The
Committee consisted of the following
Members:
†
Baker,
Norman
(Lewes) (LD)
†
Brazier,
Mr. Julian
(Canterbury)
(Con)
†
Cunningham,
Tony
(Workington)
(Lab)
†
Kidney,
Mr. David
(Stafford)
(Lab)
†
Ladyman,
Dr. Stephen
(South Thanet)
(Lab)
Leech,
Mr. John
(Manchester, Withington)
(LD)
†
Morden,
Jessica
(Newport, East)
(Lab)
†
Simon,
Mr. Siôn
(Birmingham, Erdington)
(Lab)
†
Stewart,
Ian
(Eccles) (Lab)
†
Stuart,
Mr. Graham
(Beverley and Holderness)
(Con)
†
Swire,
Mr. Hugo
(East Devon)
(Con)
†
Winterton,
Ms Rosie
(Minister of State, Department for
Transport)
†
Wright,
Jeremy
(Rugby and Kenilworth)
(Con)
Hannah Weston, Annette Toft,
Committee Clerks
† attended
the Committee
The following also
attended, pursuant to Standing Order No.
119:
Afriyie,
Adam
(Windsor)
(Con)
Dunwoody,
Mrs. Gwyneth
(Crewe and Nantwich)
(Lab)
Gilroy,
Linda
(Plymouth, Sutton)
(Lab/Co-op)
Key,
Robert
(Salisbury)
(Con)
Pearson,
Ian
(Minister for Science and
Innovation)
Taylor,
Mr. Ian
(Esher and Walton)
(Con)
Turner,
Mr. Andrew
(Isle of Wight)
(Con)
Ussher,
Kitty (Economic Secretary to the
Treasury)
European
Standing
Committee
Monday 26
November
2007
[Mr.
Greg Pope
in the
Chair]
Global Navigation Satellite System and the European Institute of Technology
[Relevant
Document: Letter to Mrs. Gwyneth Dunwoody, Chairman of the
Transport Committee, from Ms Rosie Winterton, Transport Minister,
covering an interim report from ESYS
Consulting
.]
4.30
pm
The
Minister of State, Department for Transport (Ms Rosie
Winterton):
It is a pleasure to serve under your
chairmanship, Mr. Pope. As hon. Members will be aware, the
Galileo programme has been the subject of great interest to the
European Scrutiny and Transport Committees, and was debated on the
Floor of the House in July. It has always been the Government’s
view that, as the Transport Committee recognised in its recent report,
there is no reason to doubt that a completed Galileo project would
provide a wide array of benefits to the United
Kingdom.
However, it
is also true that the proposal for Galileo to be constructed through a
public-private partnership supported by the UK collapsed in June, and
there is no doubt that that raised several issues on which
Parliament wishes for further information. That is why the Government
undertook to keep it informed of developments on the Galileo project,
particularly its financing given that the Commission asked for an
additional £1.7 billion to 2013 to deploy the system through a
public procurement.
At
the Economic and Finance Council on Friday, member states agreed on a
revision of the multi-annual framework that minimised the scale of that
revision and imposed the greatest possible degree of budget discipline
on the Galileo project going forward. My hon. Friend the Economic
Secretary was at the meeting and she is here today to assist hon.
Members with any questions they may have on the regulation and
explanatory memorandum before the Committee on the financing of
Galileo.
My hon.
Friend the Minister for Science and Innovation is also present in case
hon. Members have questions, particularly about the industry side of
the project. Given the level of parliamentary interest in Galileo, we
thought that it was important to afford hon. Members the maximum
opportunity to ask questions of the relevant Ministers so that scrutiny
of the project can take place
properly.
The
Government believe that it is right, because of the benefits of Galileo
to the UK space industry, UK jobs and ultimately the wider economy,
that we continue to support the Galileo project while maintaining our
vigilance on ensuring that the project provides value for money, is
well managed and that
risks are kept under control. It has been most helpful to our
discussions to have the backing of Parliament in maintaining that
vigilance.
My hon.
Friend the Member for South Thanet made it clear at the Transport
Council in June that we wanted regular competitive tendering
throughout the programme, a thorough assessment of costs, risks,
revenues and timetables to reassess the business case for Galileo and a
management structure that would ensure sound risk management. I pay
tribute to his work at the Council in making sure that those principles
were set out. It has enabled us to continue to push in advance of the
Transport Council later this week through its working groups and
bilateral contact with the Commission and other member states to ensure
that member states have full control of the project; that there is
complete transparency for member states over progress and risks; that,
when there are uncertainties over cost estimates, the budget is capped
to enforce effective risk management and, if necessary, choices about
the scope of the
programme.
The
expertise within the Galileo supervisory authority is available to
support the Commission on the programme’s key elements, and the
Commission employs independent project management experts to review
progress on the programme and identify any necessary changes as the
programme
progresses.
Finally,
the programme incorporates robust and fair competition to help mitigate
the risks of using a single supplier and to ensure cost control, value
for money, and improved efficiency. I am pleased that
the programme’s principle of commitment to robust and fair
competition to ensure value for money was picked up on very
strongly in the conclusions of last Friday’s ECOFIN
Council debate on the multi-annual financing of Galileo. We therefore
believe that we have the support of the majority of member states in
pursuing all the aims of the programme.
I hope that the Committee will
agree that the Government have the right and sensible approach to
continuing discussion on Galileo—that approach being set out in
the explanatory memorandums submitted with the documents before the
Committee, and that the Government should continue to pursue that
approach at the Transport Council, both this week and in any subsequent
Council deliberations.
The
Chairman:
We now have until 5.30 pm for questions to the
Ministers. I remind hon. Members that questions should be brief and
should be asked one at a time. I shall try to ensure that everybody has
ample opportunity to be
called.
Mr.
Julian Brazier (Canterbury) (Con): I, too, am pleased to
have this first opportunity to serve under your chairmanship,
Mr. Pope. When we entered the Galileo project, we were told
that two thirds of the money would come from private sources. Not only
have the private bodies all withdrawn, we now have a document that
talks of overrun to the extent of 66 per cent. for phase 1 this year,
37 per cent. for the next phase, and 62 per cent. for the phase after
that. Does that mean that the additional 2.4 billion euros that we are
discussing today is likely to turn into a requirement for a much larger
sum?
Ms
Winterton:
We have made it clear that we want a
clear capping of the project costs, and my hon.
Friend the Member for South Thanet achieved that at the ECOFIN Council.
We have continued to ask for robust cost estimates and for certainty
that the procurement process keeps the figures down. At that point, I
should like to hand over to the Economic Secretary to the
Treasury.
The
Economic Secretary to the Treasury (Kitty Ussher):
It is a
great honour to serve under your chairmanship, Mr. Pope, and
twice the honour given that you are the MP for a constituency
neighbouring my own. I hope that I can assist the Committee on a couple
of matters. The proposal that was agreed on Friday night ended up being
more in the UK’s financial interest than the original one. We
reckon that it is some £27 million to £31 million
cheaper.
Mrs.
Gwyneth Dunwoody (Crewe and Nantwich) (Lab): On a point of
order, Mr. Pope. Might the Minister be encouraged to speak
up?
Kitty
Ussher:
I apologise, Mr. Pope. The deal that we
agreed on Friday was between £27 million and
£31 million cheaper for the British taxpayer than the
original proposal. That does not directly answer the earlier question,
but it is useful for hon. Members to know. We also received an absolute
agreement between the Commission, the Council and the Parliament that
no further funds will be allocated from the current financial
perspective—Euro-jargon for the seven years to 2013. Those
parameters were agreed by the heads of Government at the
Council in December 2005.
Norman
Baker (Lewes) (LD): I am struggling to understand the
Economic Secretary to the Treasury. On the one hand, we are told that
all the private contractors have pulled out; on the other, we are told
that we have saved a lot of money. I would like some certainty as to
the maximum financial exposure to the British taxpayer arising from the
project. Will the Economic Secretary confirm
that?
Kitty
Ussher:
The additional cost to the British taxpayer above
the financial perspective is £260 million. As I said, that is
between £27 million and £31 million less than originally
proposed.
Mrs.
Dunwoody:
Did the Minister vote on this suggestion? Do the
United Kingdom Government accept that the proposed system of financing
will in a very interesting way break the commitment to keep the budget
sorted under particular headings? When the Minister wrote in to support
the measure, did she know that she was establishing a new pattern,
moving money from the agricultural basis to another title, which will
have a direct effect upon
Galileo?
Kitty
Ussher:
I am glad that my hon. Friend asked that question
as it goes to the nub of the conversations that we had on Friday.
Technically there was no vote, but it was clear that with UK support,
the package would go through. As I have said, we had concerns about the
proposed financing of Galileo. For reasons of simple budget discipline,
we think that if a budget is agreed upon, it should be stuck to, and
not messed around with at an early stage.
During the negotiations, we
achieved significant reprioritisation within heading 1A, which is where
any proposal to finance Galileo should be maintained. That is where
competitiveness and growth in economic issues are discussed, and we
achieved our aim in that regard. It was not possible to have a deal
that included the entire projected costs of Galileo within 1A without
substantially reducing other things that were important to the United
Kingdom, notably the research and framework programmes. Therefore, a
proposal was made to use to the underspend from agricultural spending
in 2007.
Early in the
day—and I want to be clear with the Committee on this matter as
it is important—there was a blocking minority against the entire
EU 2008 budget, on the basis of concerns about how Galileo would be
financed. Galileo was the sticking point in the negotiations and it was
the main thing of substance that was discussed. While we were part of
that blocking minority, we could have brought down the entire EU budget
for 2008. During the course of the day, it became clear that some other
member states in that blocking minority were using it as a tactical
position, to try to ensure that their industrial interests in Galileo
were safeguarded. Those interests were directly and diametrically
opposed to the UK’s industrial interests.
We faced a strategic choice,
and I made a decision. We could have remained in that blocking
minority, happily voted no and won the moral high ground. I could have
said that I had voted no to the EU 2008 budget because I was concerned
about the way that Galileo was to be financed. I would have been happy
to do that had I thought that the blocking minority was in the
interests of the UK and would be sustained.
However, I thought that one of
the other member states in that blocking minority would come out of
that minority at some point during the course of the week, after they
had used their presence there to negotiate industrial interests that
were opposite to ours. I felt that it was in this country’s
interests to use the leverage that we had on Friday to try to direct
the debate more towards our industrial interests, and our severe
concerns over the financing of Galileo.
I built a coalition of other
member states, we went to the presidency and asked
for greater reprioritisation from 1A. We asked for assurances that this
was an exceptional situation because the PPP proposal had fallen apart
after the original budget had been agreed. It was therefore an
exceptional situation that created no precedent whatsoever and we have
that as an agreement. We also negotiated words on procurement that are
in Britain’s industrial interests. That could only have been
achieved on Friday because the blocking minority would later have
fallen away, and Galileo would have gone through, financed in a worse
way and against Britain’s interests. Having achieved those
measures we came on board with the presidency’s proposal. I hope
that that answers my hon. Friend’s
question.
Mr.
Hugo Swire (East Devon) (Con): The Minister has been very
nimble footed in the smoke-filled corridors of the EU. What is of more
interest to the UK taxpayer, is that this is a project that has
escalated without precedent. The amount of money that it will cost is
staggering. Is there anything that we have heard
recently, and will no doubt hear this afternoon, which allows us to
think that the project cannot spiral out of control once
again?
