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We would all acknowledge the longevity of the hon. Member for Montgomeryshire in the role that he plays and we thank him for his questions and scrutiny, as well as his support on a number of key issues. He rightly reflects on how far we have come in such a short space of time and he was right to pay tribute to the
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various people he mentioned. He was also right to acknowledge that this is another important milestone in the journey towards a more accountable police service and a more peaceful Northern Ireland. We know that the police service in Northern Ireland is now probably the most accountable police service anywhere in the world. That is why increasing confidence can be put behind it.

The hon. Member for South Staffordshire, as the Chair of the Northern Ireland Affairs Committee, brings considerable knowledge and experience to these debates. I pay tribute to the work of his Committee on the issue of organised crime, the restorative justice schemes and various other areas. I am conscious that he and his Committee are currently taking a long hard look at the Prison Service in Northern Ireland and I look forward to further conversations with him about that.

This is, as the hon. Gentleman said, a gesture of faith, but it is not a reckless gesture of faith. We have a well-founded belief that the arrangements will work and represent another step forward towards ensuring that we have an accountable police service in Northern Ireland that can underpin the peace and prosperity that we all want. I was pleased that he rightly paid tribute to the important role of the Chief Constable. Sir Hugh Orde is performing that role well.

The hon. Gentleman was also right to remind us that for all the progress that has been made, difficulties still remain. There is still too much sectarianism in some communities in Northern Ireland. We want the structures of division that are still in place to be removed when it is eventually safe to do so. We must not be complacent. Direct-rule Ministers must continue to work hard with devolved Ministers and all structures of both civil society and government to ensure that we work with communities so that the hope, optimism and opportunity that we face are turned into a reality with a peaceful and prosperous future for Northern Ireland.

Question put and agreed to.


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European Global Navigation Satellite System

[Relevant documents: T he Twenty-third Report of the European Scrutiny Committee, Session 2006-07, HC41 -xxiii and the Twenty-sixth Report of the European Scrutiny Committee, Session 2006-07, HC41— xxvi .]

9.16 pm

The Minister of State, Department for Transport (Ms Rosie Winterton): I beg to move,

The Government welcome the opportunity for a full discussion on the Galileo programme. I thank the European Scrutiny Committee, and especially my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty), for its work on scrutinising the project. There is no doubt that the programme is at a turning point. Negotiations with the merged consortium bidding for a public-private partnership concession have been ended. In October, the Transport Council and ECOFIN are likely to be asked to make a decision on the future direction of the programme. The Government intend that that decision should be based on a full assessment of all relevant factors, including the identification of the available options, their costs and risks, and the programme’s affordability.

Mr. Alistair Carmichael (Orkney and Shetland) (LD): I am grateful to the Minister for giving way at such an early stage in her speech. Like her, I think that the debate is important. However, the full detail of the Commission’s position will probably not become apparent until September and the Council will take place in October. What opportunity will the House have to consider and debate the Commission’s full position before the Council?

Ms Winterton: Obviously, there are opportunities for debate in the House. We are more than happy to keep hon. Members informed of the points that the Government are making to the Commission about the UK’s position. My hon. Friend the Member for South Thanet (Dr. Ladyman) has always been open and clear about the Government’s position, and the European Scrutiny Committee’s work is continuing.

Galileo is considered to be a key Community project. There is a strong will in many member states and Community institutions to make it happen. We share the belief that Galileo could offer real benefits, not least by giving the UK and European industries the opportunity to develop new commercial applications.

Angus Robertson (Moray) (SNP): I am grateful for being allowed to intervene at this early stage. Just to follow on from the point made by the hon. Member for Orkney and Shetland (Mr. Carmichael), is it not the case that the Commission’s financial plans must return to the European Parliament as part of a process of co-decision? In conjunction with the scrutiny that the European Scrutiny Committee might offer, is that not a further safeguard to keep tabs on the project’s finances?

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Ms Winterton: The hon. Gentleman is certainly correct to say that the European Parliament has taken a great interest in the project and keeps itself informed of the position. As I say, Finance Ministers also take an interest in the project.

Keith Vaz (Leicester, East) (Lab): I thank my right hon. Friend for coming to the House to make a full statement, and for ensuring debate on the issue. How much money have the Government put into the Galileo project?

Ms Winterton: The finances to date come under the financial perspectives headings, in which the figures are not individually set out, but I assure my right hon. Friend that we are keeping a close eye on the future financial perspectives that have been put in place. As regards increased expenditure, we have made it clear that the UK has a strong position on making sure that the project is value for money.

Mr. Tobias Ellwood (Bournemouth, East) (Con): Will the Minister give way?

Ms Winterton: I will, but then I must make a little progress.

Mr. Ellwood: I am grateful to the Minister for giving way; she has been very generous so far, but she may not appreciate my question. I cannot believe that she can come to a debate of such importance without knowing how much has been spent on the project. That is almost a scandal. We must understand where the money has come from and how much will be spent in the long term. However, the biggest question that the House must answer is why on earth we are devoting so much money to the project, when there already exists a very decent system run by the Americans. Why are we going ahead with it when something that is free already exists?

