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9.39 pm

Mr. Owen Paterson (North Shropshire) (Con): I congratulate the right hon. Member for Doncaster, Central (Ms Winterton) on her new appointment. As
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much as I would have looked forward to future exchanges, this is sadly to be but a brief encounter because I, too, am off to pastures new. It is a pleasure to have one chance, but perhaps the Minister will not be thrilled to hear that I believe that she has given a rosy account of proceedings so far.

Let me set out the background. Satellite navigation could lead to a global market of up to £15 billion by 2010. The United States Navstar global positioning system is easily the largest provider of the navigation signal, which some people still believe to be a military system. It became operational in 1995. In 1996, President Clinton handed control of it to an intra-agency executive. In May 2002, the full signal was made available to users worldwide, and it was—and is—free. In 2004, President Bush replaced the executive board with an executive committee and, from that date, it was no longer used as a military system, but military and civilian authorities manage it equally. Long before all that happened, the European Space Agency and the member states of the European Union became aware of the potential of satellite navigation. They argued that Navstar was not reliable because it was controlled by the military and could be shut down at any time.

Mr. William Cash (Stone) (Con): Does my hon. Friend recall that one of the reasons why we won the Falklands war was that we had access to the American navigation systems in space? That was crucial—and there was a huge argument about it in the United States—but, as usual and, as in 1939, the Americans came to our aid and we won.

Mr. Paterson: I am grateful to my hon. Friend and neighbour for making that point. He is right to stress the significance of American help and I will tackle that further in my remarks. It is inconceivable that the GPS could be turned off, but I shall say more about that shortly.

After outline approval at the Nice European Council in December 2000, the ESA, in partnership with the European Commission, made plans to match the US GPS. Crucially, unlike the US system, it was to be completely under civilian control and, also unlike the US system, which enjoyed taxpayer funding, its deployment and operation was to be financed by a public-private partnership, with the private sector bearing two thirds of the costs.

Unfortunately, although the Galileo project was intended to be Europe’s satellite navigation system, it also became, in the manner of so many European projects, a virility symbol, which was intended to demonstrate the success of European economic and political integration. Mrs. Loyola de Palacio, then Vice-president of the Commission with responsibility for transport and energy, declared at the inception of the development stage of Galileo on 26 March 2002:

Five years later, Galileo is at what the European Commission coyly calls a cross-road. More accurately,
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it is in crisis, which arises from the complete failure of the plan for financing the scheme and the time scale for deployment. On the basis of a study by PricewaterhouseCoopers, the Commission claimed:

It also claimed that the project would cost €3.6 billion to complete and that, assuming a “worst case scenario”, total benefits would be €17.8 billion. On that understanding, in 2002 the then Prime Minister—the current steward of the Chiltern hundreds—personally approved the scheme at the Barcelona European Council on 13 and 14 March. Two years later, the Commission confidently predicted that Galileo

A mere three years later, the Commission admits to a date of 2012, and some industry sources suggest that it could be 2014. Although 30 satellites are planned, the only tangible achievement is a single test satellite, Giove-A because the second, Giove-B, has been short-circuiting and will possibly not be launched until December.

As for future costs, an unpublished Commission report now admits that, against the original estimate of €3.4 billion for deployment, plus an additional €5.3 billion for operation and maintenance—a maximum of €8.7 billion—the system will now cost €9 billion to €12 billion up to 2030. The best-case scenario for revenue becomes €8 billion to €10 billion, or less if the more accurate US GPS III offers high-level services free of charge. From a projected profit of €17.8 billion, the maximum is now €1 billion, with a possible loss of €4 billion.

That is why the PPP refused the risk, as was said. With Navstar provided free of charge, one unnamed executive of the failed consortium is quoted in the Financial Times as saying:

The Commission is now asking member states to bail out its pet project by injecting a huge tranche of public money despite a solemn guarantee in November 2001 that

So desperate is it that the venture should continue that it offers two main options: that the funding should come either through the ESA or, preferably, through the Community budget. Additionally, in its February communication, it also proposed a new stealth tax—incredibly, a levy on GPS receivers, most of which are designed to receive a signal provided free of charge by the US.

In the manner of a child commenting on Lord Randolph Churchill, we must ask what Galileo is for. Ostensibly, it is to provide navigation services, not only for people who live in Europe, but worldwide. As was said, the US Navstar GPS system is currently available free of charge to every user, while coming along is the Russian GLONASS and Chinese Beidou compass system, both of which will also be free of charge.