The Minister
said earlier that it was agreed that there would be no further money
from the EU funding round for a period, which is a fine sentiment.
However, what happens if the project runs short of money, as it has
done previously? Does it just stop, do we write it off, or do we, yet
again, move it from one pot to another to satisfy some kind of EU
nicety?
Kitty
Ussher:
I shall respond to the issues relating to finance
and leave it to my colleague the Transport Minister to respond to those
relating to the policy as a whole.
All I can say to the hon.
Gentleman is that we have negotiated the following words, agreed
between the European Parliament, the European Council and the European
Commission, that the use of financial framework revision and
“the use of funds from the margin
of the previous year is an exceptional measure and will in no way set a
precedent for future revisions.”
That is all we have agreed to do. The
hon. Gentleman can be as cynical as he likes about what happens in
future, but the ceiling has been
set.
Ms
Winterton:
Let me add that the stance that has been
taken throughout the various transport councils and in ECOFIN has
allowed us—through the working groups that were established
after my hon. Friend the Member for South Thanet laid down the
conditions that the UK wished to see in order for the project to
continue after the collapse of the PPP, which we must remember was
quite a significant point—to ensure that robust structures are
in place so that there is full transparency in decision making, and
that there is open competition, which will benefit British industry and
British jobs. We have to be absolutely clear about that. Yes, there are
decisions that need to be made here. Sometimes those decisions are
difficult, but we know that many benefits could accrue to the UK if
Galileo goes forward in the way that we have set out. My hon. Friend
the Economic Secretary made some points at the ECOFIN council that have
allowed us to ensure that governance is improved, that transparency is
there and that the competition is in place, and we shall continue to
push for that up to the Transport Committee later in the week and
beyond. It is important to be clear that both our route and
Parliament’s support for that route, which ensures that there is
that kind of governance and transparency, has been helpful. It has
allowed both me and my hon. Friend to be able to work closely with the
European Commission and to make it clear how we wish to see the project
run in the
future.
Several
hon. Members
rose—
The
Chairman:
Order. Before we go any further, enchanting as
it is to have a medley of Ministers, I would find it easier if just one
Minister replied to each question. I realise that there are different
issues to be
raised, and that different Ministers may wish to reply, but if one
Minister replied to each question, I would find that
helpful.
Dr.
Stephen Ladyman (South Thanet) (Lab): So many member
states were keen on the consortium approach to putting together the PPP
because they saw juste retour as the principle that would guide the
fact that the money they put in came back to their countries. In my
view, the key to whether this project is in Britain’s interest
in the future will be determined by whether open competitive tendering
takes place. However, we cannot have open competitive tendering and
juste retour. Can my hon. Friends—whichever one—tell me
whether juste retour is now off the table and whether we will have
something approximating open competitive tendering in the
future?
The
Minister for Science and Innovation (Ian Pearson):
Perhaps I can help you out, Mr. Pope, by being the only
person to answer this question, although I am sure that my ministerial
colleagues would also be happy to answer. I shall reply because the
European Space Agency comes under my direct ministerial responsibility
and will be the lead agency for procurement purposes. We have made it
quite clear—it is quite clear in the text of the
agreement—that the procurement process will follow EU rules
rather than the normal juste retour basis. I refer to the relevant
paragraph of the agreed text, which talks about
affirming
“the principle
to the commitment to robust and fair competition in the programme to
help ensure cost control, mitigation of risk from single supply, value
for money and improved efficiency. All work packages for Galileo should
be open to the maximum possible competition, in line with EU
procurement principles, and to ensure procurement in space programmes
are more widely open to new entrants and SMEs.”
It goes on to
say:
“This
should be without prejudice to the details elaborated in the Transport
Council”.
I think that
that gives the hon. Gentleman some assurance about the basis on which
this will
operate.
Mr.
Ian Taylor (Esher and Walton) (Con): The Ministers will
know that, if it got into the hands of the European Space Agency, juste
retour would kick in more, which is why it is good that the agriculture
budget was raided. If it is in Britain’s national interest that
we should have this project, is it not also in Britain’s
national interest that we should use the agriculture budget as part of
the gap filler? Otherwise, that money would not have been returned at
the year’s end to member states, and would have probably gone to
people such as Spanish pig farmers.
Kitty
Ussher:
Perhaps it is most appropriate for me to answer
that question. There is a general argument that says that, as we
support reducing the common agricultural policy and greater emphasis on
Lisbon and economic-type activity within the EU, this is precisely the
type of measure that we should be supporting, and I take the hon.
Gentleman’s point. There is another important national interest
to be obtained from ensuring that the budgets agreed at EU level are
realistic and maintain proper budgetary discipline, as it is our money
that is ultimately being spent. In the end,
we ended up with both on Friday night and while we could have argued
about having just one or just the other, both arguments can be
made.
Mr.
Brazier:
The Minister, I know, has had difficulty with a
number of our European partners, and I believe that Italy headed the
queue of those trying to get a large slice of the project. However,
does she accept that—looking at any big international project,
from Concorde through to Tornado and a number of others that have been
collaborative—the key to controlling a project does not lie in
simply saying, “This is a budget and we’re gonna stick to
it.”? Nor does it lie even in having open competitive tendering,
although that is a welcome
aspect.
The key is
having clear gateway points at the end of each phase, with a commitment
to review at that gateway point whether to continue at all. Will the
Minister therefore explain why we are told that there will be no
overrun and no extra money before 2013, which appears to take us right
through into phase 3? More specifically, will she tell the Committee
whether that is a clear commitment to decide whether to continue in the
light of progress and cost at the end of phase
1?
Ms
Winterton:
The hon. Gentleman is right to say that we need
to make it clear that our goal is to ensure that the budget is capped.
That is what was extremely useful about the ECOFIN meeting, and we
shall certainly emphasise the point at the Transport
Council.
In
terms of the current agreement among member states
and the ongoing relationship with the Commission, because of the points
that have been strongly made, we want to ensure that we can have
transparency on the procurement process and governance during any
procurement process and the development and deployment of Galileo.
Governance is the key issue that we have been ensuring with the
Commission and it is something that member states feel strongly
about.
The point that
the my hon. Friend the Member for South Thanet made at the previous
Transport Council, which I have also made, is that if we are to have
the confidence of the Parliaments of all member states, the system must
be open and
transparent.
The hon.
Member for Esher and Walton is perhaps also referring to whether we
should have said at this point whether there is the option of not going
ahead at all—of somehow withdrawing. The
Transport Committee, with all its reservations, said that if the
Galileo system were up and running efficiently, there would be a wide
array of benefits to the UK. We must recognise, as a Parliament, that
the pieces are in place to ensure that we have that transparency, both
in procurement and
governance.
Norman
Baker:
May I get some figures put on the
record, Mr. Pope? What was the first
estimate of the project’s costs, and the estimate of the
UK’s contribution to it? What is the current estimate of costs,
and the current estimate of the maximum UK
contribution?
Ms
Winterton:
The Commission estimate of
£2.3 billion in the current financial
perspective—2007 to 2013—includes operating costs. The
Commission has also estimated that the operating and maintenance costs
for 2013 to
2030 could be around £4.16 billion, and it believes that revenues
will be sufficient to cover those
costs.
The
current estimate of the revised costs of the development phase in ESA
is about €1.5 billion at 2004 prices. Some additional costs have
been identified, and there are other known but unscoped additional
costs. Under the arrangements to be decided for the proposed public
procurement of the full constellation of satellites, some of those
additional costs may be transferred from the development phase to the
proposed public
procurement.
Mrs.
Dunwoody:
The Minister of State, Department for Transport,
has made it plain that the British would get some benefit from those
deals, and she has also sent me a letter, dated 23 November, which not
only cobbles together the GPS and the Galileo costs, but makes it very
clear that considerable sums are involved. Does she have a definite
undertaking that British firms will not be excluded from tendering for
the next stage, as before we completed our report apparently the only
British firm capable of getting the only satellite out of the 30
satellites that are required has been told not only that it may not
tender for the next five, but that it may not tender for any subsequent
involvement in Galileo? If that is not correct, will she please make it
clear on the record that that matter needs to be dealt
with?
Ian
Pearson:
I shall answer that question. Let me clarify the
situation as I understand it at the moment. As I have explained, in
this project, the ESA will be the lead procurer on behalf of the EU. We
anticipate that, in the UK, we will see probably some €280
million of work that is or will be contracted during the next phase.
The consultant, ESYS, has estimated that downstream benefits could
reach about £1.5 billion a year by 2015. On the contracting
procedure, debate is going on about the number of different work
strands, and a key issue that my right hon. Friend the Minister of
State pointed up is how many competitive packages there will be when it
comes to satellite systems. We have been arguing strongly that there
should be the maximum possible competition, which is why we got the
wording agreed at ECOFIN on
Friday.
Dr.
Ladyman:
May we look at some of the potential benefits and
get some figures on the record? Initially, when
Galileo was put forward, there was talk of possibly creating 100,000
jobs across Europe. However, I note that Wolfgang Tiefensee, the German
Transport Minister, recently suggested that that figure might be as
high as 150,000. Are those figures still in the right ball park and do
the Government think the figure more likely to be that from Wolfgang
Tiefensee or the old
one?
Ian
Pearson:
We have to bear it in mind that, in some cases,
we are dealing with an unknowable future and nobody can accurately
predict the scale of the downstream benefits that are likely to accrue
as a result of Galileo. I quoted some figures in response to my hon.
Friend the Member for Crewe and Nantwich. As with all such projections,
over time there is significant variability. That is true also in
respect of forecasts on potential additional jobs. The figures
mentioned sound like the right sort of ball-park figures that we should
expect for a major programme such as this.
Let us step back from the matter
and consider the situation, including the history of GPS and the fact
that a large number of United States firms benefited significantly as a
result of the introduction of GPS as a system. It would be a strategic
blunder for Europe not to proceed with Galileo, although not at any
price, but we need to ensure that that is done as robustly and
transparently as possible. It is in Europe’s strategic interests
for the Galileo project to continue and be delivered in the most
cost-effective way
possible.
Mr.
Brazier:
The Minister gave quite a long answer to my
previous question. Let me put it again much more directly. Are there
break points in our commitment here or not, or are we fully committed
to all three phases, at least until the money—the new
estimate—runs
out?
Ms
Winterton:
The UK can put on a brake, but at the
moment—it is important to stress this—we have committed
to political discussions, as there have been, on potential funding
commitments for the public sector beyond 2013. We have been very clear
that we are talking about a budget for Galileo that reaches to 2013. We
want to see that budget adhered to. That has been made very clear and
there is support from other member states for the need to adhere to
that budget.
We want
to go forward in a positive and clear way on the procurement process,
the governance and the need for transparency in all those areas. We
want to ensure that British industry benefits in every way possible
from taking forward the
project.
Mr.
Taylor:
Do the Ministers agree that too much stress is
being put on the transport applications of Galileo, simply because the
Department for Transport is the lead Department in terms of the budget?
There are massive transport benefits, but what about the other benefits
that flow from better understanding of the ionosphere, for example, or
the environmental impacts and land movement, which are crucial? Spatial
positioning is becoming one of the great
industries.
Will
the Ministers confirm that PricewaterhouseCoopers’ cost-benefit
analysis
“suggests that
the wider downstream benefits in the broader UK economy could be up to
20,000
jobs”?
