical national infrastructure purposes.

Considering the importance of developing secure access to PNT services, we are disappointed that the Department for Business, Energy and Industrial Strategy (BEIS) is delaying the finalisation and publication of the PNT strategy and therefore refusing to commit to the critical action that needs to be taken. Although BEIS is in the process of establishing cross-government strategy on PNT, we believe the responsibility for PNT should lie outside of any one Department. The Government should establish the National Security Adviser (NSA) as having overall responsibility for the UK’s access to secure PNT capabilities. The NSA should ensure that the importance of developing secure PNT systems is understood throughout Government and take responsibility for developing a programme and budget for the work that needs to be carried out. The NSA should take guidance from work that has already been undertaken within Government and publish the National PNT Strategy no later than the end of February 2023, including details of the space- and ground-based components that will be used to ensure the UK has sustained, resilient and secure access to PNT services. If the strategy includes the use of the OneWeb LEO Gen2 constellation, the solutions to the technical challenges drawn out in our evidence should be addressed and the Government should provide clarification on why LEO satellites have been chosen over other, more commonly used, space-based PNT systems. In summary, the strategy should set out: (a) the updated review and estimate of the impact of loss of PNT services on the economy; (b) the results of the Global Navigation Satellite System (GNSS) programme, and details of which aspects of the proposed system will be taken forward; (c) the UK Space Agency’s analysis of the space-based elements of PNT and details of which of these will be taken forward; and (d) how secure PNT services can be delivered through LEO and the technical challenges that will need to be overcome to achieve th

We understand that the UK space sector has significant concerns about the current and future access to data currently supplied by EU’s Copernicus programme, especially if the UK cannot remain a member. BEIS and UK Space Agency (UKSA) 76 UK space strategy and UK satellite infrastructure must ensure that they communicate clearly with the space sector to ensure that there is a good understanding about any impact on the UK’s access to data from Copernicus if the UK does withdraw from the programme. BEIS and UKSA must conduct a consultation of how the space sector expects to be impacted if participation is not possible, with a particular focus on loss of access to data. The results of this consultation should be made public. Further, the UK Government should seek assurances from the EU, that if the UK does associate and invest the planned €750 million, its access rights will remain the same as all other countries participating in the programme.

The UK is world-leading in Earth Observation (EO) science and technologies. The EO sector and the Government have recognised that these strengths can also be used to support other UK ambitions such as Net Zero. Taking guidance from the UK Space Agency and UN Office for Outer Space Affairs (UNOOSA) joint review into how space technologies can be used to tackle climate change, the Government should set out detailed actions for how EO will be used to support the transition to Net Zero. This should include a package of financial support to ensure the UK remains a world leader in this area.

The UK space sector remains strongly in favour of maintaining the UK’s participation in the EU’s Copernicus Earth observation programme, for which the UK Government has set aside €750 million. Despite this, it is imperative that the UK stands ready to adapt if an agreement with the European Union cannot be reached. The Government should publish a ‘Plan B’ no later than the end of December 2022 which defines what actions it will take if an agreement with the EU cannot be reached over UK membership of the Copernicus programme and how the €750 million currently set aside for participation would then be spent. (Paragraph 58) Development of UK launch

The Government and the UK space sector have made significant steps towards developing a UK launch capability, with the establishment of a horizontal launch site at Spaceport Cornwall and two vertical launch sites: SaxaVord Spaceport on Unst in Shetland and Space Hub Sutherland. Although spaceports have taken different financing approaches, we commend the UK Space Agency (UKSA) for the funding it has provided for the establishment of spaceports and launch systems and recognise that the development of the UK space sector would not have been possible without these initial injections of public funding. Having said this, further investment may be required to ensure that the UK launch sector is successful and sustainable. The Government should continue to examine where further and continued funding may be required to secure the success of the UK launch industry.