Ms Winterton: I hope that as we work through the debate, the hon. Gentleman will be able to put aside some of his clear prejudice and consider the benefits. I completely understand where he is coming from, but we need to consider the wider issues, and the ways in which it can benefit British and European industry if we make sure that we have a strategic system in place. Perhaps he should think about the points made about the possible benefits. There is also strong reassurance in the fact that the Government are keen to make sure that the project is value for money, particularly considering the problems that there have been so far, which I will address. As regards the commitment so far, we are talking about approximately €142 million. However, I will set out where will go from here.

Lembit Öpik (Montgomeryshire) (LD) rose—

Ms Winterton: I will give way, but then I must make progress.

Lembit Öpik: I am grateful to the Minister for giving way. On that very point, may I give her one example of an important benefit? The aviation business increasingly depends on global positioning system technology, but there is no redundancy. We have no alternative method
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of positioning, using satellites, so if the system goes down—and it can—it will create a grave danger to aviation. Leaving aside the issue of costs, which is obviously important, does she agree that the principle of ensuring redundancy in such an essential navigation system must surely be right?

Ms Winterton: As I have said, Galileo is considered a key Community project, but we are clear that it cannot be carried out at any price; it has to be affordable, and it has to be value for money. It needs better governance and risk management, open competition and a firm focus on the opportunities for getting the private sector to share the costs and risks. We must also look out for opportunities for generating revenue.

From the very beginning of the project, our aim has been constructive: we want to work with our partners and the European Commission to ensure that Galileo can achieve its potential. The Government’s priority objectives are private sector involvement through a robust public-private partnership, a civil programme under civil control, and a transparent process of development and financial control to deliver value for money. We are set to achieve that. Our commitment to those objectives is therefore unchanged. In particular, our position on a PPP solution has been consistent and pragmatic. The advantages of bringing in private finance in major projects, in terms of better project management, cost control and risk management, are well known. They have been recognised in EU decisions on the trans-European networks programme, and in the fourth Space Council resolution as recently as May this year. With the ending of the negotiations, the June Council resolution—that more evidence was needed before a decision on the way forward—was the right outcome.

Before I go further, I would like to pay tribute to my immediate predecessor, my hon. Friend the Member for South Thanet, who argued strongly for these outcomes. It was he who secured the presidency’s agreement that we should not proceed with Galileo unless the costs were justifiable, and also an acknowledgement that the Council should not rule out the involvement of private finance.

Mr. Bernard Jenkin (North Essex) (Con): Between 1998 and 2001 I served as shadow Transport Secretary and debated this subject in European Standing Committee B. I asked then what the commercial applications for the project are. I got no answer. Nearly 10 years later, can the Minister give me an answer now?

Ms Winterton: The project has commercial applications in the same way as GPS has commercial applications. It is important to recognise that those are increasing. As someone who has a GPS navigation system in her car, I think we would be facing in the wrong direction if we did not recognise that there are advantages in some of those new technological developments. We have to consider carefully how we apply them in the commercial sector. That was one of the points that my hon. Friend the Member for South Thanet raised—that we need the Commission to look closely at what the commercial interest in the system would be.

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David Taylor (North-West Leicestershire) (Lab/Co-op): Does my right hon. Friend rejoice, as I do, that the European Transport Council pressed the European Commission to abandon the potential public-private partnership? Does she recognise the figure of the senior account manager at Surrey Satellite Technology, who predicted that over a 20-year period the running costs of the system will be around €10 billion? What proportion of that cost will fall on the United Kingdom?

Ms Winterton: My hon. Friend is right to say that we must consider these matters carefully. That is why it was important at the June Council to get agreement to ensure that the Commission is examining all these issues carefully. The Government are making sure that they are closely involved in asking questions about the future costs, including on-going development costs.

Michael Connarty (Linlithgow and East Falkirk) (Lab): Does my right hon. Friend agree that it is much more important that the investment, which was €10 billion, if it is successful, would, according to the analysis coming before our Committee from the Commission, allow such a system to participate in a market of €450 billion, which it has estimated will be available for satellite navigation systems up to 2025? For a €10 billion investment, a €450 billion market is worth investing in.

Ms Winterton: My hon. Friend is right. I am the first to recognise that at this stage he knows a lot more than I do about all the details of the project. I know that he has looked closely at all those costings.

Mr. John Spellar (Warley) (Lab): I thank the Minister for giving way and welcome her to her new position. The fundamental problem is not the PPP, but the funding stream. The commercial applications do not really matter; the question is whether anyone is actually prepared to pay. During my period and that of my hon. Friend the Member for South Thanet (Dr. Ladyman), the Commission evaded the crucial issue of who will pay. Why would people pay for a service—GPS—that they can get for free? Unless we resolve that question, all the other problems will keep coming back.