Ian
Pearson:
I can confirm that that figure was used by
PricewaterhouseCoopers in 2001. It suggested that there might be a
benefit-cost ratio in the order of 4.6:1, and I would be surprised if
that did not remain the case with Galileo. The history of GPS is that
it has spawned a series of new technologies in the United States, and
we want to do the same in Europe. We want to ensure that in
strategically important areas of satellite communications we continue
to maintain the strengths that we have in the United
Kingdom.
The UK space
industry is valued at about £7 billion a year, supporting some
70,000 jobs. It is a significant industry. I think that space will
become more and more important to our future. To have a prosperous
future, therefore, we need to play a full part in the satellite
technologies and positioning systems that go into space systems, and in
research and development on them.
Norman
Baker:
I understand why there is a strategic interest in
pursuing the project, and I do not oppose it in conceptual terms, but
the political imperative has perhaps clouded consideration of the
budget issues, and the fact that there are those for whom the project
is a matter of prestige clouds things
further.
I am not
particularly happy to rely on figures provided by the UK space
industry, which naturally wishes to bat on a particular wicket. Will
the Minister say clearly what cost-benefit analysis
has been undertaken —by the Government rather than the space
industry—to ensure value for money from the project, and when
that
happened?
Ms
Winterton:
My hon. Friend the Minister for Science and
Innovation referred to the PricewaterhouseCoopers study, and the
document before the Committee gives an initial analysis of potential
revenues. The Commission has also published a variety of estimates of
potential benefits. The latest figures suggest that incremental
benefits from Galileo will be of the order of €50 billion to
€60 billion over the period to 2030. However, as I am sure the
hon. Gentleman will recognise, any estimate that looks so far ahead in
a developing market is obviously subject to many uncertainties and it
would be foolish to pretend that the estimate could have a more
substantial basis.
The
UK study of gross value added from in-vehicle systems and mobile phone
personal location services suggests that revenues were worth about
£16 billion over the period to 2005. However, the link to the
GPS system makes it quite difficult to separate out the amount
attributable to Galileo. The study, which I believe is included in the
papers before the Committee, identified a range of reasons why Galileo
would expand the market, including greater signal availability. It
could help to address the problem of signal failure between buildings,
for example. It could also provide much more accurate positioning in
commercial services, together with better guarantees of the service
consistency.
Mrs.
Dunwoody:
Will the Minister explain why, if there are so
many benefits, there is no commercial partner in any of the 27 EU
states that wants to take up the opportunity? She sent a letter that
set out the benefits of Galileo. Will she tell me why it is not
possible, as she sets out clearly in the letter, to obtain a gross
value added figure that does not include services additional to
Galileo, and that is reduced not to the figure of £16 billion
that she mentions, but to £10.2 billion, using a 6
per cent. discount
rate?
The press
release issued by the Economic and Financial Affairs Council after last
week’s meeting said that there would be no further debate on
this matter. Was that accurate? The same press release made it very
clear that the amounts we are discussing are a commitment appropriation
to Galileo of €940 million —including the amount
in the preliminary draft budget of 2008—of which €50
million will come from transport-related research activities and money
from the flexibility instrument.
Could she also tell me the
status of this affirmation about the use of a financial framework
revision, and about how the use of funds is an exceptional measure and
will in no way be used as a precedent? What kind of an undertaking is
that?
Ms
Winterton:
While I understand your previous ruling,
Mr. Pope, I wonder whether it might be helpful for the
Economic Secretary to the Treasury to comment with particular reference
to the press release that was put out after the ECOFIN
Council.
The issue
raised by my hon. Friend the Member for Crewe and Nantwich has been
commented on by many people. If GPS is already available, why do we
need Galileo? Was not the withdrawal from the PPP an indication that
people felt that there was no market? People might suggest,
“Don’t bother with Galileo, just go for GPS”, but
we must understand that GPS was designed for US military use. It is
excellent for its intended purpose. However, some civil applications of
satellite navigation technology require either greater accuracy than
GPS, or a guarantee of service and availability that that cannot
provide.
When combined
with GPS to give a larger constellation of satellites, Galileo offers
improved coverage and accuracy. With the commercial add-on service, it
has the guarantee of integrity. That is why recent analyses—the
latest was conducted by ESYS—have pointed to the fact that there
will be downstream benefits up to 2025 of something like £16
billion.
The other
issue is about why we should pay for Galileo when GPS is free. Again,
this is the commercial input. Even though both GPS and Galileo will
provide their basic services free of charge at the point of use, it is
likely that users will first have to pay a fee when buying receiving
equipment, as a royalty for use of the signal. Because Galileo will
offer more than the basic service—as I have said, it provides a
greater integrity and guarantee of signal—people will be willing
to pay the operator for that additional
service.
The
Chairman:
Order. Before we move on, may I ask members of
the Committee to co-operate by asking brief questions one at a time,
which will avoid the need for Ministers to give very lengthy answers,
or for those answers to be shared between more than one Minister?
Kitty
Ussher:
Thank you, Mr.
Pope.
I am grateful to
my hon. Friend the Member for Crewe and Nantwich for her questions and
hope that I can answer them all. She asks how we can be sure that there
will be no further revision of the financial perspective. The reason is
that we have a commitment from the Commission, the Council and the
European Parliament that no further funds are
required—[
Interruption.
] My hon. Friend
looks sceptical, but I do not see what more we can do except to agree
not to do such a thing. I apologise if this sounds slightly technical,
but I will read it out because it is important. The European
Parliament, the Council and the Commission agreed on Friday
that
“any further call on
resources concerning Galileo can only be considered if accommodated
within the ceilings of the agreed Multiannual Financial
Framework”—
the
budget—
“and
without reverting to the use of Points 21-23 of the Interinstitutional
Agreement of 17 May on budgetary discipline and sound financial
management.”
That means
that we cannot have further revision. Furthermore, it has been made
entirely clear in what has been agreed that the amount of €2.4
billion for
Galileo, which I shall break down shortly, should not be
exceeded for the duration of the financial framework—2007 to
2013. The budget Ministers set out how that amount could be found and
from which part of the budget it could
come.
To answer the
point made by the hon. Member for Canterbury, it is my understanding
that, at any time—indeed, this week—Transport Ministers
could, if they wished, say, “No,” or, “We had
better break here.” All we have done is set out how the project
can and could be financed. It can be stopped elsewhere because that is
where the policy direction
lies.
My hon. Friend
the Member for Crewe and Nantwich asked how the figure broke down. Out
of the €2.4 billion, €400 million will be made available
from reprioritising within the seventh research framework programme
within the heading 1A. That is what reprioritisation means. A further
€200 million will be redeployed separately from other programmes
within heading 1A, the details of which we are still waiting for the
Commission to propose. Some €300 million will be made available
from the margin available under heading 1A—I think that that is
for the European Institute of Technology—and
€1.6 million will come from underspend of the agriculture line
under heading 2 from
2007.
There is one
further thing that I want to put on record. I have good news for the
Committee in that I inadvertently read out the wrong figure in terms of
the overall cost to the UK taxpayer. I wish to make the situation
entirely clear. As a result of the proposal that was agreed on Friday
at the ECOFIN budget Council, the estimated UK contribution to what was
agreed simply for Galileo is £194.7 million. For the EIT, it is
£31.8 million. If we add up those sums, the figure is
£226.9 million, not £260 million, as I said earlier. That
was the original proposal, and we have negotiated
it
down.
Mr.
Swire:
The Economic Secretary will find that
stopping or altering Galileo would require a
qualified majority of Transport, Economic and Finance Ministers. There
is nothing that we can do unilaterally. Indeed, I refer her to
paragraph 87 of the Transport Committee’s excellent report,
which
states:
“We
note that the Government on its own does not have the power to stop, or
to impose changes on the Galileo
project.”
I
suggest that she was inadvertently wrong—I will not say
misleading—in what she told the Committee a few moments
ago.
It is easy for
Ministers, whether there be one or three of them, to stand in a
Committee Room on a winter’s afternoon and tell the Committee
that they wish to adhere to the budget and that there is a line in the
sand in respect of that budget. However, I refer again to paragraph 1
on page 31 of the excellent report, which states:
“The estimated and
outturn costs of the Galileo programme have increased at every stage of
its
history.”
If
there is to be no more money for the project down the line, what is the
alternative that Ministers should have in place and should be
considering? Is there an option for a reduced system, which is
something that the EU has come out against? What will be the cost to
the British taxpayer if the entire project is scrapped and the money is
just written off?
Ms
Winterton:
My hon. Friend the Economic
Secretary was right to say that if the Transport Council decided not to
support Galileo, that would be the situation and there would be a break
at that point. That is entirely different from whether the UK could
just say that, given that we do not have a veto at the Transport
Council.
We must bear
in mind that the Government have taken an approach through which in
different Councils, including ECOFIN, there has been heavy
pressure from UK Ministers to ensure that the various
Commissioners are well aware of the UK’s concern about cost
overruns. That, together with the fact that we have gained support from
other member states, means, as my hon. Friend the Economic Secretary
pointed out, that we can say, “This is the budget. This is what
we want to stick to.” The alternative, if this came back and the
Commission were asking for more money, would be options about
re-scoping the project, such as reducing the number of satellites.
However, that is obviously not the route that we want to go down. We
want to ensure that the project, as it is currently set out, can
succeed within its own budget.
Mr.
Brazier:
So, we have now established that there are no
gateway points with individual partners having the power to reconsider
at the end of phases, or at other times.
I would like to shift the
questioning from money to time. We were originally told in 2004 that
the project, in the words of the Commission,
“will definitely become
operational in 2008.”
In
the debate in July, just three years on, the year of 2012 was
mentioned. There were a couple of ugly references today, if I may say
that, to 2013. Bearing in mind that the Americans appear to be on
schedule to have the next generation of GPS ready by 2014, by what date
does the Minister really believe that this is going to be
operational?
Ms
Winterton:
The Commission has made it
very clear that if decisions on the public procurement proposals are
taken by the end of this year, it expects that full operational
capability can be achieved by
2013.
Ian
Stewart (Eccles) (Lab): It is good to see you in the
Chair, Mr.
Pope.
May I say to the
plethora of Ministers on our Front Bench that they ignore at their
peril the comments of my hon. Friend the Member for Crewe and Nantwich?
She and her Committee are rigorous. However, I rise to support the
Government, and I wish to raise the issue of jobs and skills. I am also
attracted to the fact that the Galileo system will be a civil system,
unlike the American system, which is military. My research has
convinced me that the GPS III review in America is not on stream and
ready for resolution in the year cited by the hon. Member for
Canterbury.
We
have heard about job creation and downstream benefits, and I have heard
from PricewaterhouseCoopers about 140,000 jobs across Europe. I am
interested in how many of those jobs will be in the UK and what the
quality of those jobs will be. We must give more attention to
manufacturing. As a lifelong member of the Transport and General
Workers Union, the Committee would expect me to argue that
case.
The
Chairman:
Order. I shall try to be helpful to the hon.
Gentleman. At the moment, we are trying to take brief questions until
5.30 pm, or perhaps a little after that. Beyond that point, there will
be time to make a longer contribution, and I shall certainly give the
hon. Gentleman time to do so at that point.
