Select Committee on Science and Technology Minutes of Evidence


Examination of Witnesses (Questions 400 - 419)

WEDNESDAY 7 FEBRUARY 2007

ELIZABETH DUTHIE, NEIL ACKROYD AND PATRICK MCDOUGAL

  Q400  Dr Iddon: I would be a little challenging about the costs and the time-scale associated with Galileo. Costs have escalated so far by 50% according to the figures I have in front of me. The British contribution to that increased cost is considerable. The ratepayers and council tax payers and taxpayers in this country ought to be worried. Why are the costs escalating? What are the costs that are putting those costs up?

  Ms Duthie: One of the reasons the costs have escalated is that this is a developmental system. I am sure my colleagues can say more about that but it is a system which is intended to advance performance and so on. It is not infrequent that if you are building a developmental system costs do increase. I am not saying we should simply accept that explanation. Certainly the Government's position is that we should push very hard to get value for money from the programme and that is one of our priority objectives in the discussions. It is also possible that another reason the costs have increased is because of the structural difficulties. In taking forward a programme which is at the development stage, joint between the Commission and the Space Agency, is something that has not been done before and the structure has not always worked as efficiently as it should have done. There have also been problems within the industries which are bidding for the concession. There are a number of factors, not all of which are covered, but I think the important thing is that the Government is making very strong efforts to ensure that the costs are value for money for the Community and for the individual members of the Community.

  Q401  Dr Iddon: Neil Ackroyd, is there anything you would like to add or does that summarise the main problems?

  Mr Ackroyd: This is not an issue of technology costs; this is an issue of process and time. The length of time that it has taken to provide the political environment and the business environment have just gone way beyond what was originally anticipated. This is not a technology issue at all; it is an operational and administrative issue.

  Q402  Dr Spink: Has the specification changed? Are you expecting more from Galileo than you were when it first started? Is that a reason why costs have risen? If so, who has changed the specifications?

  Ms Duthie: There have been some additional costs to the development programme because in the initial specification they did not take enough account of ensuring the security of the system, so there were some additional costs announced, originally, about two years ago which were for security and other parts of the specification.

  Q403  Dr Spink: Were these specification requirements applied by the Department of Transport?

  Ms Duthie: The specification requirements were worked out within the body that is part of the ESA/European Commission structure. For instance, there is a body of experts which deals with the security of the system and they certainly assessed the additional costs before they were brought forward.

  Q404  Dr Iddon: I recognise this is a developmental programme and we all know the difficulties associated with that but what action is the UK Government taking to ensure that this is not an open money box? Have we capped the programme or are we buying into a white elephant here? Are we going to get an adequate return after full investment is completed?

  Ms Duthie: There is more than one question there. In relation to the question about what are we doing to ensure value for money, about two years ago, we, with colleagues in the other Member States, managed to get a decision that there will be no signature of the PPP contract until the Council of Ministers has had a chance to look at what you might call a cost-benefit analysis of the programme. Because of the delays in the concession negotiations, that obviously has not happened yet, but we have been working quite hard and we have put forward proposals on the elements that should be included in that assessment. We have got a lot of support for those from other Member States and the Commission has involved the European Investment Bank so that they can put forward an adequate assessment of the costs and benefits to the Council of Ministers. The European Parliament will also be involved because there will be a financial regulation to authorise the funding of Galileo and we have also worked with MEPs to ensure that they are up to speed on: "We need to take an informed decision on this."

  Q405  Dr Iddon: Would anyone else like to comment?

  Mr McDougal: You asked a question before, Dr Iddon, but I did not have a chance to respond to it about the cost increase. I would agree that there is a natural element to cost increase. This is a very complicated programme. It is evolving; the specifications are evolving. The specifications are evolving because of public interest and the specifications are also evolving because the concession and the private interests have pointed out ways, if there is additional functionality, that there will be additional revenue potential at the back end. That is all a natural outcrop that happens in any big infrastructure programme. There is a slightly unnatural element to this too, because of the nature of the way the European industry has come together to participate and to build it and to operate it and that is always going to be a challenge with this programme. But I think that is where the UK PFI experience and Inmarsat experience should really be brought to bear. We are the ones who can really bring financial discipline to this project and we should be bringing it. That is the role we should be emphasising in our involvement in Galileo, not—excuse my saying this—the traditional role of looking at a European project and saying, "I'm not sure if we really want to be part of this," but to take a very active role, saying, "We are part of this but this needs to have more discipline than it has right now." We need to step out in front of that.

  Dr Iddon: That is a very frank admission. Finally, on the time-scale, the ESA website currently states that Galileo will be operational from 2008 onwards. That sounds rather optimistic to me, in view of what you have all said this morning. Can we re-write that bit of history?