Arguing against cancellation, some advocates will say that Galileo offers greater accuracy and a guarantee of a service not offered by other systems. Galileo’s high level of accuracy, however, applies only to the subscription services. There will be no significant
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difference in the publicly accessible signal, which at the moment is deemed perfectly sufficient for any number of commercial or Government systems. Last year, for example, I visited Berlin and saw the Satellic road-pricing scheme in action, which tracks and charges every single truck over 12 tonnes on German autobahns. Only GPS is used. When I asked about Galileo, the answer was quite clear: they said that if it comes along, they might use it, but they are under no pressure, as they have GPS and their system works. That scheme has been a huge success, pulling in about €250 million a month.

Last week, I had meetings with representatives of Trafficmaster plc, a highly successful company selling navigation services to more than 100,000 vehicles in the UK. Its technical director, Christopher Barnes, said that

There is extremely limited application for the higher accuracy that Galileo will offer and, in any event, any such advantage will last only until the US deploys Block III Navstar, which promises equivalence.

Mr. Jenkin: Will my hon. Friend deal with the suggestion made by the hon. Member for Montgomeryshire (Lembit Öpik) that we somehow need to build extra redundancy into global satellite positioning systems, otherwise our civil aviation industry will be severely at risk? Does my hon. Friend agree that every airline pilot in the world has been trained to navigate his or her aircraft without global positioning, making this redundancy completely unnecessary?

Mr. Paterson: I agree that airline pilots can navigate, but I would stress the huge importance of maintaining the accuracy of GPS. To provide an example, there was a very slight glitch in one of the GPS satellites a short time ago when one of the timers went wrong. The result was that 10 per cent. of mobile phones on the west coast of the US went down. It is thus enormously important for the United States to keep GPS accurate. The economic consequences are huge, as I shall explain in more detail later.

Lembit Öpik: By way of illustration to the hon. Gentleman, does he recognise that many of the smaller aerodromes do not have navigation aids to enable a precision approach, so the only way to achieve that on those smaller fields is by using GPS? My point was that in those circumstances, without redundancy—and especially in bad weather—there is a serious risk to the pilot of an accident.

Mr. Paterson: The answer to that question posed by my parliamentary neighbour from Montgomeryshire is that we have GPS now and it will be enhanced by Block III. The answer is to use the European geostationary navigation overlay service and to get them integrated.

Fears about continuity of service are totally bogus. The President of the US said in December 2004 that providing uninterrupted access to the system and the provision of services on a continuous, worldwide basis for civil use, free of direct user fees for civil, commercial,
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and scientific uses was their clear policy. The US is also committed to providing GPS to NATO—a point on which my hon. Friend the Member for Stone (Mr. Cash) touched—where it is used not only for navigation but for command and control systems, weapons delivery and, crucially, for the prevention of friendly fire. That is the so-called blue-force tracker system.

So central are satellite navigation systems to the military that, during the height of the Iraq war in 2004, the United States did not close down the system in the region even after it found out that Iraqi forces were using it against the US. Additionally, the Federal Aviation Service approves Navstar as a navigational device in aircraft and, as can readily be seen from the 2001 federal radio-navigation plan, continuity of service is a key element in the provision of the service, without which the system simply could not be approved.

As I thought that some of these questions might come up in the debate, I spoke yesterday to Brigadier General Simon P. Worden USAF, retired, who was responsible for bringing GPS to fruition in 1995. He is now the director of NASA’s Ames research centre. Speaking to me in a private capacity, on his own account, he said:

According to him, nor could Europe ever be deprived of signals. He went on:

Where does that leave us? We have a system that offers no advantages whatever over what is freely available elsewhere, yet we are being asked to consider funding to the tune of several billions for what is essentially a European Union vanity project. We are not alone in having reservations. After the conclusion of the Transport Council in Luxembourg on 8 June, the hon. Member for South Thanet (Dr. Ladyman)—who I see in his place—was quoted by the Financial Times as saying:

He added that the UK would seek cancellation if concerns were not answered. In parliamentary replies to me, he has said that the Government have admitted to spending €142 million on the project through the European Space Agency and, through contributions to the EU budget, approximately 17 per cent. of the estimated €790 million that the Commission has invested in the programme. That amounts to €276 million in the past three years. The Government have also added that there is not an identified UK contribution to the design and development phase of the programme via the EU budget. To continue the negotiations on additional funding would be tantamount to signing a blank cheque.