Ian
Pearson:
I certainly agree that the UK must continue to
maintain a strong manufacturing capability. We are already the sixth
largest manufacturing country in the world, and I have already outlined
the strategic economic case for continuing with Galileo as a project. I
also think that there is a strategic political case, which we have not
talked about yet. The position at the moment is that we have GPS. The
ability to act complementarily with GPS, through Galileo, will provide
a number of additional benefits, including increased resilience in the
system. The suggestion that we should rely on a Chinese military system
that is totally secret is unpersuasive. Similarly, I am not persuaded
by the idea that we should be looking to rely on a Russian-based
system. It is in our strategic political and economic interests to
proceed with this
project.
There is a
lot of debate about the time that programmes take. I understand that
GPS III is unlikely to be delivered by 2014 and that there could be
substantial delays with that programme. Again, that gives European
industry and UK manufacturers a time window in which to help to
develop the new technologies that will enable us to compete in this
marketplace.
Norman
Baker:
We have talked about costs and strategic interests.
Before we run out of time for questions, may I raise briefly
implications for civil liberties? The Ministers will recognise the
significant capacity of this technology to monitor the individual. As
we are discussing this country’s interests and the costs, what
discussions have been taking place in
parallel—and where—to ensure that
sufficient safeguards are in place to protect the
individual?
Ian
Pearson:
I stand to be corrected, but I understand that
this is not a spy in the sky. A receiver is needed, so the system
depends on individuals carrying devices that want to be detected. In
that sense, unless the hon. Gentleman is talking about compulsorily
placing receivers on individuals, concerns about civil liberties do not
arise. We need to be clear that this is not a spy in the sky for the
future, but a system that will enable users to be tracked
voluntarily.
Several
hon. Members
rose
—
The
Chairman:
Order. The time for questions has nearly
expired, but some hon. Members are still standing, so I intend to use
the power under Standing Order No. 119(7) to extend the time for
questions until we run out of questions, or for half an
hour.
Dr.
Ladyman:
In July, there were press reports that a deal had
been struck between the American GPS system and Galileo so that the two
systems would be developed complementarily. The Commission admitted
publicly that such a deal had been agreed, but said that
it had not been signed. Are Ministers in a position to say what has
happened to that deal and whether it is, indeed, now a signed
agreement?
Ms
Winterton:
I understand that the agreement is proceeding.
I may have to write to my hon. Friend about whether the actual
signature has taken place. However, he is right to mention that the
agreement was the point at which some of the fears that we might be
alienating the United States by not going along with the GPS system
were allayed. That point came up at the Transport Committee and we were
able to highlight that the United States was keen on the development of
Galileo because of the benefits that would accrue on both sides. That
is why that agreement was put forward. I will come back to hon.
Gentleman on the signing, unless anything miraculously appears to
advise me of a date for the signing that I could point
to.
Mr.
Taylor:
I understand that the Galileo system
will be an open system, except that some information will
be encrypted and available only to members. That was
the basis on which the Americans agreed that the complementarity of GPS
and Galileo was a huge advantage and why they are now working
co-operatively between the two systems. That is happening not least
because, if Galileo gets up even before GPS III, it will be down to
almost centimetre accuracy. Will the Minister confirm
that?
Ms
Winterton:
Yes. To reiterate what the
hon. Gentleman said, it is true that the combination of the two systems
will increase the number of satellites visible from any location on
Earth and will aid accessibility to navigation signals for civil users
worldwide. It is also true that the US has adopted the Galileo signals
for future GPS III, put in for operation during the next decade. As a
result of this agreement, there is close working between those
developing Galileo and GPS III. I may need correcting here but I think
that the encryption applies to those services for which there might be
a payment. Therefore, the free services will remain free, but
particular services may need to be paid for because of the
encryption.
Mrs.
Dunwoody:
As the British taxpayer is going to pay 17.5 per
cent. of the total budget, where in the minutes is there a record of
the total sum and a risk analysis on which it was
reached?
Kitty
Ussher:
The agreement and the summary of conclusions does
not provide a risk analysis of the project because they are drawn up by
ECOFIN and they discuss the financial perspective only in the light of
the 2008
budget.
Mrs.
Dunwoody:
Total
budget?
Kitty
Ussher:
I will get back to my hon. Friend on the total
budget.
Mr.
Brazier:
Can the Minister confirm that
the proposed European GPS Navigation Overlay Service would have been
much cheaper and would have offered the most important single advantage
that Galileo claims to have
over the existing GPS system? By collaborating with GPS, EGNOS would
have offered a much higher degree of pinpoint
accuracy.
Ms
Winterton:
The development of EGNOS is a very important
initial part of the development of Galileo. I do not think that there
was any question of us saying that we would simply rely on that. It was
important to develop Galileo at the same time to get the increased
accuracy that is needed. EGNOS is an augmentation; it is not a complete
system. It requires a fully functioning global navigation satellite
system to which it can add some accuracy and integrity.
Initially,
EGNOS will work with GPS and potentially provide a very useful service.
When Galileo starts, it will add to Galileo’s capabilities.
Unless we have Galileo, EGNOS will have to rely on a satellite
navigation system that is outside European control. As we develop more
and more safety-critical applications—whether it is for roads,
rail, maritime or aviation uses—it will become essential for the
entire system to be under a single management regime. If we do not
develop Galileo, EGNOS will also continue to suffer from some of the
vulnerabilities of which we are all aware, of relying on a single data
source such as GPS, and will be able to warn users only of failures and
not provide an
alternative.
Mr.
Brazier:
I understand arguments about technologies and
will return to the point about having a single source later. From a
user angle, as opposed to the development of producer technologies,
what benefits will Galileo provide—apart from the issues around
having a second provider—that GPS with EGNOS supplementing it
will not be able to
provide?
Ms
Winterton:
That goes back to all the points that I was
making earlier about accuracy of signal. The hon. Gentleman knows that
sometimes, for example, in cities between big buildings, there can be a
signal failure. I gather also that big waves can create a problem with
safety at sea. In a search and rescue operation, it is not always
possible to locate ships because of the accuracy of the signal. The GPS
military application is accurate down to 1 m or less, but the civil
application is not. Galileo would provide us with such accuracy and
with the signal integrity that we do not currently possess. That is why
the United States is keen on Galileo’s development alongside GPS
III. The more satellites there are up there, the greater the
possibility of accuracy on both sides.
Ian
Stewart:
When I rose to support the Government’s
proposals earlier, I said that Amicus and the T and G, now called Unite
the Union, support them. I support them, too, and I accept that it is
important for the Government to scrutinise properly the finances and
the quality of the programme. However, I am also conscious that other
countries are keen to get in on the act, so it is proper for our
Government to move as speedily as possible, with due regard to those
other issues. The reason for having the system is that it complements
the American system. We have heard the Minister and others explain that
technologically, it improves and is complementary to the system, so the
Government should move as speedily as possible, if for no other reason
than we should
consider the market share for the UK, which in turn allows us to
consider the UK’s interests in terms of highly skilled
manufacturing jobs. So, how quickly do the Government expect to move
forward?
Ian
Pearson:
I am sure that my hon. Friend is right about the
desire to ensure that UK manufacturing companies take their fair share
of the project in open competition. We must ensure that there is as
robust a procurement process as possible, and that there are review
points along the way to ensure that value for money is secured. The
next steps are to ensure that ESYS, which will let the contracts, fully
follows through with the agreement that was reached at ECOFIN, and that
it conducts the tendering openly, transparently and competitively.
Given the capabilities of companies in the United Kingdom such as EADS
Astrium, SSTL, Vega, SISIS and LogicaCMG, they are well placed to win
work. However, rigorous cost control must be a part of the project, and
we expect ESYS to undertake such control on behalf of the European
Community, given the decisions that have been
taken.
The
Chairman:
If there are no further questions, we will move
on to debate the motion.
Motion made, and Question
proposed,
That the
Committee takes note of European Union documents No. 13112/07 and
Addendum 1, Commission Communication: Progressing Galileo: re-profiling
the European GNSS Programmes; 13113/07, amended draft Regulation on the
further implementation of the European satellite radionavigation
programmes (EGNOS and Galileo) and 13237/1/07, Commission Communication
concerning the revision of the multi-annual financial framework
(2007-2013), on re-profiling the Galileo programme and on the proposal
for the revision of the Financial Perspectives to finance the Galileo
programme and the European Institute of Technology; and endorses the
Government’s approach to discussions on these documents.
—[Ms
Winterton.]
5.39
pm
Mr.
Brazier:
The Galileo project could have been great for
Europe. Let me say at the outset that I am a strong supporter of the
development of British aerospace technology. Indeed, I worked for a
while as a consultant in the area before I came into Parliament, and I
remember managing a project at the Atomic Weapons Research
Establishment, as it was then, at Aldermaston, so I am strongly in
favour of the cutting edge of physics. It must be said, however, that
this project has gone sour. Important technological advances have been
made since the cold war when the United States set up the GPS system. I
know from my maritime brief that the difficulties with the current
system that the Minister mentioned exist, as regards safety at
sea—there are some gaps. I am also conscious of the fact that we
have an excellent space technology base and we have a good example on
the military side with the recent successful launch of the second
satellite as part of the Skynet 5 system, but this project has really
lost its way.
Where
it could have been a beacon for the Community of how a public-private
project should work, with all the benefits of private sector
disciplines and the commercial eye that the involvement of private
sector money brings, instead, we have an unwieldy state-run—in
fact it is not state-run, it is worse than state-run—EU-run
monolith. Original forecasts were that the satellite navigation could
lead to a global market of up to €15 billion by 2010. As
recently as 2004, Galileo was forecast to produce benefits of
€17.8 billion. That same year, the Commission confidently
predicted that Galileo
“will definitely become
operational in 2008”.
Just three years later, in a debate on 2
July 2007, we were told that the entry date had slipped back to 2012,
and today we hear that it is now 2013.
The proposals should not be
approved by this Committee. The proposal to divert €2.4 billion
from the common agricultural policy is unwelcome; our farmers are
suffering hardships, from foot and mouth to blue tongue. The fact that
the money was not used this year does not mean that it will not
be needed. As the distinguished Chairman of the Transport Committee has
pointed out, whatever may have been written into the record, this sets
a dangerous precedent for cost controls in the EU by taking money out
of a separate
budget.
It
is most unwelcome that the European Commission has
had to give up hope entirely of bringing private finance into the
venture. After all, in her address to the Transport Committee last
month, the Minister of State, Department for Transport said:
“We have made it very
clear to other member states that we supported PPP, not simply because
we support PPPs but because we think the involvement of the private
sector and their own money means that there is a better chance of
financial discipline, risk management and so
on.”
So on,
indeed.
Given the
enormous overspend on the project—let us remember that we are
only a quarter of the way through it—giving up on the private
sector discipline is a bad sign. Unlike defence projects, which are
similar in some respects, often dealing with cutting edge
technology and risks that are difficult to perceive, the fact that
there are no gateways where individual members can be consulted and
asked whether they really want to go on is another very bad sign. The
Government should have queried whether enough was enough, or whether at
least enough was enough to justify putting such a gateway in at the end
of the next phase.
As
the Minister said, had the private sector been investing its own money
it would have had a heightened awareness of risk management. As every
single interested party has turned round and said, “Yes,
we’d like a piece of the action as a supplier but no,
we’re not willing to commit any of our funds to it,” that
has now failed the market test. The Minister knows that there are
significant concerns over whether Galileo will represent value for
money, given the fully-fledged and functional rival in
GPS.
Dr.
