Satellite Navigation

The Committee consisted of the following Members:

Chair: Mr Lee Scott 

† Bradley, Karen (Staffordshire Moorlands) (Con) 

† Duddridge, James (Lord Commissioner of Her Majesty's Treasury)  

† Fitzpatrick, Jim (Poplar and Limehouse) (Lab) 

† Hopkins, Kelvin (Luton North) (Lab) 

Jamieson, Cathy (Kilmarnock and Loudoun) (Lab/Co-op) 

† Kelly, Chris (Dudley South) (Con) 

† Kwarteng, Kwasi (Spelthorne) (Con) 

† Leech, Mr John (Manchester, Withington) (LD) 

Shannon, Jim (Strangford) (DUP) 

† Shelbrooke, Alec (Elmet and Rothwell) (Con) 

† Shuker, Gavin (Luton South) (Lab/Co-op) 

† Smith, Angela (Penistone and Stocksbridge) (Lab) 

† Villiers, Mrs Theresa (Minister of State, Department for Transport)  

Alison Groves, Marek Kubala, Committee Clerks

† attended the Committee

European Committee A 

Monday 21 March 2011  

[Mr Lee Scott in the Chair] 

Satellite Navigation 

[ Relevant Document: European Scrutiny Committee, 19th r eport of Session 2010-11, HC 428-xvii, c hapter 2 . ]  

4.30 pm 

The Chair:  Does a member of the European Scrutiny Committee wish to make a statement? 

Chris Kelly (Dudley South) (Con):  It might help the Committee if I take a few minutes to explain the background to the documents and the reason why the European Scrutiny Committee recommended them for debate. 

The European Union has a two-phased policy for developing a global navigation satellite system. The first phase, GNSS 1, is the European geostationary navigation overlay service, or EGNOS, programme. The second phase, GNSS 2, is the programme named Galileo, which is to establish a new satellite navigation constellation with appropriate ground infrastructure. Galileo is based on the presumption that Europe ought not to rely indefinitely on the US global positioning system and the Russian GLONASS systems, augmented by EGNOS. The programme is being carried out in conjunction with the European Space Agency, and a number of agreements are in place or are being negotiated with third countries about co-operation on the project. 

Galileo is intended to allow provision of five services—the open service, the commercial service, the safety of life service, the search and rescue service and the public regulated service. The public regulated service is to be a high-performance encrypted service for authorised civil Government applications, such as national security, law enforcement and customs and excise. Potential users will need a service that is usable, available, reliable and secure. The main benefits of the service will be its greater resistance to jamming and interference from the other four services; the fact that it will remain operational if other services are turned off, locally denied or jammed in times of crisis; and the ability to deny signals to specific receivers and user groups. 

The draft decision, document (a), sets out the proposed high-level rules governing access to the public regulated service. Member states will be able to take their own decisions regarding the use, or not, of the public regulated service and the nature of its use. The Hungarian presidency intends to seek a general approach—an outline agreement on the document—at the transport council of 31 March 2011. In the report, document (b), the European Commission discusses its mid-term review of the EGNOS and Galileo programmes, and sets out their progress since 2007 and its view of how they should continue in the future. 

Over the past 10 years there have been a number of debates about the projects, and the European Scrutiny Committee thought that the two documents would provide the scope for a further useful discussion. On the

draft decision, given the timing constraints, we thought it apt that the Government impart to members of this Committee the latest information about further developments in the working group discussion of the proposal. We expect that Committee members will wish to hear in particular about the improvements secured that meet the Government’s earlier concerns, including about the security-related use of the public regulated service. As for the Commission report, the European Scrutiny Committee suggests that the debate will provide the opportunity to examine both the scope for reducing cost pressures by scaling back the programme, and the Commission’s suggestions on the need for, and how to fund, extra expenditure. 

The Chair:  I call the Minister to make the opening statement. 

4.33 pm 

The Minister of State, Department for Transport (Mrs Theresa Villiers):  It is a pleasure to serve under your chairmanship today, Mr Scott. 

This is a timely opportunity to debate the controversial Galileo programme, and I welcome the opening statement made by my hon. Friend the Member for Dudley South. I share a common goal with his Committee. We both want to hold the Commission to account for its use of public money on the Galileo project, a proportion of which comes indirectly from UK taxpayers via our contribution to the Union budget. I have grave concerns about the figures published in the mid-term review, which this Committee is considering this afternoon. The budget originally allocated to Galileo when it was reconstituted in 2007 was €3.4 billion. The Commission now estimates that a further €1.9 billion is needed if Galileo is to be completed to its original scope. However, the Government simply cannot accept that the answer is to pour more money into the programme, so we are opposing the grant of additional funds for Galileo over and above the budget agreed in 2007. 

