Examination of Witnesses (Questions 400
WEDNESDAY 7 FEBRUARY 2007
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
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, notexcuse my saying thisthe 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
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
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
Ms Duthie: That is something which
is explicitly covered in the agreement between the EU and the
US in 2004.