Ladyman:
The hon. Gentleman has asked before about the
advantage of GPS over Galileo. Galileo will provide greater
availability, accuracy and reliability, and whereas GPS will offer a
standard signal and an encrypted military signal, Galileo offers a
standard free signal and an encrypted high quality commercial signal.
There are many advantages to Galileo compared
with GPS; does not the hon. Gentleman owe the Committee and the House
more than simple assertions that there are no differences between the
two
systems?
Mr.
Brazier:
I did not say that there were
no differences; I was just about to address them. Let us consider them
in turn. The proposed system is not to be compared directly with the
existing GPS system. We know that it will not now be available until
2013. The two comparators that we should use are with the next
generation of GPS. I take the point made by the hon. Member behind the
hon. Gentleman, whose constituency I am afraid do not remember, that
there might well be some slippage in 2014. However, given the
unbelievable slippage that has already happened in the Galileo project,
we can reasonably expect further slippage.
The first comparator is the
next generation of GPS. The other reasonable comparator is GPS plus the
much cheaper EGNOS overlay system which was part of the Galileo
project, but which would be bolted on to GPS, piggyback-style. I accept
that there is a drawback to that in that there would be a single
supplier, but it would still offer many of the same
advantages.
Ian
Stewart:
Eccles is where I am from, and Eccles is the
place that I represent with pride. Brad Parkinson, the father of GPS,
has said that he is strongly in favour of Galileo and has put on public
record all the reasons why he has concerns about GPS III not coming in
on time, and about the weaknesses of the existing GPS system. The
Committee should note that Brad Parkinson has offered that
support.
Mr.
Brazier:
I am sorry if the hon. Gentleman was offended
that I could not remember his constituency —he is its
distinguished representative. He is right that Brad Parkinson has
indeed come out publicly in favour of Galileo, but that does not mean
that this Committee should too. As an American, and as the man who more
than anyone was the father of the original GPS, Brad Parkinson is
obviously aware of the project’s frailties over in America. The
point is, however, that more and more frailties in the Galileo system
have manifested themselves since he made those
remarks.
To return to
the point made by the hon. Member for South
Thanet—my constituency neighbour—the comparison between
Galileo and existing GPS is a false one. The proper question for the
Committee is how Galileo compares with the next generation of GPS,
which will obviously have many advantages, and more specifically how it
compares with bolting our own system on to GPS, which would be much
less expensive and much less
risky.
Dr.
Ladyman:
Will the hon. Gentleman give
way?
Mr.
Brazier:
In a moment, but I want to finish the point. The
central point was one that the Minister made twice, so I am sure that
the hon. Gentleman will want to make it, too. It is that having two
separate systems would be an advantage if the Americans ever chose to
deny GPS to the world or if GPS went out of commission. The first
possibility is unlikely; even when it became clear that the Iraqi army
was using GPS in the Gulf war, the Americans still regarded it as
important to keep GPS running for a whole variety of reasons, and they
did not jam any part of it. As far as a
possible GPS loss of function is concerned, the next generation will
have even more satellites, so it is difficult to imagine how GPS would
lose function yet a separate European system would
not.
Dr.
Ladyman:
I was not going to make the point
about GPS being turned off, because I think that the
hon. Gentleman is right that it never would be. What I wanted to say
was that I think that he has misunderstood the nature and purpose of
EGNOS. It is true that EGNOS has three satellites, but its purpose is
to supplement GPS systems and Galileo by testing their accuracy and
reliability, and by providing fixed data points that people who use the
other signals can employ to ensure their accuracy. EGNOS is great, but
it is completely different, and it is no replacement for
Galileo.
Mr.
Brazier:
I shall make my point once more and then move on.
I am not suggesting that EGNOS on its own can do anything, I am
suggesting that in conjunction with GPS it would take us forward on the
question of accuracy. The hon. Gentleman has mentioned fixed data
points and the improvement of accuracy. If my suggestion were adopted,
it would cost a tiny fraction of the cost of developing a separate
system, such as
Galileo.
My last point
is that we are effectively faced with a pig in a poke. We have
seen that before with collaborative projects; I have mentioned
Concorde, but I could have mentioned any number of collaborative
military projects. We all know, and the Government have acknowledged,
most recently in the Minister’s comments to the Transport
Committee, the benefits of the discipline of having private sector
money involved. We know how much less efficient a Government-run
project is than one in which the private sector takes a leading role.
This is not merely a Government-run project, but a collaborative
Government-run one. The old dictum that we used in defence consulting
was that the number of problems involved in a complicated defence
project are increased by the square of the number of countries
involved. It is an exaggeration, but it makes the
point.
It concerns me
that, as the statutory instrument is presented and as the Government
have negotiated it, there is no way out for individual countries. The
basic discipline now introduced into all defence projects, that there
should be a gateway at the end of each phase, followed by the query,
“Do we go on from here?”, is not present in this project.
The proposal and the expenditure of the money takes us right through to
2013, and, as my hon. Friend the Member for East Devon has pointed out
so eloquently, the money may, and is likely to, run out, given the
previous ramping up. At the end of that, we will be faced with the
choice of writing it all off or going on with yet another tranche of
money. There are no break points, which is why I urge my hon. Friends
not to support the Government in the
matter.
5.52
pm
Norman
Baker:
It is unfortunate that we are having this sitting
today, when ECOFIN took place last week. There is a wider point to be
made about how we scrutinise European legislation in Parliament. Even
if
the arguments put forward by anyone today were hugely convincing that we
should not proceed with this, the Government committed to it already
last Friday and, therefore, would have to defend that position. That is
not a satisfactory way in which to
proceed.
Ministers
have talked about the strategic imperative, the strategic interests of
Galileo and the wider aspects of satellite technology, and I am not in
doubt about those. Galileo provides some advantages, which Opposition
Members have mentioned, and I do not need to repeat
them. There is also an advantage in having a European base system and
not being potentially reliant on others, whether they are Americans,
Russians, Chinese or anyone
else.
Therefore, I am
minded to be sympathetic to the direction in which the Government are
taking us strategically. My concerns arise over the rigour with which
the project is being scrutinised by the European Commission and
European institutions and, after that, by member states, and also over
the cost implications of the scheme. We do not have a good record in
Europe on prestige projects. Concorde has been mentioned and we might
have mentioned any number of defence projects, Airbus or anything else.
It seems to be a general rule of big international projects within
Europe that they are always way behind schedule and way over cost.
Those two elements always seem to occur—if they are not written
in at the beginning, they ought to be. I am waiting for a project
proposed within the EU or, indeed, a Ministry of Defence one, to come
in below cost and ahead of schedule. No doubt, some will at some point,
but if someone can point out such a project to me, I will be interested
to hear of it.
We see
costs rising inexorably on this project, as on many others. Therefore,
frankly, I do not believe it when we are told that this is the final
amount of money, that it has all been negotiated, that costs will not
rise again and that it is all safe and secure until 2013. I do not
doubt the Minister’s good intentions. I am sure that he
negotiated as best he could last Friday to try to secure that, and I am
sure that he had in mind value for money for the taxpayer, but I do not
believe that the Government can possibly guarantee that because there
have been indications before about costs that have not been kept to for
various reasons. I am not heartened by the fact that it has been
difficult to get out of Ministers the most simple answers about the
cost. I have asked that question on a couple of occasions. The hon.
Member for Crewe and Nantwich asked a similar question about the total
cost, and the Minister said she would go away and write to her. It
worries me that Ministers cannot answer such a simple question in a
Public Bill
Committee.
However, we
know that the cost has significantly gone up. Some of those costs are
set out in the Transport Committee’s papers. A Library note put
the cost at £63.3 million. The Minister told us
today—after being corrected and having to amend her
figures—that it was £191 million, which is about three
times the cost on the Library note. Therefore, we seem to be seeing a
significant increase in costs to the British taxpayer and the European
taxpayer, which is us as well through the European Union’s
budget.
The question that has been asked
by hon. Members today and has not been answered is
what happens if, despite Ministers’ best intentions, the costs
escalate? In that case, would the project be cancelled? We hear that
the number of satellites might be reduced. Is that the option? If the
number of satellites is reduced too far, the advantages of the system
will be less impressive that they would be with a full network of
satellites. We need answers to those questions. Is this an absolute
budget that cannot be exceeded under any circumstances, or are we going
to be seeing the equivalent of supplementary estimates coming forward
for more money between now and
2013?
The
Transport Committee has been critical of developments in its report
“Galileo: Recent Developments”. Page 30, paragraph 89
states:
“The
history of the Galileo programme provides a textbook example of how not
to run large-scale infrastructure
projects.”
That is a
pretty damning conclusion. Page 31
states:
“The
estimated and outturn costs of the Galileo programme have increased at
every stage of its history. We have no reason to believe that even the
very substantial costs now estimated for the total programme bear any
significant relationship to the likely
outturn.”
Those stark
conclusions were agreed by a cross-party Committee.
The hon. Member for Crewe and Nantwich can be extremely persuasive on
occasions when other hon. Members have a different view of matters.
Nevertheless, all members of the Committee agreed those conclusions and
they should be taken seriously. I have not heard the reassurances that
I had hoped to hear from Ministers about the costs.
What we have is a prestige
project that the Europeans—I am a European as much as anyone
else—want to see up and running, and the desire to have a
prestige project delivered is clouding some of the rigour that should
otherwise be applied to a project of that nature. My case is not that
relevant interests have not been demonstrated—I think that they
have—but that rigour is not being applied to delivering them in
a way that is consistent with good value for money to the
taxpayer.
I return to
the side issue of civil liberties, which the Minister for Science and
Innovation, who has now disappeared, described as not being a problem.
Of course, I accept that we opt into such matters rather than having
them compulsorily vested upon us, but that is not a justification for
saying that no civil liberty issues are associated with satellite
technology generally, which is part of what we are discussing today. A
network that enables each individual who possesses the relevant
receiver to know his or her position within a few metres is an issue
that needs to be
considered.
Dr.
Ladyman:
The hon. Gentleman has a long tradition of
conspiracy theories, but he really must be brought to a halt on this
matter. We are debating Galileo today, not satellites in general.
Broadly speaking, a Galileo satellite knows where it is and what the
time is, and it broadcasts that information to anyone who is listening.
If we have a device on our person or in our vehicle that can capture
that information and make use of it, that is a matter for
us. There are absolutely no civil liberty implications
with Galileo.
Norman
Baker:
I hope that that can be confirmed. It is important
to raise this issue
properly.
Mr.
Taylor:
Paradoxically, while there might be not civil
liberty problems, there are civil security issues that are
advantageous. If one is in a difficult situation and one’s exact
location is known, it is possible that help can get there more quickly,
so the positive is more interesting than the
negative.
Norman
Baker:
I am grateful for that intervention. It is true
that there are benefits in such situations if one’s position is
known, but there is also potential for someone to know where one is. I
am not making a big issue of this; I am simply saying that such issues
should be considered in
parallel.
Mrs.
Dunwoody:
The hon. Gentleman says that the EU satellite
knows where it is and what it is doing. Should not he praise the good
Lord for that, because it must be the only bit of the institution that
does?
Norman
Baker:
I shall take that as a rhetorical
intervention.
I have
made my point. The general mood of the Committee seems to be one of
concern about costs, which have been escalating beyond any reasonable
degree, and the fact that there can be no guarantee that they will not
accelerate further. I hope that the Minister will respond to my
points.
6.1
pm
Dr.
