Written evidence submitted by University of Strathclyde (SSS0005)

Written by Malcolm Macdonald, Saskia Vermeylen, Sharon Lemac-Vincere.

1.           About

1.1.      Founded as a place of useful learning, the University of Strathclyde is an international technical university. Its mission is to make a positive difference to lives of students, society, and the world. The university is located in the Glasgow City Innovation District, a global hub for entrepreneurship, innovation, and collaboration.

1.2.      University of Strathclyde is home to one of the largest space technology clusters in Europe, providing access to a wide range of developments and expertise. Space activity is embedded across all four university faculties: Engineering; Science; Business School; and, Humanities & Social Sciences.

1.3.      Prof Malcolm Macdonald is the Director of the Centre for Signal and Image Processing (CeSIP), and CeSIP’s Applied Space Technology Laboratory within the Faculty of Engineering. He is also a visiting professor at University College Dublin’s Centre for Space Research, and a non-executive director at Weather Stream, a US-based weather data analytics company. He is a former non-executive member of the UK Space Agency Steering Board (2017 – 2020), and was Director of the Scottish Centre of Excellence in Satellite Applications from 2014 – 2020.

1.4.      Dr Saskia Vermeylen is a socio-legal property scholar in the Faculty of Humanities & Social Sciences, working at the interface of environmental and space law, coupled with legal dualism. Dr Sharon Lemac-Vincere is an interdisciplinary scholar in the Hunter School of Entrepreneurship. Her entrepreneurial portfolio cuts across commercial space and its intersection with cyber security, technology (Immersive reality, metaverse) and emerging markets. She is also a Visiting Academic at the International Space University in Strasbourg.

2.           Scotland In Space

2.1.      Although all UK regions/nations host space organisations, industrial sites and employment are much more concentrated. Scotland hosts one such concentration, with over 180 sites.[1] This is around 8.3% of the UK total number of space sites, generally consistent with a pro-rata share, by population, of UK sites.

2.2.      The space sector in Scotland employs around 8500 people, over 17.5% of UK space sector’s jobs. Whilst authoritative Scotland-only figures are not publicly available with greater granularity, on average across the UK around 75% of sector employees have a primary degree, or higher, with sector productivity around 2.5 times the UK average,1 making sector employment high-value to the Scottish economy. Moreover, sector Type II Gross Value Added (GVA) is estimated as 2.63,1 implying significant supply chain value, within Scotland, beyond the sector.

2.3.      Over the last decade, Scotland has become a global leader in the so-called ‘new space’[2]  sub-sector with, for example, Glasgow building more spacecraft than anywhere else in Europe. However, the rest of Europe, and further afield, is investing and is catching up.

2.4.      Scottish space sector income does not correlate with employment, despite significant growth in recent years only 1% of UK sector-wide income is attributed to Scotland. This is due to the attribution of income to the location of the organisation’s headquarters. As such, over 60% of the UK’s space sector income is attributed to London whilst more than 70% of employment is outside London.1

2.5.      Sector employment in Scotland is dominated by a single large direct-to-home (DTH) broadcaster, with a long-tail of small and micro companies that struggle to scale-up. The disparity between sector income and sector employment highlights the dominance of Scottish headquarter companies within this long-tail, with very few employing more than fifty staff. Indeed, of the 162 UK space organisations with a space income in excess of £5M it is unclear any of these are headquarter in Scotland: the mean income of a Scottish headquartered space company is less than £2.4M per year.1

2.6.      As the DTH market continues to decline, investment and new company scale-up will be critical to sustained, or growth in, sector employment. Especially in Scotland. Notably, long-term growth is strong in other, non-DTH areas of the sector, with non-DTH space-enabled applications driving the majority of growth and outpacing the decline in DTH.

2.7.      The Scottish sector has significant latent potential, already developing more spacecraft than elsewhere in Europe, an established data capability, and an emerging launch sector that will realise Europe’s first cross-sector space cluster. However, having led the global development of CubeSats that advantage has been squandered, with competitor nations and regions investing to catch-up. The sector faces significant challenges if it is to realise its potential.

2.8.      Space is, almost by-default, a dual-use environment. The Ministry of Defence has made significant steps towards re-establishing a sovereign defence space capability. Much of this, by necessity as well as logic builds on prior UK civil investment, and, logically, future developments should pre-emptively seek out such civil-defence synergies. However, the Scottish sector is not well positioned to benefit from this investment trend as it is neither as intrinsically dual-use or as engaged with the defence and security industries as the sector elsewhere in the UK. Academia, in Scotland, should be supported to enable Scottish SME engagement in the space defence and security sector.

