(a) (i) Given the relative paucity of debate in
the House in recent Years, we recommend a debate on this Report
and the Government's Response.
(ii) We also recommend the Publication of an annual
report to Parliament from British National Space Centre (BNSC)
on its work, as a means of providing the material necessary for
the proper exercise of accountability to parliament. This report
should set out in comprehensible form what BNSC does and why (paragraph
(i) The Government would welcome the opportunity for
a Parliamentary debate on what the Committee has recognised as
an important area of policy.
(ii) BNSC is strongly committed to openness and accountability.
Its Space Strategy, a published document, sets out clearly what
BNSC is and its aims and objectives. The Strategy is available
on the BNSC website along with action taken to date against each
key action listed in the Strategy. This information is updated
every six months. The website also contains clear information
about BNSC, UK space policy, the UK space industry and recent
To respond to the Committee's recommendation, BNSC
will revive annual publication of "UK Space Activities"
to assist with public scrutiny. A copy will be placed in the House
of Commons library. At present the proper lines of accountability
to Parliament for expenditure by BNSC partners is through their
(b) We understand that the DTI is undertaking
an evaluation of civil spending on Space programmes over the past
decade. We trust that the results of this will be published. Unless
it is suggested that funding has achieved an abnormally low rate
of return, it is evident to us that if the UK is to play a significant
role in global space activities, there will need to be an increase
in the UK Government's expenditure on civil space over the next
planning period (paragraph 12)
The evaluation will be completed later this year.
It is intended that it should be published, in the normal way.
Its conclusions and recommendations will be among the many factors
which will influence decisions on future space funding by the
BNSC partners. In particular, decisions have yet to be taken following
the conclusion of the annual spending round.
European Space Agency
(c) Any withdrawal from ESA programmes would have
serious detrimental consequences for the UK space industry. However
if the UK Space budget is increased by a significant amount, careful
consideration should be given as to whether this increase should
redress the current balance of national as against ESA spend (paragraph
The BNSC partners intend to give higher priority
to national spend in the coming years. What is important, however,
is to have a very clear statement of the objectives of any programme
proposal and to seek the best value for money in achieving those
objectives. In some cases, there may be choices to be made between
ESA or national routes and it would not be appropriate to approach
these choices with any prejudice for one or the other.
(d) We would be concerned if the obvious technical
expertise and commitment to space science in ESA were to be diminished
as a consequence of new ESA/Commission working arrangements. The
UK must continue to participate fully and comprehensively in the
strategy discussions and to ensure that the UK's interests in
science, and its particular security concerns, are reflected in
the outcome. We look forward to the publication of the joint space
strategy by the end of the year (paragraph 18)
The Government has played a significant role in promoting
much closer co-operation between the EU and the ESA, following
its initiative during the UK EU Presidency in 1998 when both organisations
adopted a common text resolution on the issue. It continues to
seek to achieve closer alignment of their space-related objectives,
particularly in the areas of satellite applications. To this end,
BNSC has worked closely with the Commission and the ESA Director
General in the development and of the European Strategy for Space,
which was approved as a Commission Communication on 27 September.
The Government agrees that the Strategy should enhance European
space achievements generally without diminishing any specific
sector. It also fully agrees with the Committee that the achievement
of excellence in scientific research through the ESA must be maintained.
UK funding policy
(e) Whilst we appreciate that the Government is
pursuing a policy of public private partnerships, we were concerned
to discover that such decisions taken unilaterally in an international
project had been to the detriment of UK companies. We hope that
the lessons of funding the EGNOS project have been learnt and
that the Government and BNSC will ensure that common ground rules
for participation in such projects agreed amongst all participating
countries at the earliest stage, and implemented in the UK (paragraph
ESA is itself developing its own processes for handling
partnerships. Partnership may take many forms and BNSC is working
closely with the Agency with a view to ensuring that the processes
adopted are enabling, rather than restrictive, and that they avoid
discrimination between Member States. The Government would expect
that any future partnership arrangements would be set up from
the start as partnerships, with commitment of all participants
to the particular form of partnership which is appropriate to
the case. However, this will not undermine the Government's commitment
to maintain focus and effectiveness in its space programmes through
the early injection of private sector finance and disciplines.
