Phillip Lee MP
Without doubt, the key challenge now facing all Western governments is how to help build and support a sustainable national economy. One that will withstand both the increasing competition from the South and East of the globe and the tough reality of an ageing workforce. In Britain, we have a further challenge. The financial crisis of 2008 hit our economy harder due to our disproportionate dependence upon the City. The financial sector will and should continue to play a key role in Britain’s economic future. We do need, however, to diversify our base by supporting other industries capable of truly sustainable growth. I believe that the space industry is one that qualifies. It can and will deliver jobs and income for Britain in the future.
The exploration of space is inspiring to most. Seeking to travel beyond what we know is a valuable part of what makes us all human. This desire for new knowledge is one of the reasons why the space industry is such a vibrant sector. Its strong growth is a manifestation of our species' instinctive drive to discover the new. Communications, navigation and global monitoring of climate are just three areas where the space industry as enhanced Man's ability to secure a more efficient and sustainable future. More importantly for us in this country, markets have been created in which British businesses could play an increasing part. Most leading authorities predict that these markets will grow strongly, not least because the volume of data being moved around the globe continues to rise significantly. The increase in consumer use of on-line multimedia has lead to a doubling of demand for data each year. Space carries a sizeable part of that burden as, for example, satellites are now the primary delivery system for digital television across Europe, connecting over 40% of households.
Perhaps belatedly, governments have realised the strategic value of high-speed data connectivity, both to their economies and their national security. It is clear that this demand for connectivity cannot just be met by terrestrial technologies. Fortunately for us here in Britain, our space industry is well-placed to provide the critical infrastructure required for a future world with such an insatiable need for immediate knowledge and media content. Satellite technology will also play an invaluable role in collecting information on changes to the global climate and provide the ‘real-time’ data needed to meet the challenges of transporting and feeding a global population that has just topped 7 billion. In short, British-designed and built satellites will be much in demand.
To date, the UK space industry (UKSI) has already been a remarkable success story. It now comprises more than 250 companies, directly employs around 25,000 staff and generates a turnover of £8 billion. It is one of the highest value-adding and fastest growing sectors in UK industry having grown by more than 10% per year for the last decade; a growth rate four times faster than the rest of the UK economy. As a consequence, UKSI now enjoys 7% of the global space market. For all of that undoubted success, there is still large potential for future growth, as the global space market is forecast to be worth £543 billion by 2020.
Conventionally, the global space industry is divided into upstream (space technology provision) and downstream (space technology use) sectors. Upstream businesses in Britain include those that manufacture satellites and those that provide ground control services. The manufacture of satellites in the UK is now worth almost £1 billion annually, around 15% of the UK’s space sector. This world-class manufacturing base here in Britain has been developed over the last 40 years by a number of companies. For example, Astrium, a pan-European satellite manufacturer, now builds 25% of the world’s telecommunications satellites and chooses to manufacture the entire payload and mechanical systems here within these shores. At a time when governments and businesses alike are looking to raise worker productivity, it is also interesting to note that space industry workers exhibit productivity more than four times the national average. Some have suggested it could be as much as £145,000 per employee to UK GDP. Furthermore, as both manufacturing and operations of satellites are capital intensive and require highly skilled people, nearly two-thirds of jobs in the sector are filled by graduates.
The downstream sector is dominated by satellite broadcasting, mostly by BSkyB, the biggest player in the UK space economy. Our fortunate early adoption of satellite TV here in Britain has since stimulated technological advances in satellite manufacture so that more can be delivered directly to the consumer. This has benefitted Britain greatly, as we are now well-positioned to prosper in a world increasingly demanding information and media content, 24 hours a day. Another successful downstream British business is Inmarsat, an enterprise that originated from the International Maritime Organisation. Its eleven geostationary satellites provide essential and highly-valued global mobile satellite communication services.
In reality, though, how does the government get public support for a space strategy? Sadly, in my political experience, the British public have a limited understanding of the true value of space to our economy and also, in broader terms, to our modern way of life. Most people, I fear, see the exploration and use of space as being just about national standing; a cold war of the past aptly played out in a frozen vacuum. What is more, government spending on space is viewed as an extravagance, about ‘boys with toys’ rather than of serious strategic value to the nation. To suggest that the taxpayer should spend money on space research at a time of economic austerity is also often met with derision. “What about hospitals and schools?” is the oft-repeated question of politicians like me who advocate financial support for space.
The reality could not be further from the truth. The UK Space Agency receives just £220m annually from central government, making the £8bn space sector one of the least subsidised parts of the UK economy. Unlike in America and the former Soviet Union, Britain’s space sector exists despite, rather than because of, previous government investment. Indeed, administrations of the past have often hampered our technological progress in space. Who would have thought that the 1875 Explosives Act prevented any British research into rockets between the World Wars of the last century, thereby allowing Germany to develop rocket technology alone; technology which would later be used by the Americans to take men to the Moon? This was a technological achievement that was arguably second to none in the history of Man. With vision, Britain could have played a larger part in that Apollo endeavour, one that ultimately repaid the US economy $14 for every $1 of taxpayers’ money spent.