2.9.      Cyber security in the space sector is attracting significant international attention. The US recently launched a consultation on their proposed Hybrid Satellite Network framework.[3] Germany has launched technical guidelines for satellite security,[4] and the European Space Agency (ESA) has increased its focus on cyber security and resilience launching a ‘Space Shield’ tool to collect adversary tactics and techniques to develop an evidence base of attack types to enable ESA to strength it’s security actions.[5] This trend to build cybersecurity into the space ecosystem from a ‘secure-by-design’ perspective arises at a time when internationally there is a global shortage of skilled cyber security experts (currently estimated at, at least, 3.5 million).[6]

2.10. The Scottish government has already identified cyber security as a critical enabler of space sector growth; for example, working with ScotlandIS, a membership organisation for Scotland's digital technology industry, to begin identification of possible activities to enhance the cyber security stance of the Space sector. Given Scotland's global reputation in the satellite market, there is an opportunity for Scotland to lead in ‘secure-by-design’ cyber security resilience. This would, in-effect, create a competitive advantage for Scottish space businesses and, simultaneously, create a skilled workforce in the dual emerging domain of cyber: addressing skills shortages in both sectors.

2.11. Sustainability of the space environment will be a key sector-wide challenge, and opportunity, in the coming decade. Much like the terrestrial environment, this is more than wealth creation and must be viewed in the context of losses incurred in an unsustainable space environment. Space has the potential to become a trillion-dollar sector in the 2030’s, with Scotland well positioned to secure a significant share of that if future investment is astutely targeted at ‘moving the dial’. Failure to preserve another natural environment from irresponsible human actions jeopardises this opportunity, alongside the vital contribution space makes in mitigating the impact of humans on the Earth’s ecosystem, and, to the NetZero transition.

2.12. The UK is a global leader in modern regulation of space activities with the Space Industry Act 2018[7] delivering a new global benchmark. However, for the UK to deliver on its ambitious National Space Strategy[8] it must strengthen still its legal and regulatory platform to ensure support and growth of a safe and sustainable space sector.

2.13. The regulation of space is a reserved matter. Notwithstanding this, the ambition of the Scottish Government’s proposed Human Rights Bill, open for consultation at time of writing,[9] to become one of the first common law jurisdictions to establish the human right to a healthy environment provides an opportunity for Scotland and the UK to provide further leadership through ambitious and strong legal protection and policy initiatives for environmental and sustainable protection by extending this human right into space. Enabling Scotland, and hence the UK, to provide global leadership and vision in the regulation of a sustainable space environment.

2.14. It could be perceived that Earth observation continues to underdeliver on promised commercial potential. The new space Earth observation sector lags the rest of new space in Scotland. However, in Europe as a whole the new space Earth observation market is significantly outperforming the rest of the Earth observation sector. Scotland, and the UK, has established a track-record of company creation but has failed to scale those companies, with market share significantly below pro-rata levels in comparison to leading ESA member states.

2.15. Earth observation needs to look beyond its traditional core community, to engage with adjacent technology sectors where Scotland, and the UK, also has significant strengths, and to engage as a solution provider across the economy into challenge owner sectors such as FinTech and HealthTech.

2.16. Globally, the space sector is transitioning away from the concepts of ‘up’ and down’ stream. The sector is becoming more integrated, more ‘cross’ stream. This is evident in Scotland’s manufacturing (upstream) capability, with companies acting as service providers (downstream), who also build spacecraft, rather than as merely manufactures. This shift is not only higher margin, it also enables the rapid deployment of novel capabilities that provide unique commercial advantage, often from within Scotland’s leading academic community which is itself a key attractor to inward investors in the sector. However, the lack of access to suitable finance, particularly private capital, within Scotland risks loss of potential as companies exit in pursuit of opportunities elsewhere.

3.           Spaceports

3.1.      The UK government has adopted a market-led, grant supported approach to Spaceport development. Given the number of potential spaceport sites this is a sensible approach, rather than picking winners. However, at times there has been a lack of perception of local context when national support has been provided through grant funding.

3.2.      Any spaceport, just like any airport, with only a single launch operator must be viewed as at risk. This risk is significantly amplified when the launch operator does not have a flight proven capability.

3.3.      The launch market, globally, is continuing to rapidly change and evolve. The UK must ensure it does not pursue a speculative, five years old business case in a rapidly evolving market.

3.4.      The on-going development of launch vehicles, globally but principally in the US, has also changed the satellite build market, with many operators now deploying spacecraft larger than the CubeSat formfactor, which Scotland has a strong track-record in, as a result.[10]

3.5.      Development of a national, sustained space launch capability without a sustained government customer is, probably, unprecedented. To secure a sustained space launch capability in Scotland one or more government customers will be advantageous. Whilst EU Exit has removed one such sizeable potential customer, the UK should continue to pursue ESA launch from Scotland whilst also seeking to ensure UK government, for example the Ministry of Defence, regularly launch from Scotland.

3.6.      Whilst space regulation is a ‘reserved’ matter, within Europe several sub-national governments, such as Basque Country and Catalonia, are supporting local space economies by acting as a contracted customer for space services deployed by new satellites. The Scottish government already commissions vehicles in other domains, such as Marine Protection Vessels and aircraft. The Scottish, and UK, government should consider acting as a similarly contracted customer for novel space services, in support of core government business, developed and launched from Scotland to support the realisation of Europe’s first sustained cross-sector space cluster, ensuring value for money in delivery of government business. Such services would also likely deliver significant export value.

4.           Skills

4.1.      Space is an inter-disciplinary sector that draws on a very broad range of skills and capabilities, all of whom correctly identify as part of the space sector.