Ms Winterton: My right hon. Friend is right to say that we should examine cost implications, funding streams and income. As I have said, my hon. Friend the Member for South Thanet made those points very strongly at the June Council. Those points accord with the European Scrutiny Committee’s assessment of the communication from the Commission that was before the Council. Like the Transport Committee in 2004, the ESC questioned the Commission’s evidence, recommending that it should produce a fully substantiated case for continuing with Galileo, whether by public procurement or PPP, including governance, finances, the total cost, the level of risk, the sources of private sector revenue and the sources of funding from the Community budget. In our minutes statement at the June Council, which was produced jointly with the Netherlands, we asked for exactly that—a cost-benefit comparison on the same basis between a PPP and a public procurement of the system, followed by an operating concession. Our aim now is to work
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with the Commission and our partners to build a wider consensus on the detailed issues that must be clarified before October.

It may help the House if I mention some of the issues now. First, on cost and timelines, the evidence of the programme to date—the publicly funded development phase of Galileo and EGNOS, the European geostationary navigation overlay service augmentation system—shows significant cost and timetable overruns. We will continue to argue for sound cost estimates and prudent project timelines that take account of the risks inherent in any project of this size and complexity.

Secondly, on affordability, the Commission’s communication accepted that more money will be needed than has been earmarked in the budget. Much of that amount, €1.1 billion, could be swallowed up in cost overruns for the development phase and EGNOS. In line with sound financial management, the UK will resist any reopening of the European budget headings. We will also argue for consideration of whether the system might be phased or re-scoped to what is affordable. Next week, the Government will continue to push for clarity on the financing at the ECOFIN council. We will reaffirm our commitment to funding the programme within the existing ceilings of the 2007 to 2013 financial perspective, and we will put that message across very firmly on finance as well as transport networks.

Thirdly, the communication did not include a substantive consideration of risk. However, the design and market risks identified during the PPP negotiations, some of which are substantial, will not change and could increase. Pressure to build the system quickly could be a factor in increasing the risks. We will therefore push for an assessment of all the risks that the project may face.

Fourthly, lack of effective competition was one of the major problems that affected the concession negotiations. We welcome the emphasis on competition in the Council resolution and will continue to argue strongly for open procurement.

Fifthly, public sector governance needs to be improved. There must be transparency for EU member states and compliance with EU principles. In the continuing debate, the UK will also maintain the position agreed by the Council, the Commission and the European Parliament—that Galileo is a civil programme under civil control. Our firm commitment is that Galileo cannot be used for dedicated military purposes. It is a civil programme under civil control. The December 2004 Transport Council conclusions made it clear that changing the civil status of Galileo would require a decision under the terms of the common foreign and security policy. That decision making is by unanimity and remains so.

Mr. Jenkin: The right hon. Lady says that the Government are giving the assurance that this will not be for dedicated military use. Why does she put the word “dedicated” in front of “military use”? Why does not she just say that it will not be used for military purposes, end of story—or is this meant to be a covertly joint defence programme?

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Ms Winterton: Of course some military forces might use Galileo for purposes such as transport logistics; that is why I put it like that. Among our European partners, some organisations such as the coastguard and border police, for whom Galileo may be useful, are technically under military control. However, we should not look to such organisations or to any other Government users to provide the bulk of Galileo revenues.

The Government are equally firmly opposed to any suggestion that the Commission should mandate the use of Galileo charged services in EU regulation. If Galileo is to be a successful project, we should encourage the private sector to look for commercial, not governmental uses. Governments will certainly also then use the services if they are cost-effective.

Mr. Humfrey Malins (Woking) (Con): The Minister will know that the European Scrutiny Committee referred to the need to identify the sources of private sector revenue. Can she do so?

Ms Winterton: That is exactly the question that we have given back to the Commission. As the hon. Gentleman will know, in the first consortium that was put together there were sources of private sector revenue. We want to ensure that we are considering all the commercial aspects. It would not be right for me to prejudge that.

One of the Galileo successes so far is the test satellite built in Guildford and delivered on time and to budget, which has successfully transmitted all the operational Galileo signals. That is a real success, and it should be one of the lessons learned from the project. It was delivered by a small company, Surrey Satellite Technology Ltd., a high-tech spin off from Surrey university. If Galileo is to work for the Community, we need more successes like that across Europe. Unfortunately, for a majority of our European partners, the failure of flawed negotiations has tainted the idea of a public-private partnership. In that context, there is a risk that people tend to fall back on what they know—in this case, public procurement—as the safe option. By doing so, frankly, they ignore the facts. As my hon. Friend the Member for South Thanet said at the June Council, if the private sector is not willing to face the risks of the project, what makes us think that the public sector can handle them? The risks—cutting edge design, uncertainty of revenues, cost and timetable overruns, and the industrial rivalries which have caused significant delays—do not change.

The Government are therefore committed to defending the principles which we believe are essential for a successful project. We will continue to argue for a robust approach and to widen the support for that among transport and finance colleagues in Europe. If, nevertheless, the PPP approach is abandoned by consensus, and if the alternative is affordable in the view of the budget authorities, we will continue to work for clarity in governance, open competition and value for money, in line with our commitments to this House. I commend the motion to the House.

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