Despite its undoubted success, UKSI still plays only a minor role in the global space economy. Although the industry has done well considering the relative lack of state support, the present government could do more to enhance Britain’s position in the global space market. For starters, I believe that this should include the following: creating a supportive regulatory regime, making government procurement smarter, licensing a 'spaceport' in the UK and committing to the European Space Agency’s manned-space flight programme.
Clearly, space entrepreneurs need to be attracted to Britain. To do so we need to create a suitable business environment within an appropriate regulatory framework. In this country, we have a long and well-respected history of regulation of the civil aviation industry. Remarkably, we do not have similar regulations in place for the far-riskier travel into space. This regulatory desert makes insurance of space projects such as Richard Branson's pioneering Virgin Galactic much more difficult. The irony is that Lloyds and others already collect annual premiums of around £300 million for the insurance of space hardware. If safety and environmental regulations on sub-orbital and orbital flight services were established here in Britain then London could further enhance its insurance market share.
In terms of regulatory guidance, I would also advocate that the government direct the Office of Communications (OFCOM) to only represent interests of space companies which are UK-domiciled, UK employers and UK Taxpayers. At present, international companies are setting up letter boxes in dependent territories e.g. Isle of Man, and using OFCOM to represent them to the International Telecommunication Union. This ‘regulation shopping’ disadvantages home-based businesses who are building for Britain by using British taxpayers' resources to help foreign ‘carpetbaggers’ to compete. (Note: Britain is the only country that allows this practice to happen).
Smarter government procurement could also support our space industry. Services from space are increasingly of great value to government departments, especially the Ministry of Defence. The Paradigm project is a very good example of where the space industry has worked in partnership with government to deliver a secure military satellite service for our Armed Forces, thereby supporting the development of a ‘service side’ to a British-based business. Recently, the present government recognised its essential role in space procurement with the Chancellor’s welcome announcement on funding for the NovaSAR low-cost, radar satellite demonstrator mission. This project is aimed at helping the UKSI in capturing a growing export market in earth observation services (EOS). Moreover, the World Bank has estimated the global market in carbon credits to be worth as much as $2 trillion by 2050, a market which, in the trading of carbon emissions and offsets, will require a satellite-based system for its policing. I am sure that in the future the market for EOS in monitoring global agreements, from the illegal dumping of oil at sea and illegal fishing, to illegal logging, will be a key sector for the UKSI.
Another potential growth area for UKSI is the well-publicised sector of space tourism. The world's first 'spaceport' is currently being built in New Mexico; interestingly, a project driven by a British entrepreneur. I believe that the Government should be leading a campaign to build the second spaceport here in Britain. Not just to secure part of the relatively small market in sub-orbital space tourism, but because, as Jim Bennett argues in his latest publication The Space Investment Report, the port would provide a regional 'seed' around which scientific and economic interests could consolidate and subsequently develop. This opportunity to create such a British hub for excellence in space technology and allied industries should not be missed.
One final suggestion to government would be to advocate Britain contributing to the on-going, manned-space flight programme run by the European Space Agency (ESA). For a relatively modest £300 million per year (0.04% of annual UK government spend), we could participate in high-value microgravity experimentation. We are fortunate that our only ESA astronaut, Major Tim Peake, is an expert in this field. Furthermore, Britain is a leading centre for research in the broad area of science. It is worth noting that the MISSE (Material International Space Station Experiment) programme has been operating on the International Space Station (ISS) for over 10 years. The ISS is an impressive structure in which the UK has sadly no involvement. The MISSE programme’s total cost to date is estimated to be $20 million (direct and indirect costs). According to Boeing, the tangible product and value-added outcomes so far exceed $2.3 billion. Remarkably, future MISSE plans are thought to have even higher ROI (return on investment) projections. In addition, Boeing has estimated that this area of science will yield in excess of $100 billion in the future. As Britain is an expert in this field it does beg the question why are we not investing in it more?
Making this century one that Britain remembers as its golden space age is not beyond us. Firstly, the UK Government should recognise that space is a key, high-technology industrial sector; that it should sit equally with defence, life sciences and biotechnology as one of the sectors that government should actively support. The global demand for our space products and services will continue to be greater than that from domestic sources. Hence, the space industry would continue to provide strength to our export economy. Since the use of space will undoubtedly remain integral to the growing digital economy, this export strength should continue for many decades to come. In this London Olympic year, it therefore seems appropriate to remember the motto: Citius, Altius, Fortius. What better way to elevate our country’s economic ranking than with a growth policy that places Britain at the very heart of the global space industry? To my mind, Britain should look upwards to the stars to secure a stronger economic future. It is time for us to be bold.
Dr Phillip Lee MP
Executive Vice-Chair of the Parliamentary Space Committee