Ladyman:
We are having an interesting debate. It is always
fun to engage in such debates on those rare occasions when we get to
debate scientific and technical matters in this House, but I must take
issue with the hon. Member for Lewes. There are absolutely no civil
liberty implications around Galileo. If someone chooses to have a
device fitted to their person that allows their place in the world to
be calculated from the information being beamed from the Galileo
satellite, that is a matter for them. It absolutely is not a civil
liberties issue. I agree that if the Government ever insisted on
someone having such devices on their person, he would be right to raise
civil liberties issues, but Galileo itself and the way in which it is
utilised has no such
implications.
Mr.
Siôn Simon (Birmingham, Erdington) (Lab): Will my
hon. Friend give way?
Dr.
Ladyman:
In a moment. My hon. Friend the Member for Crewe
and Nantwich said that Galileo must be the only part of the EU that
knows where it is and what it is doing. If the EU were run by
scientists, perhaps more of the EU would know where it is and what it
was doing.
Mr.
Simon:
The question of what happens to information that is
gathered by the devices that people choose to have might raise civil
liberties implications, but, as my hon. Friend said, that has
absolutely nothing to do with the satellite transmitting its
whereabouts, which is what we are discussing
today.
Dr.
Ladyman:
My hon. Friend is 100 per cent. right. That is
where civil liberties issues arise, and that is what we should
concentrate on should we wish to debate civil liberties. That is not to
say, however, that Galileo, as a system, offers any such
difficulties.
As I
said in my intervention on the hon. Member for
Canterbury, Galileo will offer greater availability,
reliability and accuracy. It will give two signals—a standard,
freely-available one that people can use to build the sort of devices
that we all have in our motor cars for satellite navigation purposes,
and a much higher-quality signal that will be encrypted, for which
people will have to pay for access. That signal will offer greater
levels of accuracy and reliability than were hitherto available and
will bring the commercial benefits that Galileo will bring to Europe,
as opposed to other systems being used. Those potential benefits have
variously been estimated to include the creation of between 100,000 and
150,000 new jobs in Europe. I have no reason to doubt the
Pricewaterhouse figure of 140,000.
What the hon.
Member for Canterbury said was true. There will be another competitor
for Galileo coming along when the next generation of GPS is available
in two years. But if one is entering a marketplace or building a
commercial system, knowing that their competitor is two years behind
gives a huge advantage in generating business and capturing market
share.
In the UK, we
know that knowledge-based industry, information technology and those
sectors where our scientific skills, knowledge and ability to develop
products out of science and technology are the key to our economic
future. For us to abandon this entire marketplace now because we think
that the Americans may introduce a competitor two or three years down
the line would be absolute
folly.
Where I agree
with the hon. Member for Lewes is that if there is a strategic
value—I believe that one exists—it ought to be possible
to document it more clearly than the Commission has so far, and that is
a failure of the Commission. It should be possible to manage the
project more rigorously than it has been managed so far. All I can say
is that if the Commission had accepted the advice that the UK
Government consistently offered over the past few years about how the
project ought to be organised, we would not be in the position that we
are in at present.
But
we are where we are. Whether we proceed with the project or not is a
matter that will be decided by qualified majority voting. Before the
Conservatives leap up and use that as a stick to beat the Government
with, may I remind them that the subject area was conceded to QMV by
the Maastricht treaty when they were in Government? It was not conceded
under this Government. Indeed, we would not be able to have projects
such as Galileo if we did not have QMV to make decisions, because they
are so complex and involve the interests of all the member
states.
Mr.
Brazier:
Absolutely, but Maastricht is not the point. The
point is that today the Committee is advising the Government on how
they should vote on the package that is before us now. It lacks all the
merits of the package that the Minister and I would have liked. The
question is, which way should the Government vote in the
QMV?
Dr.
Ladyman:
I will answer the question
directly. I am glad that the hon. Gentleman at least concedes—I
believe he is conceding—the strategic value of the project, and
that he is saying that if the project were organised slightly
differently he would be supporting it. I have to say to him that in the
two years that I had the job of Minister of State, Department for
Transport, which my right hon. Friend the Member for Doncaster, Central
has now, I did not receive a single representation from a member of the
Conservative party opposed to Galileo. I did not receive a single
contact from any Opposition Member saying that we should not go ahead
with it. I did not receive one piece of advice at any time during those
two years that suggested that the UK Government were taking the wrong
negotiating position or were trying to direct the
project.
Mr.
Brazier:
Will the hon. Gentleman give
way?
Dr.
Ladyman:
Let me answer the hon. Gentleman’s
question, which was how we should vote on the package now. If we have
assurances about continuing control on the total budget—the
Economic Secretary gave us those assurances—that would be one
benefit of the package on the table. If we have transparency and
competitive tendering in the future—the Minister for Science and
Innovation gave us assurances that we would have that—we as a
nation will do very well out of the
project.
The example
that I would give the hon. Member for Canterbury is Giove-A, which was
built by the university of Surrey at a fraction of the price of
Giove-B. It was delivered on time and is successfully operating, while
Giove-B has not even been launched yet. If British businesses are
allowed to bid for work in a free and transparent environment such as
Ministers have described, we will do extremely well, and we will get
back in business a heck of a lot more than the 17 per cent. of the
budget that we are likely to have to pay out. That is the test that we
need to apply: will there be free, transparent and competitive
tendering? We have had that assurance, and that is why we should be
supporting the motion
today.
Mr.
Brazier:
I am aware that it was at about the time when the
hon. Gentleman regrettably left his job, but the line that I have taken
today is absolutely consistent with what my hon. Friend the Member for
North Shropshire (Mr. Paterson) said on 2
July.
The hon. Member
for South Thanet referred to a well run project, but the essential
point is that the private sector is out of it. An EU agency is choosing
how to place the tenders, and there will be no break points in the
process.
Dr.
Ladyman:
I understand that the placing of the contracts
and the competition system will be in the hands of the British National
Space Centre, which seems to me a positive step. My right hon. and hon.
Friends the Ministers have reassured me today that the total budget is
controlled and that there will be free and competitive tendering. Those
were the two principles that I called for, when I had the job now being
done by my right hon. Friend the Member for Doncaster, Central, in
considering whether the project should
proceed. Those assurances have been given to us, so I am happy to vote
for the motion. I shall hold my right hon. and hon. Friends to account,
so that they ensure that there is no backsliding from those promises
and that we get open tendering and a controlled budget. On the back of
that, we can get a substantial slice of the 140,000 jobs and build a
substantial sector around the use of Galileo
technologies.
My final
suggestion to my right hon. Friend is a further benefit that we might
get. A significant number of the satellites are
likely to be launched from Kazakhstan. Our continued use of Baikonur in
Kazakhstan might depend on its allowing us to qualify for the World
cup.
6.12
pm
Robert
Key (Salisbury) (Con): It is a pleasure to serve under
your chairmanship, Mr. Pope. You would be hard put to find a
Member of this House who was more supportive of science, technology and
the future than I am. However, there are consequences of progress in
science and technology, and not all of them are beneficial. A lot of
the supporting documentation before the Committee
is—appropriately, one might say—starry-eyed. I wish to
bring the Committee down to earth, because we are after all talking
about £10 billion of taxpayers’
money.
In the document
published in Brussels on 19 September, the Commission’s staff
working document called “Progressing Galileo: Re-profiling the
European GNSS Programmes”, with the reference COM(2007) 534, we
are told about the benefits that there will be. Paragraph 4.1 refers to
the increase in public benefits that can be generated from GNSS, such
as
“employment,
environment (reduced road congestion, shorter and more direct routes
reducing fuel consumption), social benefits (enhanced safety),
increased efficiency of public services (in search-and-rescue, fire and
ambulance services, security) and economic sectors...and the
management of scarce public resources (in
aviation).”
I do not
doubt that that is true. In her letter to the hon. Member for Crewe and
Nantwich on 23 November, the Minister also mentioned the benefits,
stating:
“These
downstream supplier benefits form one component of the total benefits
that might be delivered by Global Navigation Satellite Systems. Other
components include consumer benefits, broader social benefits and
upstream supplier
benefits.”
But let us
look a little more carefully at exactly what is meant. In the documents
accompanying that letter there is a paper called “UK GNSS
Downstream Benefits Assessment—Final Report”. In figure
2-2, which is about the growth of GNSS receivers in UK vehicles, we see
that at the moment there are about 7 million receivers in
vehicles in this country and that that will have grown to 47 million
receivers in 20 years. We are also told that sales of UK telematics for
road transport applications in our vehicles will be running at about 5
million a year by about 2015, which is not very far away.
That is not something about
which I am very happy. My constituency has enormous practical problems
as a consequence of this new technology. Wiltshire county council is
tearing its hair out, along with many highway authorities the length
and breadth of the country. The Milford Preservation Society is
concerned about the damage being done to ancient bridges, which are
completely inappropriate for certain traffic. In the
A338 Bourne valley, and particularly the village of Idmiston,
constituents regularly see 44-tonners that have become stuck around
corners that they cannot navigate.
For a number
of years, I have been pursuing the consequences of such problems with
Ministers. The Under-Secretary of State for Transport, the hon. Member
for Poplar and Canning Town (Jim Fitzpatrick), wrote to me about the
issue on 28 September. He had started—for all I know, it may not
have been him, but the hon. Member for South Thanet—an informal
public consultation on the use of satellite navigation systems on our
roads. The consultation finished in January, and I wrote to him to ask
what had happened to it and where the results
were.
Mr.
Swire:
They have got lost.
Robert
Key:
Have they got lost, as my hon. Friend says? The
Minister told me that the intention was to publish a summary of the
consultation results on the departmental website. He said:
“Analysis of the
consultation responses and consideration of other relevant information
are being used to inform development of possible next steps on this
complex subject. As yet no definitive way ahead has been
agreed.”
That
is the problem. The Department is urging the spending of £10
billion on a technology that cannot cope with the problems that we have
on our roads today.
Dr.
Ladyman:
Indeed, it was me who started that consultation.
However, the problem to which the hon. Gentleman refers is with the
mapping software, not the positional technology that works out where
the vehicle is. It is purely a matter of the software that works out
what route the vehicle should be on and where it should be
going.
Robert
Key:
Yes, I am fully aware of that, but, unfortunately,
the hon. Gentleman fails to understand the consequences for his
constituents and the taxpayers of this country. Yes, it is the mapping
software and, yes, there are different kinds of GPS systems in cars and
different satellite navigation providers. I know all that and I have
such a system in my own car—it regularly takes me across parts
of the country where there is no road marked all, which does not help
me very much. The problem, however, is that lorries from Romania are
getting stuck in the lanes of Wiltshire because the sat nav shows that
it is the shortest route and that the driver can save fuel. It seems
that there will be a lot of social benefits and that the consequences
will be entirely beneficial, but the result is in fact incredible
economic downsides, not to mention environmental downsides and a
reduction in the quality of life of people living in the villages of
this country. So it is no good the hon. Gentleman saying what he
did.
I understand
what the Under-Secretary meant when he said that even though people
might have electronic systems, it is all down to signage. We know that
it is down to signage, but, unfortunately, the signage is not there
when people need it, because the highway authorities do not recognise
that this problem will arise. If one of us were driving a 44-tonner, we
would perhaps see that a road was entirely inappropriate, but someone
from another country may not feel the same
way, particularly if there is no sign suggesting that they should not
drive down a particular road. I do not want to labour the point, but it
is a serious one and should be
considered.