We understand that the Civil Aviation Authority (CAA) is considering changes to its approach to setting liability caps for orbital licences, including changing to a variable liability limit approach, where liability bands are defined and the maximum value is recommended to be £50m. We believe this approach will be welcomed by the industry, who want further certainty on the liability caps that will be applied to their operations. The Government should develop proposals for the variable liability approach as quickly as possible, opening the consultation on these by the end of UK space strategy and UK satellite infrastructure 77 December 2022. To ensure that the required certainty is brought to the space industry and that the UK’s launch sector begins to flourish, it should seek to implement the proposals by June 2023.

We were pleased to hear that the Civil Aviation Authority (CAA) has been working with spaceports, satellite manufacturers, and launch suppliers to ensure that the spaceflight regulations and licence application processes are fit for purpose. However, we are concerned that the CAA is not providing enough support for applicants which could cause delays in the licensing process. The Department for Transport (DfT) should ensure that the CAA is suitably resourced to be able to provide an effective liaison service for each licence applicant to support them with navigating the application process.

The Government must take steps to ensure that the CAA is appropriately resourced to meet the demands of processing increasing numbers of licence applications. Quarterly review meetings should be held by the CAA and DfT to review whether the CAA’s staffing complement is sufficient and further funding should be provided by the Government to the CAA if required and in good time to allow induction and training of such staff.

We are disappointed that a launch from the UK has not yet been achieved, especially as we were assured on several occasions that the first horizontal launch would take place in summer 2022. The Department for Business, Energy and Industrial Strategy and the Department for Transport must prioritise working towards achieving the first launch from UK soil as soon as possible.

We are concerned that the delay in achieving the first UK launch is partly due to the Civil Aviation Authority (CAA) being unable to process licence applications in a timely manner. For this initial set of licence applications, the Department for Transport must provide additional resource to the CAA to ensure that the licensing process does not impede the feasibility of a launch this year. After this, we expect that the application process will become streamlined and therefore the timeline for processing licence applications should be reduced to 3–6 months for all licences by

The publication of the Space Industry Regulations in July 2021 was a vital step that set out the licensing processes for launch activities, including establishing the Civil Aviation Authority as the regulator. The Civil Aviation Authority, with the support of the Department for Transport and the Department for Business, Energy and Industrial Strategy, should continue to take guidance from other authorities such as the Federal Aviation Authority on how to best operate the licensing process. (Paragraph 88) Growing new technologies

Although we believe that UK Space Agency (sponsored by BEIS) and the Ministry of Defence are both right to commit to improving their abilities to track and recognise objects in orbit (Space Situational Awareness /Space Domain Awareness), the two departments appear to be developing these capabilities independently, despite the previous Secretary of State for Business, Energy and Industrial Strategy’s claims about efforts to integrate and find synergies. We believe a joint approach to serving civil 78 UK space strategy and UK satellite infrastructure and military needs from these capabilities should be established. The Government should bring UKSA and MoD Space Situational Awareness/Space Domain Awareness services under one roof to maximise the use of knowledge, technology, and resources. The UK Space Command would be a perfect candidate for this as it already works alongside the UK Space Agency and Ministry of Defence to deliver joint national space capabilities.

We commend the Department for Business, Energy and Industrial Strategy’s approach to promoting the sustainable and safe use of space by developing a “regulatory road map” for the sustainable use of space and working with like- minded nations to promote the safe use of space. The Department should publish this roadmap no later than the end of February 2023 and include what steps it will take to try and establish the “critical mass” required to form a consensus on the sustainable and safe use of space.

We commend the Government’s latest announcements which will encourage the UK space industry to use space sustainably. As space is global in nature, the Government should set out how it intends to work with international partners to establish an International Space Sustainability Standard, rather than focusing on UK only interventions.

The Government has taken positive steps towards supporting the establishment of space debris removal missions and we look forward to seeing further work in this area, especially on ensuring that regulation of these activities is fit for purpose. Space debris removal missions should remain a clear focus of Government support and facilitation for the foreseeable future.