My concerns about this project date back many years, and I have to confess that I voted against it in the European Parliament when it was first launched. That said, it is now under way and has the potential to bring significant and quite valuable benefits to Europe’s member states and their citizens in terms of improved signal accuracy, availability and resilience. It can also provide a boost for the high-tech and space industries in the UK and other EU member states, but as the European Scrutiny Committee correctly affirmed in its recent report, it is an expensive system and member states cannot be expected to write a blank cheque for its completion. All avenues have to be explored to reduce costs and find savings. 

I recently met European Commission Vice-President Antonio Tajani to discuss my concerns and those expressed by Parliament through the European Scrutiny Committee and the Select Committee on Transport. I called for a far clearer explanation of why the programme was over-budget and pressed him for assurances on what the Commission was doing to remedy the problems besetting the project. I also made it clear that the UK Government wanted much more detailed information on how the revised figure for the estimated cost of completion had been calculated. Most importantly, I emphasised that

the Government believe that the programme should retrench and reduce its ambitions in order to keep within its allocated budget. 

Frankly, axing the project is not a viable option at this stage because it would not be possible to put together a qualified majority to support that approach. In any event, it is still possible to generate real benefits from Galileo without committing additional funding. The UK Government believe an 18-satellite system could be delivered within the current budget. We hope that the budget may even stretch to more than 18 satellites. Working in conjunction with GPS, an 18-satellite system could still provide important and worthwhile services for the public sector, businesses and the general public in the EU, although the range of services would be more limited than that in the system originally anticipated for Galileo. The Government believe that the responsible way to get the project back under control and to ensure that we get the best value for money we can is for the Commission to get 18 satellites in orbit as quickly, cost-efficiently and securely as possible. In other words, it would be a descoped system compared with the 30-satellite constellation. 

At our meeting, Vice-President Tajani assured me that reducing costs was his target. I urged him to assess fully all the options for getting costs down and descoping the system. I also stressed the need to embed sound project management skills in the Commission team dealing with the project. As a result of the Government’s work, a commitment to the application of project management procedures is now formally contained in the legal framework for Galileo. In addition, the UK has a full-time detached expert working in the Commission whose expertise on project management is being directly deployed in tackling the problems with the programme. 

The second document under consideration this afternoon is the proposed decision on the rules governing the public regulated services to be offered by Galileo. PRSs are to be restricted to Government-authorised users and are expected to offer higher levels of accuracy and integrity than GPS or the other Galileo services. Encrypted signals will offer a defence against spoofing and reduced vulnerability to jamming. 

The Government recognise the need for legislation to provide EU-wide controls to guard against the security risks associated with misuse or proliferation of sensitive PRS-related technology. We are clear that the legal text governing the rules for the PRS must give member states the protection needed to maintain national security. I look to Vice-President Tajani to honour the assurance he gave me when we met that the legal text that enters into the co-decision process with the European Parliament will reflect the UK’s national security concerns. I have also pressed the Commission to be more transparent in its assessment of the potential uses and costs of the service. 

In conclusion, although I would be the first acknowledge the seriousness of the problems that have beset Galileo, it would be a mistake to lose sight of the benefits the programme can bring. In particular, UK industry has done very well in winning contracts for the design, testing and construction of the system, and it is well placed to secure a strong lead in security module manufacture, associated infrastructure and downstream applications for the PRS. We have a strong and successful space industry that has defied the recession, and Galileo

has played a significant part in that success. Hon. Members might wish to bear that in mind during the following discussion. 

The Chair:  We now have until 5.30 for questions to the Minister. I remind Members that they should be brief and that it is open to them, subject to my discretion, to ask related supplementary questions. 

Jim Fitzpatrick (Poplar and Limehouse) (Lab):  It is a pleasure to see you presiding this afternoon, Mr Scott. The Minister referred to several of the questions that I wished to have answered, but I want to tease out more detail. As detailed on page 39 of the bundle of papers, the project started in 1999, meaning that UK support for it began under the former Labour Government, so we are hardly in a position to say anything against it. However, I have several associated questions about costs. If I stray too far, Mr Scott, I am sure that you will ask me to stop. 

