UK Government recommits to UK space sector with regulatory reforms

First, it was announced that the UK Space Agency will become part of the Department for Science, Innovation and Technology ("DSIT") by April 2026, bringing space policy back within the control of Ministers. This cutting of bureaucracy and increase in public accountability in decision-making marks a notable shift in how UK space policy will develop under the current government, which is now seeing space policy as part of its wider drive towards ‘regulating for growth’ in innovative sectors in the UK.

Secondly, DSIT published a report on the "regulatory sandbox" on rendezvous and proximity operations ("RPOs") announced in August 2025 (the "Sandbox").  RPOs are emerging as a key focus of the UK space industry, and the trade association UKspace estimates that UK companies could secure 25% of a global £11bn in-orbit servicing and manufacturing market by 2031.¹ This report captures lessons learned from mock RPO missions run in partnership with Astroscale, D-Orbit and ClearSpace.

The report sets out extensive recommendations for possible improvements to various aspects of UK space regulation. Key takeaways from the report for RPOs include:

1. Redefining “Operating a space object”: calls for a clarification of when customers of RPO services will be considered to be “operating a space object” under the SIA 2018 and thus require their own licence as opposed to relying on the licence of the RPO service provider.
2. Risk-based safety demonstrations: proposals for streamlining the "as low as reasonably practicable" safety demonstrations for RPO missions given their different risk profile to other types of space operations; and
3. Flexible multi-service licences: advocates the introduction of multi-service RPO mission licences whereby RPO service providers are pre-approved to service any objects falling within an "envelope of defined parameters" without requiring a formal licence variation.

The report also makes recommendations concerning wider aspects of the UK's space licensing regime, which include the following.

• Increasing regulatory predictability: Identifying areas where new guidance from the CAA could reduce uncertainty around licensing decisions by:
  • clarifying how the regulator will exercise its broad discretionary power to issue licences "if it thinks fit" under s8(1) SIA 2018;
  • defining "national interest" in the context of the bar on licences that would impair the national interest of the UK in s8(2)(c) SIA 2018; and
  • specifying the international standards and agreements that are relevant to licence decisions, to avoid the accidental incorporation of non-binding international sustainability goals into UK national law.
• Reducing complexity: Recommending that the Outer Space Act and the Space Industry Act are consolidated into a single statute to avoid unnecessary differences between their requirements.
• Indemnity cap legislation: Considers the impact of licensee indemnity caps, a familiar bug-bear of UK-licensed operators, who under UK legislation must indemnify the UK government for claims brought against the UK for loss or damage caused by their activities (see here for further details). While in practice such liability is typically capped at €60m under the terms of each operator licence, there is technically no legal requirement for licensing authorities to grant such a cap, and the report calls for UK regulators to adopt a policy to always grant a cap in line with operator insurance levels. At time of writing, the Space Industry (Indemnities) Bill, which would write a standard cap into law, is currently progressing through Parliament.

The report’s recommendations are yet to be formally adopted by DSIT, but they look likely to foreshadow further collaborative, industry-led approaches to regulatory reform in the space sector. Given the focus in the report on the methodology behind the Sandbox approach, we expect the UK Government to make use of this mechanism more in future.

With the space industry continuing to grow in size and prominence in the UK, the UK Government continues to seek to find ways to attract investment and secure the UK’s position as a global-leader in space.  Businesses in the sector who wish to play their part in shaping their regulatory environment should be prepared to engage early in such processes or risk their competitors doing so in their absence.

Hogan Lovells has a global, industry-leading space and satellite practice, covering all aspects of the space and satellite industry from complex joint ventures to space related procurements, complex communications and spectrum licensing issues, space-related legal compliance, and space industry finance matters. For more information, please click here.

Authored by Theo Cornish, Andrew Eaton, and Malcolm Parry.