Research has already shown the UK has the potential to be a world leader in the growing in-orbit services and manufacturing (IOSM) market. The Government should seize this opportunity. The Department for Business, Energy and Industrial Strategy and UK Space Agency (UKSA) should work with organisations and companies such as the Satellite Applications Catapult and Space Forge who have already set out the steps that the UK needs to take to maintain leadership in this area. UKSA should set out which parts of the Catapult’s proposals it plans to take forward and should set a budget for this work.

Although the technology is at a relatively early stage of development, Space Based Solar Power (SBSP) has the potential to become a useful supply of green energy by 2050, helping the UK to reach its Net Zero goals. We commend the announcement by BEIS of plans to create an innovation programme that will seek to develop the technologies required to achieve SBSP. (Paragraph 105) Supporting the UK space sector

Space-based projects, including fundamental research and development of new and especially wholly novel technologies, generally occur on long timescales and therefore require long-term funding. We were pleased to see the announcement of a three-year budget for the Department for Business, Energy and Industrial Strategy for 2022–23—2024–25 which should bring some certainty to the sector. The Government should reflect on the consequences of the recent one-year settlements UK space strategy and UK satellite infrastructure 79 on the space sector and provide a commitment to deliver at least three-year budget settlements to facilitate a more strategic approach to the allocation of public support for these technologies of the future.

The current procurement systems are limiting the growth of the UK space sector and SMEs require further support to access new customers and expand. The Government should further consider how procurement could be used to support businesses and leverage further private investment. The Department for Business, Energy and Industrial Strategy should work with the Ministry of Defence to establish improved procurement mechanisms.

Clusters, such as those in Harwell and Glasgow, can be established in different ways and clearly bring benefits to the UK space sector. We welcome UK Space Agency’s (UKSA’s) announcements of at least some funding for the establishment of further clusters, and we particularly commend any such innovation outside the South East of England and London. However, the funding provided to support these new clusters was very limited and is therefore likely to prevent new clusters developing at pace. The UKSA should set out in response to this Report its plans for each of the new clusters, what support it plans to provide and what outcomes it is aiming at, including how many companies it aims to attract to each region and how many jobs it aims to create.

The Satellite Applications Catapult has been instrumental in securing the establishment and development of space sector SMEs and driving the growth of Harwell space campus. The Government should provide further support to the Satellite Applications Catapult, which will in turn stimulate the growth and success of space companies. Given that the Government’s levelling up white paper says that “the Department for Business, Energy and Industrial Strategy will aim to invest at least 55% of its total domestic R&D funding outside the Greater South East by 2024–25”, we would encourage the Government to be even more ambitious. Support for space R&D undertaken outside of Harwell should be in line with the proportion of the UK population living outside of the Greater South East. This would promote the growth of new space clusters and expand the space sector’s reach. (Paragraph 119) International considerations

The UK’s involvement in the European Space Agency (ESA) has brought a wide range of benefits to the UK and its space sector, but there is a need to re-address the balance between funding for ESA programmes and funding for national space programmes. The Government should not diminish its funding via ESA but should increase its investment in national space programmes; and both funding streams should reflect and focus on the objectives of the National Space Strategy as far as possible.

The UK has already benefited from new international agreements that have been established outside of the European Union, such as with the US on the Artemis Accords and the UK-Australia Space Bridge. More needs to be done to ensure that the UK increases its international reach and benefits from the skills and technologies being developed in other countries. The UK should focus on forming new bi-lateral 80 UK space strategy and UK satellite infrastructure and multi-lateral agreements, like the UK-Australia Space Bridge, that support the UK’s aims for space and provide access to new trade opportunities, collaborative R&D projects, and access to new technologies. (Paragraph 130) Addressing the skills shortage

The space sector is suffering from a skills shortage, with experienced employees and those with skills such as programming being particularly hard to find. Higher Education institutions struggle to provide training that keeps pace with technical advancements happening in the sector’s industries. The UK Space Agency’s newly convened Space Skills Advisory Panel (SSAP) should look to establish a working group, including representatives from Higher Education institutes, Doctoral Training Centre’s, and industry, who should develop joint training programmes that address the skills gap and allow future space employees to gain experience in the most advanced technologies.