(f) We detect a degree of hesitancy on the part
of the Government in its policy of opposing 'juste retour', possibly
based on the absence of any independent authoritative study. We
recommend an independent study to ascertain the effects of ESA
moving away from 'juste retour', particularly on UK SMEs (paragraph
The position on juste retour is clear. Juste retour
is an integral part of the ESA Convention to which the UK is a
signatory and helps maintain the involvement of the European Space
Agency's Member States and, in particular, the smaller countries.
The problem in recent years has been the gradual increase in the
cumulative level of juste retour from the 80 per cent set in the
Convention up to 98 per cent in the three years to December 1999.
This created many distortions to proper competitive bidding and
removed the Agency's reasonable margin in which to operate open
competitive bidding. BNSC consistently opposed the increasingly
higher levels of juste retour.
The impact of juste retour was studied very thoroughly
in the build up to the 1997 Ministerial Council meeting and the
resulting Ministerial Resolution made significant changes to the
way the Agency's industrial policy operated. In particular, the
Agency's Optional Programmes, which account for over 80% of its
total spend, are moving to a system where a nation's contribution
to a programme will be adjusted at the margin to match the success
of its companies in winning work under that programme rather than
vice versa. Furthermore the Resolution agreed to the ending of
the then current series of industrial return statistics, which
had been cumulative since 1972, and had led to special measures
to rectify the low return of some Member States. Thus at 1 January
2000 a completely new series of geographical return statistics
were begun and UK's previous 6 per cent over-return was wiped
clean. The new industrial policy includes measures to integrate
SMEs more comprehensively into projects against the background
of further major restructuring of the prime contractors (ASTRIUM
and ALCATEL) and a more flexible position on juste retour. BNSC
will work positively with ESA to evaluate the effectiveness of
the latest changes and look to the next Ministerial in 2001 to
implement any further necessary improvements. The Government does
not therefore propose to commission a review at this stage .
(g) (i) Given that DTI is responsible for the
operation of the UK system of export controls, we expect joinedup
Government within as well as between departments to ensure a smoother
passage for space exports requiring licensing, and
(ii) that Ministers will convey to their US counterparts
concerns at the unintended consequences of recent changes in the
administration of US export licensing (paragraph 28).
(i) The Government is fully committed to supporting
UK exporters. It is also committed to implementing an effective
system of export licensing for items controlled for strategic
reasons or because of sanctions, and to meeting its international
non-proliferation obligations. Export licence applications from
the space sector are assessed on the same basis and against the
same criteria as any other applications. All export licence applications
involving goods on the Military List of the Export of Goods (Control)
Order, and dual-use goods where there are grounds for believing
that the end-user will be the armed forces or internal security
forces or similar entities in the recipient country, are considered
against the EU Code of Conduct on Arms Exports. An export licence
will not be issued if there is a clearly identifiable risk that
the proposed export might be used for internal repression or international
Export licence applications often raise complex issues
which need careful and detailed consideration. These issues cannot
be fully explored until after an application has been submitted
and all relevant information can be considered. All licence applications
are circulated by the DTI to any other government departments
with an interest as determined by those departments in line with
their policy responsibilities.
Relevant sponsorship directorates within DTI, such
as BNSC, are kept aware of export control procedures and policies,
and take them into account in their dealings with industry. When
an export licence application is recommended for refusal, the
relevant sponsorship directorate is given an opportunity to comment
before a final decision is reached. Any differences of view within
or between Departments are discussed and resolved, involving Ministers
(ii) The US Department of State published regulations
implementing changes required by Congress to the US export licensing
regime for satellites and related components and technology in
March of 1999. Since then BNSC and the British Embassy in Washington
have had a number of productive exchanges with the US administration,
bilaterally and in partnership with EU and NATO colleagues and
with industry to discuss common concerns in this area. In particular,
the Government has encouraged the US Administration to give clearer
guidance to industry on how to work within the new rules and to
address concerns about the speed of processing licence applications.