The Minister mentioned the Government’s dissatisfaction with the cost overrun. What is the UK’s share of any prospective overrun? Will the Commission be burdened with the full cost, or is an additional contribution expected from member states? There was a debate in Government while we were in power about the US GPS system, the Russian system and possible new systems emerging from India and China. Our European dimension was regarded as a kind of luxury; none the less, we thought in the end that it was an important addition for Europe to have its own independent service. As a starting point, what are the UK share costs, and what additional costs might be apportioned to the UK? 

Mrs Villiers:  The hon. Gentleman is right that the project started under the Labour Government, so they have some responsibility for how it has gone. On the UK’s share of the costs and what might happen to the €1.9 billion cost overrun, as I said, the UK Government’s position is that no additional funding should be allocated to the project and that it should be de-scoped to stay within the current budget. Of that budget, UK taxpayers’ contribution is roughly 12.5% after abatement. The abatement process leads to slight variations from year to year, but €3.4 billion is funded by the EU budget, of which roughly 12.5% is contributed by UK taxpayers. 

One option proposed by the Commission for dealing with cost overruns is a system in which the EU budget would meet certain costs and leave it up to member states to meet the rest. That is a matter of grave concern to me, which is one reason why we strongly oppose additional funding for Galileo. We do not believe in writing a blank cheque for Galileo. We find that proposal unacceptable. The Commission will ask formally for more funding as part of the negotiations for the next financial perspective; it has said that it will not ask for any within the current financial perspective. 

Jim Fitzpatrick:  Page 4 of the bundle says that the draft decision has not been subject to an impact assessment. On 13 January, in a letter to the Chairman of the European Scrutiny Committee, the hon. Member for Stone (Mr Cash), the Minister referred to the lack of an impact assessment; the letter is quoted on page 52. Can she bring us up to date? She said that she met the

commissioner, and she is clearly putting the Commission under pressure. Has the impact assessment been dealt with, or will it be? What impact might it have on the Commission’s ability to keep costs under control? 

Mrs Villiers:  The shadow Minister is absolutely right to raise the issue, which is a concern to the Government. I have raised the point not just in my meeting with Commissioner Tajani but at a Council of Ministers meeting that I attended a few months ago. It is a matter of regret, but the Commission has now undertaken to produce an impact assessment on the Galileo programme as a whole. We hope to see that impact assessment later this year, and we expect it to provide more transparency on the costs and problems that have hit the Galileo programme. That impact assessment is very important, so we will hold the Commission to account on its delivery, which is vital if we are properly to scrutinise the programme. 

Mr John Leech (Manchester, Withington) (LD):  If the decision is made not to invest at this time the additional resources that it has been suggested are required, would it preclude the investment of those resources at a later time to add to the existing system? If it is possible to add those extra resources at a later time, would it be significantly more expensive to try to improve the system at that later stage? 

Mrs Villiers:  Clearly, if a decision were taken at a later stage to embark on additions to the programme, the member states would want to consider it on its merits. There is no obvious disadvantage in keeping the programme within its current allocated budget, because we can deliver significant benefits with the 18-satellite constellation that the Commission has acknowledged is deliverable within the current budget. That does not stop the EU deciding in future that it wants to go for a bigger system, but that is a decision for the future. The best option for salvaging this programme is to go for a descoped system, to get something up in the air and working, which would get these benefits and get some value out of €3.4 billion. 

Kelvin Hopkins (Luton North) (Lab):  I am not an expert in these matters, but I understand that there are those in the industry who believe that the 30-satellite system will be essential. The 18-satellite system will be not only a half-system, but at a severe disadvantage compared with other systems around the world. Many regions of the world are now building their own systems. Has the Minister had long discussions with those in the sector who are expert in such matters to hear the arguments in favour of the 30-satellite system, rather than the 18-satellite system? 

  Mrs Villiers: Eighteen Galileo satellites would be quite significantly more limited than the 30-satellite constellation. It is when they work with GPS that they will start to generate the sort of benefits that, for most users of the system in the future, will make it indistinguishable from the 30-satellite constellation that was originally envisaged. It is clear that an 18-satellite system would deliver the benefits in terms

of potential encrypted services and better accuracy, particularly in cities, where the size of buildings can distort GPS signals and make them less accurate. 

On feedback from industry, yes, I have had discussions with industry, including, for example, Astrium. I have listened to industry’s views on how it would like the project to go, but I have to focus on getting value for money, which is why it is essential that we go down from the 30 satellites, because in these difficult times I am not content to see more EU taxpayers’ money pulled into this project. We need to retrench and descope. 

Jim Fitzpatrick:  Paragraph 2.7 of the European Scrutiny Committee’s report states that 

“the key achievements since 2007 have been: establishing a new governance framework”. 

