Size and Health of the UK Space industry
The UK Space Agency recently published a report on "The
Size and Health of the UK Space Industry1 , the findings
of which are of particular interest to show how the sector has been
affected by the current recession, and to illustrate the
significance of the sector for the UK economy.
260 companies, which are actively involved in the UK space
industry, were invited to provide input to the study. Altogether
the companies recorded an impressive space-related turnover of
£7.5 billion in 2008-20092 , of which the upstream
sector (companies that provide space technologies) accounted for
£930 million and the downstream sector (companies that
utilise space technologies) accounted for £6.6 billion.
This represents a growth of 8% within the study period, 2007/2008
and 2008/2009, and of 21% since 2006/2007.
The growth has been driven by the downstream sector, which reported
a growth of 24% during the study period. The upstream sector faced
a difficult sales period and experienced a decline in turnover in
2008/2009 against high turnover figures in 2007/2008. However, over
the study period the upstream sector still recorded an average
annual growth of 3%. To put this in perspective, the national UK
GDP grew by only 0.3% over the study period.
The results show that the space industry has performed strongly
throughout the recession, expanding in terms of turnover,
employment and contribution to GDP, and is in a strong position to
continue to grow, particularly as the UK eases out of
recession.
The Significance of the UK Space Industry
As the Science Minister, David Willetts, stated:
"in space we have a sector which is growing as fast as the Chinese economy; and it is exactly the kind of area where there are things we can do to maintain its excellent performance; and on the public-sector side we shall fight to do so"3 .
With the growth rates that the industry showed during a
recession, it would seem to be an industry worth fighting
for.
Recognition of the value of the UK space industry was one of the
catalysts for the creation of a joint UK Government, industry and
academic Space Innovation and Growth Team (IGT), which was launched
by Lord Drayson in 2009. What proceeded was a six month
consultation period resulting in a detailed report setting out the
Space Innovation and Growth Strategy (IGS) which defined a 20-year
vision and strategy for the future growth of the UK space
industry.
The purpose of the IGS was to involve the whole UK space community
to identify the challenges and opportunities for the space
industry, which will govern its future competitiveness, growth and
success.
Following the publication of the IGS report, the Technology
Strategy Board's Space Special Interest Group facilitated the
development of National Space Technology Roadmaps.
We were involved in one such roadmap through our participation in a
group called "Access to Space", led by Craig Clark the
CEO and Founder of Clyde Space.
Encouraging Growth Investment in the UK Space Industry
Joanne Wheeler led a subgroup looking at the regulatory, legal
and insurance issues which hinder or encourage "access to
space" in the UK.
There are clear growth opportunities for UK-based businesses in the
space sector. It is essential, however, that the regulatory, legal
and insurance framework in the UK does not place UK based business
at a competitive disadvantage compared with businesses operating
and seeking licences in other jurisdictions.
It is important that the licensing framework in the UK ensures
affordable and efficient access to space and relevant spectrum and
encourages businesses to operate from the UK. A supportive
regulatory environment for operators and manufacturers in the space
sector will also encourage technology spin-offs, industrial and
technological skills and competencies, and spill-over into
non-space related sectors.
To ensure that such goals are met and to encourage the progressive
development of the space sector in the UK, efficient access to
space and spectrum must be ensured. The working group was therefore
tasked with identifying:
- growth opportunities for UK-based businesses in the space sector, and the economic and social benefits created by space based or derived activities; and
- the regulatory burdens which hinder or prevent such growth opportunities being fulfilled and the full realisation of the resulting economic and social benefits for the UK.
Perhaps the two most significant regulatory burdens identified, which place UK businesses at a competitive disadvantage compared with businesses operating out of other countries such as France and the US, are:
- the unlimited liability which a licensee has with respect to any claims brought against the UK Government in relation to damage or loss resulting from the activities of the licensee (section 10 of the Outer Space Act 1986); and
- the high third party insurance requirements faced by licensees, represented by the £100 million minimum liability cover, as a condition of the grant of a licence.
At a recent meeting attended by representatives of the UK
Department for Business, Innovation and Skills (BIS), the UK Space
Agency and the UK space industry, industry members expressed their
concerns, which were received well by the UK Space Agency.
Following up with the UK Space Agency, we understand that they are
working closely with the Treasury and other Government bodies with
a view to conducting an impact assessment of proposed changes to
the current full indemnification to be given to the UK Government
in accordance with section 10, and the high third party insurance
requirements. Through this assessment they are seeking to ensure
that the UK remains competitive with other countries active in the
space sector and to encourage growth and investment in the UK space
industry; recognising the significance of the space industry for
the UK.
We will keep you informed through these bulletins of these
developments towards changes to the UK Outer Space Act.
Footnotes
1. The report was prepared by Oxford Economics and can be found here.
2. This represents a value added contribution to UK GDP of £3.6 billion.
3. " UK space funding: Steady thrust ahead?", Jonathan Amos can be found here
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 29/11/2010.