We have had to recognise in doing so that these changes to the
US export control regime were imposed for national security reasons
and are a highly sensitive issue in the United States. It appears
that the greatest adverse effect has been on the US satellite
industry, which has suffered a large fall in revenues and lost
considerable market share to European industry since the changes
The US administration has responded constructively
to our concerns and those expressed by others including US industry.
They have made considerable outreach efforts to explain the new
procedures to industry and to help them work with them more effectively.
Additional staff were hired under a Congressional mandate specifically
to address the concern about licence application processing times
and measures have been introduced to speed up approval of licences
for exports to NATO and major non-NATO allies of the US. We will
continue to monitor the situation closely but the actions of the
US Administration this year give some grounds for optimism and
average processing times are apparently falling.
Higher education and space
(h) The next UK space strategy must explicitly
address the question of the supply of appropriately qualified
graduates, so that the space industry can be sustained in the
years ahead. We would hope that in the review of the next UK space
strategy, due weight is given to the support of higher space education,
both to promote space to future students and to ensure the maintenance
of centres of excellence (paragraphs 29 and 30).
The Government recognises the importance of attracting
students to space science and engineering courses, not least because
space is a beacon subject, attracting students to science and
engineering more generally. BNSC is aware of concerns regarding
appropriately qualified graduates and liases with the space education
sector. This factor will be taken into account in the preparation
of the next UK Space Strategy.
(i) It is important that the UK remains involved
in the field of satellite telecommunications, at both the pure
and applied levels of research (paragraph 35).
The Government remains committed to supporting the
development of new satellite telecommunications technologies.
During the last 18 months, the UK has increased its subscription
to the Advanced Research in Telecommunications Systems (ARTES)
programmes and BNSC has launched a new £9m national satcom
programme, S@TCOM. The key drivers are seen as multimedia/e-commerce
and advanced mobile system developments.
ARTES provides the main vehicle through which ESA
carries out its satellite telecommunications activities which
range from market studies to full system development. The UK contributes
to three elements namely:- ARTES 1 (market studies/strategy);
ARTES 3 (multimedia systems); and ARTES 4 (pre-competitive technology
development activities). The S@TCOM programme is complementary
to the ESA ARTES programmes and aims to develop innovative technology
and applications in satellite communication and navigation in
order to allow industry to exploit commercial market opportunities.
(j) The Particle Physics and Astronomy Research
Council (PPARC) expressed disappointment that they were unable
to support bids for one of the DTI's key initiatives, MOSAIC,
due to timing problems. Given the low number of spacerelated
initiatives, this raises questions over the effectiveness of the
lines of communication between the DTI and other BNSC partners.
We hope that if, in the future, DTI provides such seedcorn funding
the programmes are better managed. We will follow the outcome
of the MOSAIC programme with interest and trust that the programme
will be fully evaluated (paragraph 41).
PPARC has an earmarked budget line for developing
space science activities outside the ESA programme. Late in 1998,
PPARC had built up sufficient prospective resources in the budget
line to consider issuing in 1999 an Announcement of Opportunity
(AO) for small science missions or payloads. In view of the interest
in MOSAIC expressed by the Space Science community, the initial
plan was to issue the PPARC AO at the same time as the MOSAIC
AO so that proposals could be submitted to both.
However, pressure for release of the PPARC AO a year
ahead of schedule arose from a strong UK interest in a specific
collaboration with US space scientists in the Swift mission proposed
in August 1998 in response to a NASA AO. Since NASA was in command
of the schedule, PPARC was left with a choice between MOSAIC,
which had not yet been approved given funding uncertainties, and
the definite opportunity of participation in an important mission
which was a strong contender in the NASA competition. PPARC chose
the latter and issued an AO in February 1999. The strong scientific
and financial support from the UK was a factor in the Swift mission
being selected by NASA in October 1999. This meant PPARC was unable
to finance participation in MOSAIC when the AO was announced in
BNSC worked closely with PPARC in the definition
of the MOSAIC programme to encourage space science proposals with
matching funds from space science sources beyond PPARC. A number
of space science proposals were put forward under the MOSAIC competition
although none were in the event successful. It was unfortunate,
but unavoidable in the circumstances, that PPARC could not co-ordinate
its cycle with both NASA and BNSC. However, the BNSC partners,
DTI and PPARC were both fully in contact throughout this period.