4.2.      Given the previous heavily integrated nature of the sector across Europe, including the UK, our exit from the EU is both amplifying extant recruitment difficulties and making it more challenging for UK nationals to gain wider professional experience. As such a new skills development strategy is required to ensure Scotland reaches its full potential.

4.3.      The sector is highly imbalanced: 29% female, minorities underrepresented, advantaged socioeconomic backgrounds overrepresented. Simultaneously, the sector has an acute, multifaceted skills shortage that is in-part due to the sectors success, with growth outpacing skills supply. The immediate skills shortage hinders sector growth, whilst preventing the sector from performing the planning that would secure growth and eradicate the skills shortage: keeping the sector in a ‘firefighting’ mode. Moreover, the transdisciplinary nature of the sector makes in-job training and staff retention critical. Yet, company size typically makes such training challenging, while sector growth creates opportunities for experienced and skilled staff that makes staff retention challenging. Addressing the sectors diversity issues, in all its forms, is critical.

4.4.      The space sectors skills shortage is not isolated from similar shortages in other sectors, seeking similar skills. Often these other sectors are more established and, especially within Scotland, have large companies that the Scottish space sector lacks. Consequently, these other sectors are able to co-invest with skills providers to ensure development of tailored programmes to address skills gaps. The space sector, especially in Scotland, suffers from a structural market failure whereby this type of co-investment is not possible. As such, there is a need to find a means to allow companies, colleges, and universities to collaboratively invest in addressing the skills shortage; likely with some initial government funding to resolve the market failures.

4.5.      Alongside a technical skills gap, there is also a, so-called, ‘soft skills’ gap in terms of interpersonal skills (84%) and communication skills (76%),[11] which may correlate with a more neurodiverse workforce than the rest of the economy, alongside shortages in business and entrepreneurial skills.

4.6.      Companies, colleges, and universities should be encouraged to better engage on future skills needs, and to work collaboratively to support and accelerate on-going efforts to diversify the sector such that it better reflects the people and communities of Scotland.

5.           Strategy & Policy

5.1.      Unusually for such a high-skilled sector, it has a notable footprint in all four of the UK’s nations. Despite this, sector support mechanisms, alongside infrastructure investment, remain very focused on the south of England (along the M4 corridor) with those from further afield expected to be able to frequently travel long distances. The removal of this cost overhead (fiscal and time) through the COVID-19 pandemic highlighted this cost to those who were incurring it, but also that things can be done differently, more efficiently and sustainably, and in a more equitable manner.

5.2.      The strategy should seek to remove structural geographical biases in the sectors support mechanisms, for example, through adoption of a digital first (rather than in-person or hybrid) approach to sector briefings.

5.3.      The space sector is R&D intensive: the UK’s space industry’s R&D investment is more than five-times the UK business average. However, the commercial nature of the sector appears to distort the nature of R&D investment, towards the mid- to high-Technology Readiness Levels[12] (TRL). Consequently, the sector is under-represented and under-active in the lower TRL range. This predisposition is repeated throughout the sector, in its representations and its governmental support with, for example, a tendency to focus on the commercially valuable outputs of the innovation pipeline rather than the inputs. This has created a disconnect within the sector.

5.4.      The Scottish government includes several experienced users of satellite data, including agencies such as Marine Scotland, NatureScot, and Scottish Environment Protection Agency (SEPA). These users should be supported to work with academia to inform and co-create future research programmes to address user needs with, for example, development of new sensors or data processing techniques to ensure enhanced impact and social value from publicly funded research.

5.5.      Academia needs to be viewed as a key enabler and core part of the sector that is integral to future growth. Further recognition should be given to the value of basic research as the pipeline of future commercial innovations, and that engineering science underpins the technical innovations of the future. To this end, steps should be taken to encourage an increase in sector engagement in low-TRL research and consideration given to how academia might better support government with the identification of longer-term opportunities. This could include, for example, secondment into the civil service.

5.6.      The UK frequently struggles to achieve its 'fair return' from ESA.[13] Simultaneously, whilst ESA does not track this return at sub-national level, it is apparent that Scotland is significantly under-represented in the UK’s weighted value of contracts from ESA. As such, the UK’s under-return could be directly addressed through a focused effort to diversify engagement with ESA to better reflect and engage the whole of the UK’s space sector.

5.7.      Whilst Scotland is on the verge of a cross-sector space cluster, this remains technically focused with a lack of access to suitable finance, particularly private capital, within Scotland. Policy and effort should seek to better engage the Scottish private capital market with the local space sector.

5.8.      The tendency for government to issue grants, rather than contracts, hinders company growth. Government should seek to act as a customer to the space sector, supporting both the creation and delivery of new services for the government customer within a single contract. This is analogous to the approach taken in competitor nations, and supports the development of commercially viable, scale-able products, and investable companies.

5.9.      For space to deliver its promised potential it needs to transition to an outward looking, underpinning sector of the economy that is ubiquitous across a vast range sectors in a similar fashion to things like artificial intelligence, communications, and data analytic. Strategy and policy must accelerate this transition.

September 2023

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