  Q406  Chairman: Estimated date?

  Ms Duthie: I think the generally accepted date for the system to be operational is 2011.

  Q407  Dr Iddon: So we can tell ESA to rewrite their website.

  Ms Duthie: ESA may be talking about the four in-orbit validation satellites. They may be taking rather a narrower view of it.

  Q408  Chairman: We heard it here and it is 2011. Would you roughly agree with that?

  Mr Ackroyd: I think it is fair to say that the utility will come from the system rather before then. Just an extra six or seven satellites will make a big difference to many applications.

  Q409  Chairman: But the whole system will operate in 2011.

  Mr Ackroyd: Yes.

  Q410  Dr Spink: When do you think the utility will start?

  Mr Ackroyd: If you look at the experience we had with GPS, practically when there are six or seven satellites.

  Q411  Dr Spink: When would that be?

  Mr Ackroyd: Based on current presumptions, probably about 2009.

  Q412  Dr Harris: Mr McDougal, how influential do you think the UK is within Galileo to make sure that it delivers all the things we are talking about that the UK is particularly interested in seeing it deliver?

  Mr McDougal: Let me make sure I understand the question. There are UK private interests, and I can speak knowledgeably about that. I can speak less knowledgeably about the UK public voice.

  Q413  Dr Harris: I meant the UK from your perspective, the people you deal with in the UK. As a community, how much do you think the UK has influence, in order to get out of it what we are hoping and expecting?

  Mr McDougal: I think we are doing a reasonably good job, as academia, as industry and as government on the whole. From the upside, the UK has benefited extremely well and Surrey Space has been a great success story in the early implementation of Galileo: Astra and big contracts, Logica et cetera, et cetera. If you look further towards the downstream and the exploitation of this, the UK has a tremendous amount of resources to bring to this, from, say, the Inmarsat perspective: Inmarsat as an operator of all the satellite services, the leading operator in the world today for all the satellite services. I think that Europe sees that as a very natural skill set to bring but, beyond that, there is a whole set of smaller businesses in the UK, in Leicester, Sheffield, Nottingham, around Surrey that are really on the edges of this right now and which will come together as the exploitation of the satellite system becomes more mature. I think we are pretty well placed. Whether we operate in an aggregated way to the best effect, I am not so sure.

  Q414  Dr Harris: May I ask any of you how much you fear or are worried about the co-opting of Galileo for military use from exclusively civil use, how realistic that threat is and what the problems that would cause.

  Ms Duthie: May I come in on this one because this is a political question. Galileo, it is agreed by the Council, by the Commission and by the European Parliament, is a civil programme under civil control. That has always been one of the unique selling points of Galileo and it is, for instance, why the EC has made agreements with other countries to extend the commercial and governmental use of Galileo. So it would be a very big change to have any sort of development of Galileo as a military programme. The Government position is strongly to defend the fact that Galileo is a civil programme and we obviously do that when that comes up.

  Q415  Dr Harris: Other countries are suggesting that they might want to see military use of it.

  Ms Duthie: You have to see this in the context, I think, that there is a more general discussion going on about dual use of space; for instance, in the work that is currently being done on EU space policy. But for Galileo the issue is that it will remain a civil programme.

  Q416  Dr Harris: Does the announced intention of China to develop a satellite navigation system create any threat to the viability of Galileo in any way?

  Ms Duthie: I do not think we have enough information about the Chinese system yet to know whether it creates a threat to the viability of Galileo as a commercial system.

  Q417  Dr Harris: Do you agree that this is a risk?

  Mr McDougal: I do not think it is unexpected at all. China has long had expectations of putting in place a nationally oriented navigation system, as do the Indians, as does Russia, as has the US. We will still cooperate with the Chinese in their system with Galileo. You should really see these systems not necessarily as independent silos of information but that they will be sharing data in many ways and will make the user experience for many of us even better.

  Q418  Dr Harris: You understand why I am asking the question. The New Scientist headline story on 8 November was headed "China's satellite navigation plans threaten Galileo". But you think that is unfounded.

  Mr McDougal: Yes.

  Ms Duthie: There is an EC-China agreement which relates to the development phase. On the point that Pat made about the complementarity, of course it is already agreed with the US that the receivers will be complementary for GPS and Galileo and this is one of the big technical advances because you would have double the number of signals.

  Q419  Dr Harris: My final question is about the issue of jamming in times of conflict, whether you anticipate any problems from the US capability to jam civilian public systems.

  Ms Duthie: That is something which is explicitly covered in the agreement between the EU and the US in 2004.


 
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