The Minister for Space announced the successful applications
under the MOSAIC programme at Farnborough Airshow and BNSC is
committed to carrying out a full evaluation of the programme.
(k) We are concerned that there is an apparent
lack of leadership of the UK's participation in Galileo. We recommend
that a sustained effort is undertaken by BNSC to ensure joinedup
thinking across Government, particularly between DTI and DETR,
on the Galileo programme. In the absence of any clear indication
of how income may be derived from Galileo, we recommend that,
once the definition phase is concluded, the Government discuss
with industry the commercial potential for raising income from
Galileo and make that assessment publicly available before committing
further public funds (paragraph 46).
The Government does not accept that there is a lack
of leadership for the UK's participation in Galileo although the
case for Galileo has still to be proved. The Government expects
that the Commission and ESA studies currently underway will help
to do this. BNSC is working closely with UK industry, DETR (which
is the lead Department for the UK) and other interested Government
Departments. The Government is continuing to seek clarification
from the European Commission and the industry on a number of aspects
of Galileo, including the benefits to users, the commercial potential
for raising income, and the likely costs, in order to provide
a basis for decisions on further development. As to joined-up
Government, good links exist between the key interests.
(l) Despite more than a decade trying to stimulate
commercial markets for Earth observation data, provided at public
expense, it is universally accepted that the take-up has been
unsatisfactory. It is widely agreed that the market for Earth
observation data has not increased as rapidly as was initially
anticipated. It appears to us that some of the EO missions of
the last decade have suffered from insufficient prior discussion
with those who may have wished to use the results. As a consequence
they did not provide the high quality realtime and continuous
information which users demand (paragraphs 51, 52 and 55).
(m) We welcome the news that the first low
cost opportunity mission in the Living Planet programme is to
be UKled, and one of such selfevident practical significance
(n) Expenditure on EO is one of the areas
currently being evaluated by the DTI. Further EO expenditure at
current levels must be driven by more than an expression of general
but unsubstantiated hope that commercial markets will be generated.
It must also be accepted that there are good public policy reasons
to gather EO data which cannot be expected to generate a commercial
return (paragraph 55).
The Government agrees that the growth in the commercial
market for Earth Observation (EO) data and derived information
products has not been as fast as some may have expected. The level
of 'user drive' in the definition of requirements for future missions
is now seen as the key factor determining the rate of take-up
for EO as an information source. Other important aspects relate
to the maturity of techniques for the conversion of raw data into
useful information, mission costs and length of development periods.
BNSC will only recommend government funding of pre-commercial
EO missions if the focus is on delivering competitive information
services based on a robust business case.
This changing approach has had a number of positive
effects. Sustained UK pressure has led to a truly user-driven
EO programme at ESA with Living Planet. UK environmental scientists
have had considerable success in the selection of ESA Earth Explorer
missions, notably CRYOSAT whose practical significance was recognised
in the Report. Such advances are linked to the development of
environmental policy and in the longer term to key areas of likely
future economic benefit. The importance of the public sector customer
for EO is being recognised through the BNSC Government Information
From The Space Sector (GIFTSS) initiative, and the drive of the
EC Global Monitoring For Environment and Security (GMES) initiative
towards user needs. With these changes, the UK should take advantage
of its skills in EO, built up over the last ten years. The critical
need for a user-driven approach is at the heart of all of the
recent investments in EO by BNSC.
Whilst the predicted commercial growth in the market
for EO derived information has not been achieved, the market is
now growing and there have already been some notable highlights.
For example, the UK has strength in the commercial application
of Interferometric Synthetic Aperture Radar (InSAR), which provides
critical information on phenomena such as subsidence, landslides
and earthquakes. Similarly, commercial applications of crop monitoring,
location of telecommunication assets and oil spill monitoring
are also successful applications of EO. The launch of Envisat
will provide continuity for, and broadening of, the current observations
allowing further growth in these application areas.