Therefore, we have to say that we are not content with the Government’s approach to discussions on the Commission document. Although the hon. Member for South Thanet was prepared to countenance cancellation of the project outside the Council chamber, it appears that he did not do so inside it. There is, however, a practical alternative, which the hon. Gentleman did not offer to his European colleagues but which he should
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have pressed. Preceding the development of Galileo is the European geostationary navigation overlay service—EGNOS.

Dr. Stephen Ladyman (South Thanet) (Lab): It was not my intention to intervene on this debate, but I will not have the hon. Gentleman misrepresent me. I made it very clear inside the Council of Ministers that cancellation had to be a real option if we did not get the answers that we were seeking from the Commission. He should not misrepresent the British Government’s position. It was stated very clearly.

Mr. Paterson: The debate is whether we are happy with the Government’s negotiating stance. They have left us with two forms of public funding, either through community funds or through the European Space Agency. I would have liked EGNOS to be promoted. It is a satellite-based system that will augment Navstar and GLONASS, making them suitable for safety-critical applications such as flying aircraft or navigating ships through narrow channels. Properly integrated with Navstar GPS beyond 2008, that would provide for all Europe’s needs. The UK has already paid its contribution of €35 million towards it. It would be a short cut to playing a key role in a global system.

Mr. Cash: I thank my hon. Friend for giving way on the question raised by the former Minister. In the discussions that the hon. Member for South Thanet (Dr. Ladyman) described in the correspondence to the European Scrutiny Committee, he said that

So irrespective of anything that he might or might not have said, and irrespective of whether we like it, the fact is that, under the majority voting system, this thing is moving inexorably ahead because the Government, in their vainglorious fashion, happen to believe that they can chuck away taxpayers’ money to the tune of billions of pounds without anybody blinking an eyelid.

Mr. Paterson: I am most grateful for the mild manner in which my hon. Friend and neighbour made his point. I agree with much of what he says. There is a much cheaper, practical alternative which would give Europe a comprehensive system that is accurate down to a metre. That would involve amalgamating EGNOS with Navstar.

The Government should have made it absolutely clear in negotiations in the European Council that any further state funding through the European Space Agency or the Community budget would be unacceptable. Our proposal would ensure that Europe had the highest-quality coverage with minimum further investment by the taxpayer. Instead of funding vanity projects, the EU should work closely with the United States to provide a fully integrated global system. That is a real test for the new Government. First, the Prime Minister must negotiate carefully at the intergovernmental conference, as his predecessor approved an EU space policy in the draft mandate from the European Council that will enable the Commission to fund Galileo from its own budget. Secondly, this is a
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real test of the new Prime Minister’s attitude to open-ended public spending projects. The Government should have demanded the integration of EGNOS and GPS, creating a fully integrated global system, and said a firm “no” to further public expenditure on Galileo. As that has not been the Government’s policy so far, I urge my colleagues to vote against the motion.

9.55 pm

Michael Connarty (Linlithgow and East Falkirk) (Lab): I am saddened by the Opposition’s tone, particularly as they have forgotten that the Government’s position—and this is even accepted within the Commission—is that nothing that happens in Galileo should be outwith the financial perspectives. The 2013 financial perspectives are agreed—they will be maintained—and no one is giving them away.

Sadly, I suddenly see in the Opposition a complete lack of ambition. They called the initiative a vanity project, but one of the Government’s prime decisions was to argue for small and medium-sized enterprises in Europe to be fully and openly involved in the development of anything to do with space policy or Galileo. The Opposition wish to stop that ambition, and they do not have any vision to offer Europe in the technological field at all. Instead, they will rely on GPS from America and hope that it will remain free, or they would rely on Russia, because its service will be free, or even China, which will also provide a free service. They do not, however, have the ambition to operate an independent system —[ Interruption. ] I hear an American voice.

Mr. Ellwood: May I correct the hon. Gentleman? First, everyone in the House wants to support businesses in viable and successful projects. However, as we have just heard from the Minister, the project is about to go down the pan, so the hon. Gentleman is disingenuous in saying that the Opposition do not support businesses—that is absolutely wrong. There is a free service, but he suggests that we should ignore it and use a commercial one instead and make people pay for it. There is no market for that service; no one will buy it when a free service is available.

Michael Connarty: It is a well known strategy to operate a loss leader in business. I studied economics, and there comes a time when one wishes to charge a premium for the services that one offers; that is a well known strategy. If others have made the service available, what is to stop them charging for it? That is an extremely good business model and, in future, when things get crowded in the satellite world, some people who provide the service will say that they must charge for it or, presumably, there will be another form of return. Are we suddenly saying that the USA is a free-market provider of services to the world? That is not a model of the American economy that I recognise.

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