Ian
Stewart:
I always listen carefully to
the hon. Gentleman’s contributions, because he is an experienced
politician, but he did not listen carefully enough to my hon. Friend
the Member for South Thanet. This is about the strength of a signal
from a satellite, not the information or the software on the system.
The problem to which the hon. Gentleman refers with some
passion—no doubt the same passion is felt in his constituency
and in other areas—can be resolved by other methods. It is
absolutely nothing to do with the subject that we are
discussing.
Robert
Key:
I am sure that you would have ruled me out of order,
Mr. Pope, if the hon. Member for Eccles was correct.
However, I bet this happens in Eccles, just as it happens in Salisbury.
He has this problem as well. The problem that we face will not go away.
It is an inevitable consequence of this technology. My plea is that
Ministers get a grip. So far, the Ministers in the Department for
Transport are not getting a grip, they do not know what to do, they are
wringing their hands and they admit
this:
“As yet,
no definitive way ahead has been
agreed.”
I rest my
case.
I hope that this
issue will be seen in the context of a technological downside that we
cannot ignore. It is all very well to talk in terms of the EU and the
benefits that the new technology will bring, but if the practical
result of it is to bring about the consequences that I have described
we need to think very carefully. Above all, the Department for
Transport, in which I was happy to serve as Roads and Traffic Minister,
must grasp this subject, tackle it and come up with some answers. I
will suggest some answers if the Department will
not.
6.21
pm
Mrs.
Dunwoody:
I know that we have very little time left and I
want to make just one or two simple
points.
Any major
transport scheme that is supported by a number of nations needs the
support of those that will ultimately pay for it. It needs to be clear,
its lines of governance need to be transparent, it needs a real purpose
and it needs to offer value for money. Anything other than that becomes
a grand project of doubtful lineage and even more doubtful
outcome.
The Transport
Committee, which I chair, has looked at this matter closely and it was
quite clear from the evidence given by Ministers at the beginning of
our inquiry that the Government were asking for a number
of undertakings. First, there should be clear risk
assessments and they should be supported by independent verification.
That has not happened. Secondly, they should have an idea of the total
budget. Whether the decision was taken by the Transport Ministers,
Economic Ministers or kicked up to the Heads of State, as my Committee
asked, it was dependent on the clear assessment of the size of the
budget and on the commitment of the various Committees to that. That
has not happened.
Whether Parliament can influence
the final outcome is not clear. What is clear is that in any
international organisation the inability to defend the very large and,
in many cases, unwieldy projects that are worked on at international
level is one reason why those institutions do not have general support.
This is a classic instance of exactly why the
European institutions face considerable difficulty in gaining the
support of the citizens of
Europe.
I see that
neither of the other Ministers who came here to join our discussion is
here at the moment. Therefore, I will direct my questions to them in
writing. I have to say that this is a sad day. This is a messy,
unproductive, indefensible decision and I am sorry that Parliament
cannot influence
it.
6.24
pm
Mr.
Taylor:
First, my interest in this issue is kept going by
the fact that I am co-chairman, with the hon. Member for Nuneaton
(Mr. Olner), of the all-party parliamentary space committee.
It has the support of UKspace, which is the industry body. I disclose
that relationship, which means not that we are not independent, but
that we enjoy the opportunity to talk to those who are working hard in
the space industry and contributing substantially to the UK
economy.
Secondly,
I note that a very long time ago, in the olden days
when there was a Conservative Government, I was the Science and
Technology Minister who initiated the work on EGNOS. I queried the
decision at the time, but it nevertheless landed on the Department for
Transport to be the lead budget holder. I want to give credit to the
hon. Member for South Thanet for his ministerial stewardship in that
Department. I felt that he gave an excellent lead and, as has been
evident this afternoon, had a great understanding of the issues
involved.
This is a
difficult issue. My hon. Friend the Member for Canterbury lucidly
pointed to some doubts that many people have about how the budget has
changed, grown and been managed. I made a speech—I shall
certainly not bore the Committee with it today—about a different
financing structure that should have been brought into Galileo, in
which I suggested that the Department for Transport could have been the
first customer for the data output from a satellite system. That would
have allowed the City to finance the upstream launch of the
satellite—a scheme that is now understood in the context of
private companies such as Inmarsat and Avanti Communications.
Sadly, that is pie in the sky,
because what has happened has happened. However, there is no doubt that
the process has been mismanaged, initially with the concessions that
were supposedly going to provide the answer and then with the changing
of the partners—the juste retour by some other name—which
has constantly cropped up.
I will not repeat the
perceptive questions asked by my hon. Friend the
Member for Canterbury. However, I want to emphasise briefly the fact
that the problems that we are experiencing on the budget, which are
important, are small compared with the downstream benefits to be gained
once the satellites are in orbit and working. We should not
underestimate the importance
of the services and certainly not the problems that would arise if we
did not have those services in future, or even today, when we have the
accuracy provided by the existing American system, GPS. An outage of
those satellites or any problem—for example, an incident created
havoc on the west coast of America when there was difficulty
with the satellite signal—would create chaos.
For example, it is estimated
that in 2015 the cost to the European economy of a GPS failure would be
about €500 million a day. We should think of how satellite
positioning is becoming a part of our everyday lives. The pilots flying
across the Atlantic are trained to use GPS. In the old days, they flew
blind between radar signals based on land, but now they do not have an
alternative because they are not trained to have one. That is an
obvious and simple point, but we should look at
others.
Mr.
Brazier:
My hon. Friend is putting forward a cogent and
interesting case, as always. I shall place it on the record that every
qualified airline pilot is required to be able to operate without GPS,
although, of course, they normally operate with
it.
Mr.
Taylor:
As someone who uses aeroplanes to travel across
the Atlantic, I am gratified by the confidence of my hon.
Friend.
I shall come
to another example that my hon. Friend might find more to his interest
and approval. I went to the university of Nottingham recently,
where a big academic investment, backed by the
regional development agency, has been made in providing knowledge of
the potential of global positioning. I learned that the ionosphere,
which is critical to communications, can be better understood by using
GPS and, ultimately, the greater accuracy of
Galileo.
Much of our
weather forecasting is made more accurate by GPS signal. The way that
we look at land movement—not only vertical, but from a sideways
perspective—is improved by understanding the benefits of a GPS
signal and, potentially, that of
Galileo.
I also
recently visited the National Physical Laboratory in Teddington, where
a remarkable amount of work is being done on the accuracy of atomic
clocks and the ability to ensure split second timing. Those things are
happening in this country and will have an enormous benefit to the
economy and the ability of companies, organisations and others better
to exploit the signal that comes out of a
satellite.
There is
some benefit already with GPS, but even the Americans understand that
they must get GPS III going. They think that the technology that goes
into Galileo will be up to the standard of, if not better than, GPS
III. There is some doubt about the budgetary process in America on the
GPS III process. Nevertheless, the Americans are working closely with
European companies in an attempt to get both systems up and compatible.
There is no doubt that the compatibility will work.
I have one query for the
Minister on which she might like to reflect. I have a high regard for
Astrium UK, the company that is processing the Giove-B
satellite—it has not yet been launched. The company that managed
to get the satellite up there and preserved the spectrum
and positioning allocation, which otherwise might have been
taken by the Chinese, was Surrey Satellite Technology Ltd, an expert in
micro-satellites. I would be saddened if SSTL was not allowed to be
part of any tender, with the tendering process being agreed at European
level last Friday.
I
hope that there will be a role for a constellation involving not only
the larger satellite, which is Astrium’s, but the
micro-satellites. That will certainly help in respect of redundancy
because of the ability to get a cheaper launch capacity up
there.
A number of
things are vital. One that has not been mentioned, but which has been
referred to in the press, is the feeling that we can allow the Chinese
and the Russians to continue to work with the Americans, and that
Europe will not need to play, but my case is that not just transport
but many other aspects of our economy depend and will become more
dependent on those
signals.
It is almost
absurd to think that we should rely on the Chinese. It is dangerous for
us to believe that the Russians will always be co-operative, even if
they improve the technology of what is an old system. We must not be
anti-American, but this is an area in which we must complement what the
Americans are doing and have some control over the technologies that
flow upstream and downstream in building, launching and using the power
of these satellites.
I
sympathise with my Front-Bench colleagues. My hon. Friend the Member
for Canterbury will be relieved to know that, as I am not a member of
the Committee, I am not required to consider how I should vote.
However, having got the budgetary process to this stage, I am in favour
of getting on with it. It would be better if things had been done
differently—as with the Paradigm Consortium and Skynet, for
example—but they are not going to be done in that way.
I hope that
the Minister pushes the proposal through, using the power of her
colleagues. Let us ensure that, at last, we get a satellite navigation
system with accuracy down to centimetre distance, which we can achieve
with Galileo, and enable British companies, many of which are hugely
active in this area, to benefit. Customers and consumers will benefit
too.
6.33
pm
Ian
Stewart:
I am mindful of the comments made by my hon.
Friend the Member for Crewe and Nantwich and, like my hon. Friend the
Member for South Thanet, I will therefore keep an eye on what the
Ministers do in progressing these issues. That is the proper thing for
us to do.
I
rise—this time, at the right stage of our proceedings—to
speak in favour of the proposal. My view is that the Galileo system is
not a rival to GPS. Galileo will work with GPS to provide greater
integrity, accuracy and reliability of global satellite navigation
services. As I said, Brad Parkinson, the father of GPS, is strongly in
favour of Galileo. Galileo and GPS combined will stimulate massive
economic growth because of the greater capability and performance that
both systems together will bring.
On November 18, the
Financial Times said:
“Galileo is a
technological place-marker. Have it, and you will be a player in
understanding and exploiting the potential of one of the biggest
technologies to have arisen in the past 50
years.”
Earlier,
I raised the question of trade union interest in creating and
manufacturing highly technological and skilled jobs. I cannot
understand why we do not see the urgency of creating manufacturing
jobs, notwithstanding the concerns of my hon. Friend the Member for
Crewe and
Nantwich.
Galileo will
keep the UK at the cutting edge of the global space industry—one
of the most high-tech, value-adding sectors. The UK will increasingly
depend on GPS, which is not infallible, as we heard from other hon.
Members. Well documented failures have occurred, and Galileo will
improve the robustness of satellite navigation for the global economy.
Glen Gibbon, editor of the US magazine Inside GNSS,
wrote:
“If you
have the choice, would you really want to rely on an air traffic system
or a rail or maritime traffic system that is controlled by someone
else?”.
Like previous
speakers, I do not wish to appear anti-US—that is not my
purpose—but each country should have regard to what Glen Gibbon
said when deliberating on the matter.
Earlier, I quoted Brad
Parkinson who is strongly in favour of Galileo. He said:
“The number-one issue we
should worry about is constellation
sustainment”,
and added
that
“right now the plan
is that the first GPS III won’t be available for operation until
April 2014. Frankly, that leaves me nervous. The history, with due
respect to the Joint Program Office (JPO) and Air Force, has not been
stellar in getting these new satellites
launched.”
Brad
Parkinson has expressed such concerns in the US, which adds to the
weight of the argument for us to pursue the Galileo system in this
country, for all the reasons given by Ministers and other
supporters.
Mr.