(o) Beagle 2 is an example of an innovative
approach to funding and of a project which seems to have won funding
despite, rather than because of, the system. It now has the full
support of PPARC and the space community. It would be a sad comment
on the seriousness of the UK contribution to space science if
the necessary funding could not be found. The project is entitled
to expect Government support in finding ways to fill the funding
gap which we understand has yet to be filled (paragraph 60).
The Government is pleased to be able to confirm that
BNSC has successfully worked with the Beagle 2 consortium to ensure
that the finances of the project are put onto a more sound footing,
pending receipt of sponsorship income. The project offers unique
and valuable opportunities for sponsorship, which we expect to
see enthusiastically taken up.
(p) The general perception among all those
involved is that the Government and BNSC are following a policy
of no involvement in launchers. It is our strong impression that
in BNSC there is a less than open mind on the case for Government
assistance to launcher development. If Ministers do indeed have
an open mind on the use of public funds for launcher research
and development, they should make this explicit (paragraph 67).
(q) We recommend that a review is undertaken
of the UK's participation in launcher development programmes.
Since no partner in BNSC is likely to be fighting for UK involvement
in reusable launch vehicles (RLVs), we also recommend that this
evaluation be undertaken by a body independent of BNSC (paragraph
Ministers continue to have an open mind on this issue.
The Minister for Science will consider attractive public good
and commercial prospects for inclusion in the space programme
subject to the availability of realistic resources. This principle
was followed when considering and eventually rejecting the question
of entry into FLTP in December 1999. The Minister for Science
also decided at that time to support more immediate initiatives
in launchers at the sub-system and equipment level through the
UK National Technology Programme. Three such proposals have been
One of these proposals covers further development
and exploitation of a market assessment model developed in the
UK by BAe(Systems). In conjunction with members of UKISC, this
model will be used to reassess the combined effects of development
costs and timescales, revenue streams, market entry conditions
and windows of financial return in the current and medium term
launcher market. BNSC will help facilitate this work and ensure
that comparisons are drawn with open source data, for example
from Euroconsult. If the results of that work are significantly
different from those considered during the extensive public consultation
on the UK Space Strategy, the Government will consider passing
the results across for further review by an independent analyst.
For the moment, however, it is the Government's view
that current proposals for the development of new launchers are
heavily dependent on public money and could not be contained within
realistic resources in the UK. To put the resources required in
this area into context, the Ariane V programme has cost $6bn to
date, with plans to invest a further $3bn in the launcher, which
achieves sales of some $1bn per annum. During the periods of intensive
development, ESA has allocated about $900m per annum to launchers.
For the UK to pay its GDP share of this, the DTI element of the
civil space programme would need to double.
(r) The decision has now been made not to
participate in the Future Launch Technologies Programme (FLTP).
The UK has, however, technical expertise in the area worthy of
maintaining and developing. We recommend that consideration should
be given to ways of fostering existing UK expertise in technical
space infrastructure in the UK outside the normal avenues of space
technology funding (paragraph 69).
The Government fully agrees: this is already UK policy.
BNSC has for example helped to facilitate discussions for Reaction
Engines in France, Japan and the US, including visits to Lockheed
Martin, Boeing and SNECMA.
(s) We recommend that, within the framework of
the recently agreed US/UK partnership on defence equipment and
industrial cooperation, vigorous efforts be made to provide
for a level playing field for the US and UK space industry with
a presumption in favour of reciprocal removal of barriers to trade
The Government recognises the strong potential of
the recently signed "Declaration of Principles for Defence
Equipment and Industrial Co-operation". Officials of both
countries have agreed to work together over the next 12 months
to identify a range of co-operative actions that should have impact
across the full extent of defence equipments, including space.
The declaration will not however have a direct impact on current
(t) We recommend that the Government take
the opportunity of its response to this Report to set out how
it is envisaged that the changes in DERA's status and role will
impact on UK space policy, and in particular on (a) the availability
to BNSC of expert, impartial, and free advice on space technology,
and (b) on the extent to which UK firms offering technology potentially
in competition with DERA will be able to bid for MoD contracts
The proposed restructuring of DERA has led BNSC and
DERA together to undertake a review of their relationship. The
review is currently under way and is expected to culminate in
a new Collaboration Agreement to supplement the existing Framework
Agreement. As part of this process there has been close and constructive
consultation with industry through its trade associations, and
this is ongoing.