Companies often find it difficult to recruit employees with considerable experience, but we think companies are also hesitant to invest money and time into training staff. This is partly due to the short-term nature of grant funding, creating a need for companies to have immediate access to the correct expertise. Further, space organisations fear that they will lose early career workers through competition with similar sectors, such as the tech sector, which require similar skills but often offer higher salaries. Industry players should move away from requiring applicants to have years of experience and should instead strengthen their early career training programmes, including the use of apprenticeships so that not all applicants require a degree. The Government should make it easier for businesses to do this, by offering multi-year grants which allow companies to plan and offer employees longer contracts.

If the UK is to address the space skills shortage it is currently facing, then it will need to inspire future generations to take up a career in space. Although the UK Space Agency has programmes in place that are seeking to do this, we believe there is a disconnect between what the UK space sector does and how the wider population perceives it. Most associate space with space exploration and may not associate it with the range of vital services that it provides. The UK Space Agency should ensure that its “inspiration” programme addresses the breadth of the UK’s activities in space and uses local role models who reflect this. (Paragraph 146) Conclusions and next steps for the National Space Strategy

We welcome the publication of the National Space Strategy, which provides a good overarching vision for future civil and defence space applications. However, the strategy lacks details on how its broad aims will be achieved and does not specify on which areas the Government will focus its efforts. Additionally, the strategy does not clarify what funding will be made available to the sector to ensure the success of the strategy’s initial ten-point plan.

We are reassured that the Government has set up a national space board that is developing a cross-Government implementation plan to sit alongside the National UK space strategy and UK satellite infrastructure 81 Space Strategy. To ensure that the space sector understands what steps the Government is taking to support the sector, the plan should indicate which areas of space the Government intends to focus. The Government should publish its implementation plan no later than the end of February 2023. It should publish annual progress reports to show how the goals of the strategy are being met.

We share the space sector’s concern that there has been no announced uplift in public funding for space to accompany the National Space Strategy and support the achievement of its objectives. This is all the more concerning given that the UK’s overall investment in space lags behind comparable nations such as France, Germany or Japan. The implementation plan should set out at what level, and how, the Government plans to fund the additional mechanisms and systems inherent in its ambitions for the space sector. Further, the implementation plan should set out what steps the Government will take to enable the sector to leverage increased private investment.

While we accept that the scope of the UK space industry is quickly changing and that the Government must take an adaptable approach to measuring its success, dropping headline targets when producing strategies and plans indicates a lack of ambition. If the implementation of the new National Space Strategy is to be assessed effectively, we must be able to observe if positive changes have been achieved in the space sector against some indication of what success looks like. The Government and UK Space Agency should publish the metrics by which the progress of the UK’s space sector will be measured (including a justification for why these metrics have been chosen) and set a clear target against which the success of the sector can be judged. These should be published alongside the implementation plan.

As the National Space Strategy stressed that civil and defence capabilities would be brought together wherever possible (so called ‘dual use’), more needs to be done to identify where overlapping capabilities can be brought together to exploit synergies and remove any unnecessary work and reduce costs. One example of this is considering whether the Skynet system, which is continuing to receive significant public investment, could provide civilian communication services. The Department for Business, Energy and Industrial Strategy and the Ministry of Defence should map out the civil and defence uses and potential uses of other aspects of space and identify areas where existing and emerging capabilities could safely provide joint value. This work should be published no later than the end of February 2023, including an implementation plan of how civil and defence applications will be linked further over the next 5–10 years.

Despite some potentially purposeful activity—including the establishment of the National Space Council and the National Space Board and the publication of two over-lapping high-level strategies (the National, and the Defence, space strategies)— the disbanding of the National Space Council is set to undo these efforts, with the responsibilities and interaction of the departments and agencies involved in space remaining very unclear. This is preventing the Government from making well- informed and productive decisions on space policy. In response to this Report the Government must provide an explanation for the disbanding of the National Space Council and set out what new governance structures will be put in place and how these will ensure the success of the National and Defence Space Strategies. (Paragraph 172) 82 UK space strategy and UK satellite infrastructure