Can the UK afford its own space industry?
December is a crucial month for the UK's space industry. First, the Innovation Growth Team (IGT) for space will deliver its preliminary report, a strategy and vision for the next 20 years in space, to science minister Lord Drayson. Also due is a long-awaited decision by the European Space Agency (ESA) that will reveal the first suppliers to the new satellite navigation system, Galileo, a European version of the US-sponsored GPS. For UK bidders, it could mean a bundle of contracts worth hundreds of millions of pounds.
The two announcements are inextricably linked. Many in the industry believe the UK's chances of winning lucrative ESA contracts are hampered by a comparatively weak domestic space programme. Surrey Satellite Technology (SSTL), which built Galileo's first test satellite, is competing for an ESA contract to provide navigational technology for the completed Galileo system, scheduled to launch in 2012. The company's business development manager Phil Davies believes the UK has some catching up to do.
"You find that most other leading economies take space more seriously than the UK," says Davies. "In France, Germany and Italy they all have space agencies and they all have national space programmes. Plus they all participate in the ESA at a much higher level than the UK. We are a long way behind our three European equivalent economies in terms of the direct benefits, what the space assets can do for you, and also the indirect benefits, in terms of job creation and the creation of a high-tech economy."
The IGT panel, which includes leading industry lights such as SSTL, Logica, Inmarsat and Virgin Galactic, hopes to hit on a strategy that will help the UK catch up. Space is a £6bn industry, but some believe that to protect and expand those revenues, the UK must follow its EU neighbours in establishing its own domestic space agency.
The timing, however, couldn't be worse. Coaxing any more money out of the public purse at a time when all three major political parties are discussing cuts is likely to be a thankless task, according to Flightglobal's Rob Coppinger. "If the reports from the Labour party conference are to be believed, then I can't see much prospect of the IGT report being acted upon before the next government takes power," he says. But whichever party wins the election, says Coppinger, "increased funding for spaceflight would seem to be a very distant prospect."
Logica's director of space Stuart Martin disagrees. The beauty of the IGT report, he says, is that the government is obliged to respond to the IGT's recommendation—"and act on it. That's the idea." In any case, he says, the space sector's growing economic significance cannot be ignored. "The commercial sector of space is growing around 10-15 per cent per year. All the commercial satellite operators are getting loans from banks to build new satellites. It's one area [of the economy] where the business case is stacking up."
The problem with space, however, is the huge amount of upfront capital required, and the time it takes to realise any return on that investment. Galileo is the EU's version of the Global Positioning Satellite system, developed and run by the US military. Europe receives access to the GPS network for free, but security experts believe that the network's critical importance makes it a risk to rely on the US indefinitely.
The Galileo project is a coordinated mission to launch 30 satellites into orbit 14,000 miles above the earth. It is already way behind schedule and likely to cost a great deal more than the proposed €3.4bn, but proponents say it could return that sum many times, vastly improving the accuracy of navigation on earth, make it easier to introduce individual road charging based on a driver's mileage and allow companies to track sensitive cargoes.
Aware of the project's many critics, Martin argues that the UK has a moral responsibility to pay its own way in Europe. But there are other considerations, too, he says. Investment in space can be a catalyst for building a high-tech infrastructure from which the whole economy can benefit. When a country develops industrial capability, says Martin, "it gets multiplied by involvement in follow-on programmes," for example commercial satellites. "All that commercial return is spun out of national investment in public sector programmes. Without that public sector investment you don't get the commercial benefits afterwards."
Martin understands the concerns regarding return on investment, especially given the frailties of the government balance sheet, but space programmes, he argues, are long-term projects. "That's one of the reasons why they have to be publicly funded. In the same way you need to build roads, these are capabilities that will improve the lives of your citizens and are things that a government has a responsibility to do. When we see the benefits that GPS has given us, it's ubiquitous." Galileo has the potential to go a step further, he adds. "If we look at how far telecoms technology has come on in 20 years, then you can see the benefits of having a new system up there, which takes new signals and new technologies."
The UK space industry recognises that regardless of the potential worth of Galileo, it still has a public relations battle of its own. The IGT report is expected to draw on case studies from a wide range of dependent industries, such as entertainment, navigation and environmental science, in an effort to prove the space's worth. On the environment alone, says Martin, the Intergovernmental Panel on Climate Change (IPCC) recently determined that of the 57 variables that need to be monitored to ensure we are keeping to our climate change targets, "30 of these can only be measured from space."
ESA is funded by contributions from EU members based on their Gross National Income (GNI). As Martin says, "whoever puts the money in, they get contracts back." But lobbying power is also related to the maturity of member states' domestic space industries. Part of the IGT panel's task is therefore to persuade the government that the UK should fund its own space programme.
With its own space agency, argues Martin, the UK can start contributing to the many discretionary space projects that also hold sway with ESA. "Yes it would cost more to have the overhead of a [domestic] agency, but the commercial return would justify that expense", he says.
But it's not necessarily the amount of money that's important, says Davies. It's how you spend it. The UK currently contributes around £200m to ESA's space science programme and its earth science programme. In theory, that should entitle the UK to a set number of contracts, but the UK is actually "under-returned", says Davies. "We are putting in more money than we need to. So even with constant funding we have the balance wrong. We have no national programme and all of our money goes into ESA. We should be putting slightly less into ESA and putting the difference into a national programme."
A national space agency enables a country to embark on the programmes that ESA, a consensus of EU member state projects, isn't able to do. More crucially, says Davies, it also allows member states to build up a competence in "small programmes of work", which put it in a position to bid for larger ESA contracts when they arise. "One of the reasons why the UK has been under-returned in ESA is that we haven't had a national programme that has allowed the industry to do the pre-cursor work and position itself to win the big contracts later on," says Davies.
The idea of a national space programme is not new. The Mosaic Small Satellite Programme, founded in 1999, was coordinated and sponsored by the British National Space Centre to the tune of £15m. The goal was to stimulate the growth of small-satellite capability in the UK by funding three missions: the Gemini Communications Satellite, The Topsat Earth Observation Satellite, and the Disaster Monitoring Constellation (DMC), designed to provide early warning for natural and man-caused disasters.
"A national programme, even with modest funding can really have huge benefits," says Davies. SSTL supplied Mosaic with the DMC satellite and Davies says the company can now "trace over £100m of business to that one mission", a huge return on the initial £4.5m government investment. Adds Davies: "Just the income tax of the people who worked on all of those programmes would more than justify the investment." It's a credible argument. By December, we should know whether it has convinced the Treasury.
Posted 22 October 2009 : Director.co.uk