DERA has played a valuable role as a BNSC partner
and the expectation is that this will continue. There is however
a clear balance to be struck between the useful project management
and technical support which DERA provides to BNSC, its proposed
new status and the impact of this on industry.
More generally, the BNSC is reviewing the role and
contribution of its partners, and potential partners, taking account
of their status in the public or private sector.
(u) BNSC's main role is one of coordination.
If BNSC is to continue in anything like its present form, it must
be encouraged to take a more proactive stance and to provide firm
and clear leadership in coordinating policy across Government
departments (paragraph 80).
(v) BNSC was set up as an ad hoc arrangement in
1985. It is now time to review the role, status, and organisation
of BNSC. We recommend that following the completion of the DTI's
evaluation of spending on space, the Government undertake a public
review of BNSC along the lines of the quinquennial reviews of
Government bodies. This review should also consider the possibility
of giving BNSC or its successor body its own budget, in addition
to the existing budgets of BNSC's partners, in order to ensure
that the UK space programme reflects the long term public policy
interests of the UK. Full attention should also be given to coordination
between military and civil applications. We also recommend that
the next DirectorGeneral of the BNSC or its successor body
is recruited on a fixed term contract through open competition
The BNSC is a flexible and dynamic partnership. It
has successfully co-ordinated the space interests of all government
bodies, resulting in an effective UK presence in European space
activities. Nevertheless, the Government agrees that after fifteen
years of existence it is timely to take a look at how BNSC is
set up and operates. The Committee has conducted a full and valuable
public review of this issue and has received many submissions
from a broad range of interested parties. The Committee also recognised
that the BNSC spending partners are completing an evaluation and
have gathered considerable relevant information in the course
of this. The Government proposes to draw on all this material
in conducting a review of the budgetary and organisational arrangements
for BNSC, and its position in relation to the DTI and the Office
of Science and Technology. The DTI will consult with the other
government partners in the BNSC during this review, which in particular
will look at the case for introducing greater transparency into
its spending on space, by reference to broad programme objectives.
The BNSC remains committed to developing the partnership
between departments, which is its lifeblood. Consistent with the
programme for the modernisation of Government, it will continue
to encourage partners to locate in BNSC headquarters staff with
responsibilities for space-related activities. The programme of
secondments from industry will be maintained and expanded as opportunities
arise. Where the Government considers that the field of candidates
for particular posts would benefit by being opened more widely,
they will be advertised publicly. The Director General of the
BNSC has been appointed relatively recently and the appointment
of a successor is not therefore in immediate prospect. When an
appointment is next made, the Government will consider the Committee's
proposal for a period appointment, taking into account the views
of the partners in BNSC and any relevant recommendations of the
review described in the previous paragraph.
UK space strategy
(w) UK space strategy must be sufficiently
flexible to be able to react to potential future applications
of space technology (paragraph 82).
The UK Space Strategy was established following extensive
consultation with the space community. The Government's priority
must be to implement the key actions in the Strategy. This will
require focus and continuity of policy. It will, however, continue
to remain abreast of developments in new space technologies and
applications and evaluate these against current objectives.
(x) The latest space strategy document is
admirable in many respects but limited in ambition. We hope that
its successor will be able to announce something beyond a modest
continuation of existing programmes, and that the civil space
programme will be funded on a less cautious basis (paragraph 83).
BNSC is not short of ambition. Its key ambitions
are to achieve the highest quality astronomy and space science,
improve our understanding of the Earth's environment and to help
industry maximise profitable space based business opportunities.
These are ambitious goals and, within the bounds of affordability
and value for money, BNSC will continue to pursue them with all
the vigour they demand. This will necessarily mean that there
will be continuity, where this is appropriate, and new initiatives
where new opportunities arise. Ambition, however, must, if it
is to be successful, arise ultimately from working with BNSC's
academic and industrial partners, the users of space opportunities,
and sharing in their ambitions.