Brazier:
The hon. Gentleman clearly
feels strongly about his case, but surely the point is that when Brad
Parkinson made those remarks, Galileo was much further forward in the
frame. Galileo has now slipped back to 2013, which is only one year
ahead of the next generation of GPS. Given that it has slipped a lot
further than GPS did originally, it is reasonable to propose that it
might not be in the frame until after the next generation of GPS. In
those circumstances, it would be interesting to hear from Brad
Parkinson
again.
Ian
Stewart:
I shall not put myself in the place of
Brad Parkinson, but I do not think that our Government should wait to
see what happens in the US or anywhere else. It is in the interests of
the UK to have this system. It is important to think carefully about
Glen Gibbon’s comments on the interests of individual countries.
I shall not second-guess what will happen, but I speak strongly in
favour of what I believe the Government should do now and
why.
Finally,
I reiterate that I do not understand why there seems
to be no sense of urgency over the creation of highly-skilled jobs for
this economy. That is our
future.
6.39
pm
Ms
Winterton:
This has been a very good debate. I hope that
hon. Members found the attendance of the other Ministers helpful. The
Government were very aware that this has been a matter of concern to
Parliament and thus thought that it was important to have in attendance
the maximum number of Ministers covering the various aspects of the
matter before us, such as benefits to industry and financial
issues.
This
is a difficult matter. The project has been dogged by many problems
that have been aired well today, not least by my hon. Friend the Member
for Crewe and Nantwich, who put many of those views forward in her
Committee’s report. The report also stated that if we could get
things right, a wide array of benefits could flow from Galileo.
Today’s debate has been interesting because we have been able to
have a reasoned discussion about the benefits, as well as being honest
about some of the problems that have occurred. I hope that what came
out of the question and answer session and the debate reflected the
various sides of the argument, and I hope that we have given some
reassurance on the points raised.
Mrs.
Dunwoody:
I am grateful to my right hon. Friend for giving
way; she is always very gracious. The minutes from the Transport
Council show clearly that there was never any discussion about the
total budget for the project, its use, or its provenance. It seems to
concern itself entirely with the division among member states, 10 of
which wanted the money taken from agriculture and 10 of which were
prepared to abandon various aspects of transport. Can my right hon.
Friend give me an assurance that at some point someone has actually
debated the total
cost?
Ms
Winterton:
Absolutely. I was coming to the issue of the
total cost. I also want to point to the agreement that came out of the
meeting on 23 November, which stated clearly that the global agreement
at the conciliation meeting will be implemented only if there is
agreement on the legal basis of Galileo. That flowed from the
discussion about the changes in the budget, and it effectively means
that if Transport Ministers vote not to continue with Galileo, it will
not happen.
I would
like to consider some of the break points that were discussed earlier
and especially the point acknowledged by the hon. Member for
Canterbury, which was later picked up by other hon. Members including,
interestingly, the hon. Member for Esher and Walton, who clearly has
some previous form on this matter. For example, it was asked whether
there was an issue regarding safety at sea? I mentioned some other
advantages, and I was glad that the hon. Member for Canterbury said
that he supported the development of good space technology. I agree
with him. We were all disappointed that the PPP failed, but
that does not mean that we have given up on private sector
discipline.
Mr.
Brazier:
I am grateful to the Minister for graciously
giving way. I am happy to acknowledge and put firmly on record that
there are several areas, including safety at sea, in which further
development is needed. However, the key point of which the Minister
must persuade the Committee, regarding committing this large and
uncontrollable sum, is whether or not those benefits could be achieved
more cheaply either by using GPS III, which is now on a similar time
scale, or by supplementing this in some way with EGNOS, which, as she
acknowledged, is a small part of the total
project.
Ms
Winterton:
During the question and answer session, I tried
to explain that EGNOS is an augmentation, not a complete system.
Therefore, all the things that we have at the moment, particularly the
reliance on a single data source, which all hon. Members have
mentioned, will still apply. It does not solve the problem to which the
hon. Gentleman drew attention. It can warn of failures that might occur
in the system—that is its role—but it is not a
replacement. It needs to work hand in hand with Galileo. In a sense, it
is the first stage of getting a global navigation satellite
system—a precursor of Galileo—and we need to consider it
on that basis. I take the point made by hon. Members that it provides
some added advantages, but it is in no way comparable with what would
eventually come from
Galileo.
Mr.
Swire:
The right hon. Lady told the Committee that
they—whoever “they” are—had not given up on
attracting private funding towards this project. Will she
spend a little bit more time saying what that
actually means? Are the Government and other European partners actively
looking for private sector involvement? Why is the private sector so
shy of this
project?
Ms
Winterton:
It goes back to why the PPP did not work, with
people saying, “The private sector obviously
isn’t interested because the PPP failed.” The PPP failed
for various reasons, including unresolved disputes about the share of
the industrial work and clear signs from quite early on about proper
transparency and governance, as my hon. Friend the Member for South
Thanet mentioned. However, as I have said, despite the failure of the
PPP, we are pushing for—and expect to get—private finance
in as early as possible in the operations phase. There is still a
presumption that operation and replenishment will done be through a
PPP. We have yet to take decisions on that, but that is the direction
in which we are going.
I want briefly to address the
break points, which a number of hon. Members raised. Those break points
would be when the Council considered the contract between the
Commission and the European Space Agency, and twice a year at each
Transport Council, when the Council reviews progress on the project. We
are ensuring that independent project consultants review the project
throughout the deployment phase so that when we return to the Councils,
we can have an independent look into how it is
progressing.
The hon.
Member for Canterbury mentioned GPS III several times. Again, that
relates to the point he made about EGNOS. GPS III has the same number
of satellites as the current GPS, so it will not improve signal
availability and resilience in the same way that Galileo will. Having
more satellites will provide a greater reliability and integrity of
signal.
I should like to turn briefly to
the comments made by the hon. Member for Lewes. The total cost to
2030—I previously broke the costs down
individually —is 708 billion. I think that my hon.
Friend the Member for South Thanet answered a lot of the points about
civil liberties, as did my hon. Friend the Minister for Science and
Innovation. This is a two-way process: a person must have a receiving
machine to determine where he or she is, and so that others may know
his or her
location.
This issue
goes back to something that was said by the hon. Member for Esher and
Walton about the need to look at some of the wider aspects of the
project. For example, one of the documents that I was reading raised
the possibility of using the system to track down stolen cars. We need
to examine all the issues in a wider context, if we are to consider
some of the benefits of global
positioning.
Mr.
Taylor:
I would just like to point out that with the
better signals that Galileo can provide, it will be possible, for
example, to conduct mountain rescues even when the sky cannot be seen.
There are all sorts of benefits for
security.
Ms
Winterton:
One other issue that perhaps has not been
raised is the possibility of real time information being provided on
matters such as congestion problems. The benefits to British industry
of such information would be considerable. I think that congestion
costs something like £6 billion a year. We are constantly being
asked to help to solve that problem, and there are possibilities down
the line for providing that kind of information,
too.
Mr.
Brazier:
May I give the right hon. Lady an opportunity to
straighten the record? She mentioned a moment ago the figure of 708
billion, if I heard her correctly—my hon. Friends also think
that she cited that figure. Was that really the figure that she meant
to
give?
Norman
Baker:
Euros or
pounds?
Mr.
Brazier:
Exactly. What is the
currency?
Ms
Winterton:
The figure is in pounds and is the total cost
to 2030.
Mr.
David Kidney (Stafford) (Lab): You said 708; it is
7.8.
Ms
Winterton:
It is 7.8—I am so
sorry.
Mr.
Brazier:
The Minister mentioned that there had been some
reduction in the bidding process, but my hon. Friend the Member for
Salisbury has pointed out to me that the table in the Transport
Committee report gives a figure of £9.68 billion. Can she could
explain to the Committee why there is such a very large difference
between the two figures? Perhaps part of it is down to exchange rate
movements.
Ms
Winterton:
As I understand it, the Transport
Committee’s figure includes EGNOS costs, which, for these
purposes, is a separate project. I must get my decimal points right
here, obviously. That figure also takes in the £5.7 billion
20-year cost for operations, based on a PPP, with the private sector
recovering the capital costs of deploying the system. Of course, I
would be more than happy to write to the Transport Committee’s
Chairman to explain why we consider that it has made an exchange rate
error. I am more than happy to follow that matter up, because I realise
that there may be a little to-ing and fro-ing about exchange rates.
However, that is the advice that I have been given.
Dr.
Ladyman:
It has just occurred to me that there might be
one more overestimate in the total cost. We make a contribution of 17
per cent. of the EU budget, but that is before any rebate or anything
else that we get back. So, the proportion that we would pay might be
less than is being suggested by these
figures.
Ms
Winterton:
My hon. Friend makes a very valid point. It
brings me on
to—
Norman
Baker:
Will the Minister give
way?
Ms
Winterton:
I will make some progress, if I may. I want to
pay tribute to my hon. Friend the Member for South Thanet, because the
work that he has done has enabled us to make good progress with
the Commission and has ensured that the Commission has concentrated on
the points that he raised throughout the time that he had
responsibility for this project and, especially, on the action that he
took after the collapse of the PPP. That has given us a much stronger
hand in our negotiations. It was telling that my hon. Friend said that
it was important for us to continue to ensure that governance is
transparent and to lever in some of the private sector
finance.
I want
briefly to touch on the US and the signing of the agreement. One of the
agreements on GPS-Galileo collaboration was signed in June 2004, but
there have been ongoing statements on which agreement has been
reached.
The hon.
Member for Salisbury gave a gloomy and backward interpretation of some
of the benefits of new technology. If I were working
at the cutting edge of British industry and looking at new technology,
particularly in the space industry, I would be rather worried, although
the situation was rescued by the hon. Member for Esher and Walton. When
the hon. Member for Salisbury was Minister for Transport, I hope that
he was more forward looking on technological development. Many of his
points were about problems with the current system and why we must
improve
it.
I
thank my hon. Friend the Member for Crewe and Nantwich for her
continued interest in the matter. I assure her that the final decision
is expected to be made at the European Council on 13 and 14 December,
although it is not yet clear whether there will be substantive
discussions.
Finally,
I want to address one of the issues raised by the
hon. Member for Esher and Walton. The procurement strategy is still
under debate, and we expect to discuss that at the Transport Council.
ECOFIN agreed that the strategy will be open to competition with
opportunities—that was stated specifically in the
conclusions—for small and medium-sized enterprises such as SSTL.
I assure
the Committee that we will work to ensure that that commitment is
followed through in the Transport
Council.
The debate
has been wide ranging and thorough. We have explored many of the points
raised by the European Scrutiny and Transport Committees. I am grateful
to all hon. Members for their contributions and to my fellow Ministers
who attended the question and answer session. I hope that my assurances
will allow the Committee to support the
motion.
Question
put:—
The
Committee divided: Ayes 7, Noes
4.
Division
No.
1
]
Question
accordingly agreed to.
Resolved,
That
the Committee takes note of European Union documents No. 13112/07 and
Addendum 1, Commission Communication: Progressing Galileo: re-profiling
the European GNSS Programmes; 13113/07, amended draft Regulation on the
further implementation of the European satellite radionavigation
programmes (EGNOS and Galileo) and 13237/1/07, Commission Communication
concerning the revision of the multi-annual financial framework
(2007-2013), on re-profiling the Galileo programme and on the proposal
for the revision of the Financial Perspectives to finance the Galileo
programme and the European Institute of Technology; and endorses the
Government’s approach to discussions on these
documents.
Committee
rose at Seven
o’clock
.
