UK Government Report
Description of sector
The global space economy market is valued at between £155 billion and £190 billion, and it is estimated to grow to £400 billion by 2030.1 The UK space sector has trebled in size in real terms since 2000 (see Figure 1). With a turnover of £13.7billion (2014/15), the UK currently captures between 6.3% and 7.7% of the global market.
The UK’s Critical National Infrastructure uses the space sector for defence, the emergency services, environmental monitoring, flood response and other essentialfunctions of the state
Employees in the space sector are on average the highest qualified by sector in the UK, with three out of four space sector employees holding a higher education qualification. Each direct UK space sector job supports another two employees in the supply chain and supporting sectors. Total estimated Type II employment (including indirect and induced jobs) is more than 115,000 jobs.
Together with its highly skilled workforce, the sector’s low volume, highly specialised production means that the movement of skilled business people within and between companies is an essential part of the sector’s business model. Major companies in the UK space sector have a multi-national structure with business units and teams spread around Europe. The sector’s trade association, UK Space, estimates that 11% of UK space sector staff are non-UK nationals.15
The current EU regulatory regime
Space became an explicit EU competence in the Lisbon Treaty. One of the EU’s largest space programmes (Galileo and EGNOS) was initiated much earlier under a trans-European Networks legal basis. The space programmes are established through EU Regulations synchronised with the EU budget period (currently 2014- 2020) that set the budget and objectives. Specific adjustments have been made to the EU procurement rules to allow the Commission to contract for space programmes in a way that reflects the peculiarities of the sector. Some security elements of these EU space programmes are restricted to EU Member States (e.g. the Copernicus security and emergency management services, Galileo’s Public Regulated Service,the right to manufacture specific receivers for Galileo signals) creating marketsexclusively for EU companies.
The technical and financial aspects of major space projects mean that collaboration at the European level is a feature of the space sector. Institutional support (domestic,EU and European Space Agency) is frequently needed to support technological innovation or to establish new systems and infrastructure.
EU activity on space has always had an explicit civil focus for reasons of Treaty competence, even though the systems developed have clear utility to both the civiland the defence sectors. The EU has allocated around €12bn on various space initiatives and projects between 2014-2020:
a. Galileo and EGNOS – €7bn29
b. Copernicus space element – €3.4bn30
c. Horizon 2020 space element – €1.5bn
61. The UK space sector receives EU funds through the following routes:
UK companies and research institutes have successfully bid for around 9-13% of the available H2020 budget awarded so far in 2014 and 2015. Grants have funded research on a wide range of issues from space science, space exploration, technological innovation and the development of commercial services and products based on space technology. Horizon 2020 grants are also used to develop technology that will form the basis for future evolutions of the EU space systems Galileo, EGNOS and Copernicus. Horizon 2020 grants are also used to develop the European Space Surveillance and Tracking capability with
around €150m expenditure forecast in the budget from 2014-2020. The UK is part of a 5-nation consortium currently influencing direction and benefiting from these grants.
Procurement.The EU’s space programmes are procured directly by the European Commission through competitive procurement processes (they use procurement agents on their behalf for some of this). €3.5bn of contracts to design, build, operate and replenish EU space programmes are out to tender at present. UK firms currently hold Copernicus data processing contracts providing data from the satellites to run the Copernicus Services. These contracts are worth €23m to 2020.
The European Centre for Medium-Range Weather Forecasts operates the Copernicus Service Climate and Atmospheric Monitoring System from its offices in Reading on behalf of the EC, handling service budgets in excess of €60m p/a. Over the next three years, the European Commission is expected to release invitations to tender totalling €165m for running the Copernicus Climate Change Service. Beyond 2020, up to €5bn could be spent on contracts for next generation of Copernicus satellites.
Loans. Space companies are able to access European Investment Bank loans.
The EU is also an export market for the UK sector; a standard-setter; a source of imports and skilled professionals; a facilitator of the free flow of personal data; a customer for space projects and systems; and a facilitator of R&D collaboration.
EU frameworks and rules that establish free market access for goods and services are relevant to the sector. Manufacturers benefit from free trade within the EU for low-cost movement of parts and people to enable the sector’s mobile workforce to follow space projects around Europe (see the Galileo supply chain in figure 4).
Rules that facilitate and guarantee the free transfer of personal data within Europe play a part in the current business model for the sector, where telecommunications data crosses between the UK and the EU for operational reasons.
The UK is also a member of the European Space Agency (ESA) which is not part of the European Union. The ESA has established standards for its suppliers for equipment and products for use on space missions. These are increasingly used by other space faring nations in their own procurements.
The EU has not established internal market rules that directly apply to the space sector (there was an attempt to do so in 2015 but it was withdrawn under pressure from Member States, including the UK). However, some space services do fall within the scope and benefit from EU regulatory frameworks; for example, the Telecommunications Directive, the Audio-Visual Directive, and broadcast and personal data transfer rules.