---

The Space Economy (UK Engagement with Space Committee Report)

My Lords, it was a privilege to be a member of the UK Engagement with Space Committee, served so well by its two clerks, Sabrina Asghar and Steph Coulter, and expertly chaired by the noble Baroness, Lady of Ashton of Upholland. I realised that she was going to be a wonderful chair when she persuaded our first witness to join her and some members of the committee to drink champagne immediately after his appearance before our committee. Only later did it become clear that Professor Brian Cox’s appearance before our committee had coincided with his birthday.

Apart from the noble Lord, Lord Booth-Smith—and here, I may be disagreeing with the chair—all members of the committee could recall seeing the moon landing on TV in August 1969. But, despite having witnessed

this extraordinary event for humankind, or perhaps because we had done so, we were still not fully aware of the importance of space to the UK economy, nor of the role it plays in the UK’s defence and national security. Those two words, “dual use”, featured regularly in the evidence presented by our witnesses.

It was not possible for us to ascertain how well co-ordination between DSIT and MoD worked to deliver cross-governmental space policy. It is my view that the DSIT Minister responsible for space at the time did not manage to convince the committee that he was fully aware of the detail of the Ministry of Defence’s space plans. Yet, we now know that the long-awaited defence investment plan has allocated £3.2 billion of direct investment in space for the next four years. So, my first question to the Minister is to ask how closely involved she was, as the DSIT Minister responsible for space, in helping to shape the allocation for space in the defence investment plan.

The space sector shares several of the positive characteristics of other deep tech sectors in the UK: a thriving academic base in our universities, a rapidly increasing number of start-ups, and a global economy within its domain growing at about 10% per annum. It delivers £7 billion GVA, with a labour productivity 2.3 times the UK average. Yet, the UK ranks only 16th in space investment as a proportion of GDP, behind the US and most major European countries, as well as Japan, South Korea and Israel.

This low level of investment has been compounded by fragmentation and lack of focus. The Government have attempted to address this issue by first recognising space as a priority frontier sector in the advanced manufacturing sector plan of its 2025 industrial strategy. Secondly, in March this year, the Minister announced that the Government would prioritise funding in four subsectors: satellite communications; assured access to space; in-orbit servicing, assembly and manufacturing—ISAM—and space domain awareness.

Such prioritisation is defensible provided that it remains possible for innovative university labs or start-ups to access funding for research and development outside the chosen subsectors. Here, space weather research provides a salutary tale. As the noble Lord, Lord Willetts, will remember, back in 2007, the newly formed Science and Technology Facilities Council, STFC, decided to stop funding solar-terrestrial physics. Eventually, after parliamentary intervention and other steps, the Natural Environment Research Council, NERC, agreed a rescue package. Fast forward to 2026, and today the UK space weather community, built from that research on solar terrestrial physics, stands as a world leader in the operational forecasting that is crucial to the aviation industry, as solar flares can disrupt the radio communications used by aircraft on polar and remote routes. Yet the underpinning research was initially written off in 2007.

UKRI is at present engaged in a rather fraught dialogue with the physics community about the funding allocation for the STFC. Will DSIT carry out an impact assessment of the flat settlement—in effect, the cuts—proposed by UKRI in physics funding, to include a consideration of the possible impact on space research?

The Minister has recently answered questions in this House about AI sovereignty. The House of Commons Science, Innovation and Technology Committee published a report two days ago, Science Diplomacy: Sovereignty, Strategy, and the Global Race, in which it argues that tech sovereignty should encompass not only AI but space and quantum. So my final question is to ask whether the Minister agrees that a subset of space technologies, beyond assured access to space, should be designed as sovereign capabilities for the UK, and whether any work is going on within DSIT and the MoD to investigate how we might improve resilience in these space capabilities without, in the words of the Prime Minister,

“telegraphing our specific vulnerabilities to hostile actors”.

1.31 pm