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House of Commons
Session 2007 - 08
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General Committee Debates
European Standing Committee Debates

Global Navigation Satellite System and the European Institute of Technology

The Committee consisted of the following Members:

Chairman: Mr. Greg Pope
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.”
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.
“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 ]
Cunningham, Tony
Kidney, Mr. David
Ladyman, Dr. Stephen
Morden, Jessica
Simon, Mr. Siôn
Stewart, Ian
Winterton, rh Ms Rosie
Brazier, Mr. Julian
Stuart, Mr. Graham
Swire, Mr. Hugo
Wright, Jeremy
Question accordingly agreed to.
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 .

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Prepared 27 November 2007