18/11/2013 09:43 GMT | Updated 23/01/2014 18:56 GMT

Space Growth Plans May be Stunted by Risk Issues

Government ambitions to boost the UK space programme and excited talk this week about a mini Cape Canaveral in Wales are missing a key point: Who is responsible if things go catastrophically wrong?

The UK is not a good place from which to run a satellite business or any other business involving activities in outer space.

Unlike France, the US and most other countries, UK companies involved in activities in space are strictly liable without limit for damage caused to aircraft in flight or on the surface of the earth. That is because governments are liable under the outer space treaties and because the UK government requires UK companies to indemnify it.

If a UK satellite fell on New York, for example, the operator would have to pick up the bill. If on the other hand a US satellite fell on London, the liability would be shared between the operator and the US government with the operator bearing only a first tranche and the US government bearing the rest. The US government would indemnify the operator, not the other way round.

The UK liability regime is wholly out of line with international practice. For decades, operators in France and the US (whose launch facilities pioneered access to space for the private sector) have had the benefit of a risk-sharing regime. It is a rational scheme, at the heart of which is a deal. Governments are strictly liable without limit for loss caused by space objects to aircraft in flight or on the surface of the earth. By doing a deal with operators whereby the company which launches or operates the space vehicle bears the risk of the maximum "probable" loss, which is quantifiable and insurable, and whereby the government bears the risk of the maximum "possible" loss, governments have so far not had to pay out a penny to meet their treaty liabilities.

In the UK, no such deal is available. The operator is required both to insure against the maximum probable loss and to bear the maximum possible loss without limit. It is all risk-bearing and there is no risk-sharing.

What is needed is the repeal of the indemnity provisions in the Outer Space Act 1986, a piece of legislation that was enacted to provide a legal framework for the launch of two satellites by what became BSkyB. Those provisions were included at a time when, briefly, the US had adopted a risk-bearing policy for its space industry and UK officials no doubt felt they should follow suit when drafting the Act. The US, however, rapidly abandoned the policy and went back to risk-sharing, which it has retained ever since. Meanwhile the UK was left stranded with what was and remains an internationally anomalous and fundamentally unattractive and inflexible statutory regime.

Two years ago, the UK government finally accepted that, to enable UK industry to exploit the opportunities available to them and to compete on a level playing field internationally, whilst also allowing better global access to the UK market, it would address the anomaly by bringing the legislation into line with other countries.

That was good news for the industry and the UK generally. But following a consultation on the reform, the government announced briefly a year ago that, due to the range of views received during the consultation, its response would be delayed. Nothing since has happened.

The industry has responded feebly to the government's inaction. Perhaps it is because of the arcane nature of the legislation. Or maybe it is because those who might be affected by the Act have set themselves up in France or the US. Perhaps it is sheer despair.

Now an industry group has published a Space Growth Action Plan (on 14 November) calling for government to provide a regulatory environment that promotes enterprise and investment in the UK and to "review the competitiveness of the UK's Space business environment". They are dead right about the environment but dead wrong about another review. That is not what is needed. The government identified precisely what was needed two years ago. No further review is necessary. Not, at least, so far as the statutory indemnity is concerned. The industry should press for the solution that, two years ago, was almost within its grasp. Otherwise the business will continue to go to France, the US or elsewhere.