Could the Minister confirm that is what she referred to when she said that we will now have an official who is directly involved? The following two bullet points list 

“operating EGNOS Safety of Life service (due to begin in early 2011)” 

and 

“completing work on building the first four Galileo satellites with the first two due to launch in August 2011”. 

Following on from the point raised by my hon. Friend the Member for Luton North on the comparison between 18 and 30, are the first milestones in place and being observed? Could the Minister say a little more about the reduction from 30 satellites to 18 satellites? How will that impact on the ability of UK companies to win part of the contracts? 

Has the Minister had an assessment of how much business the UK is getting from the project, given that she said our share is about 12.5% of our overall contribution to Europe? Is the amount of business for UK companies commensurate with that? With regard to the 18 to 30 satellites: are we not going to get the 30 or is the Minister still hopeful that, if the project is better managed, we might go past 18? 

Mrs Villiers:  The shadow Minister raised many issues; if I do not manage to cover them all, I am sure he will feel free to come back. Regarding business opportunities, UK companies have so far won contracts worth more than €316 million for work on the validation stage of the project. Surrey Satellite Technology is part of a consortium that won a substantial contract in January 2010 to construct payloads for 14 satellites, and the UK share is worth approximately €236 million. As the project progresses, we can expect UK companies to be in a strong position to continue to gain business as a result of that work. However, that alone does not justify the blank cheque; it does not justify the additional funding that the Commission is asking for. We believe that, because of constraints on public spending across the EU, this is a time to look to the interests of taxpayers and see what can be delivered within the current budget. 

Regarding the role of the UK Government in relation to the new governance arrangements, as I said in my opening statement, we have now got a commitment to abide by project-management principles in the legal framework for Galileo. We have our detached national expert in the Commission. The Department for Transport has four officials working full-time on that, engaging with the Commission. They have attended more or less

weekly working group meetings under the Hungarian presidency. They have made considerable advances in improving the decision that we are looking at today on PRS. We also have a seat on the GNSS Supervisory Authority, which is the European agency involved in managing the project alongside the Commission and the European Space Agency. We have also volunteered to host one of two Galileo security monitoring centres. Alongside the French Government, we have offered to provide that at no cost to the Galileo programme, as security is so important. That, again, gives us the opportunity to be heavily involved in the programme and keep it on track. 

The Commission is the programme manager and responsible for procurement. However, we are trying to be involved in every way, so that we do as much as possible to safeguard the taxpayers’ money that is going into the project. 

Kelvin Hopkins:  I understand the cost implications. As a profound Eurosceptic, I do not want to spend money on European projects. However, if even if there were no European Union, we might be collaborating with other European countries to produce Galileo. Given that a high proportion—in fact, the bulk—of the payload technologies are produced by British companies in Britain, might not a lot of the extra cash have come to British companies? Has the Minister discussed that with her colleagues in the Department for Business, Innovation and Skills with regard to the implications for British industry? 

Mrs Villiers:  In terms of our approach on the project, we have been in close touch with officials at the Department for Business, Innovation and Skills, not least because it is anticipated that responsibility for the programme will soon pass from the Department for Transport to BIS, because it is responsible for the rest of the UK’s space programme. 

I reiterate that I absolutely accept that the industrial return from the Galileo project has been significant, and I hope that will continue. However, the fact that UK companies are in with a chance of contracts is not a reason to press ahead with another €1.9 billion devoted to the project, when there is a way we can deliver a workable system—18 satellites working with GPS—delivering significant benefits. 

At a time when Governments of member states are all grappling with public finance problems, it seems to be unjustifiable to add that significant budget addition just because we feel that we might get an industrial return from it in the future. 

Mr Leech:  Following on from my previous question, I wanted to tease out some more information from the Minister. My concern is that there is no technological problem in trying to expand from 18 satellites up to 30. I would like to know if there has been any assessment to find out whether going for 18 satellites means that we effectively scupper any opportunity to expand the system in the future. If there are no technological problems with expanding in the future, I would like to know if there might be a serious financial disincentive in expanding the number of satellites and therefore that we might choose not to go ahead with expansion at a later stage

because it would then become too costly. Perhaps the Minister could just expand on her answer to my first question. 

Mrs Villiers:  I have not seen evidence that says that by opting for 18 satellites now we are cutting off our options to add more satellites in the future. I do not think that this project is like a rail project, where we have to add in passive provision in some circumstances, to ensure that there is the option to expand in the future. I am certain that my officials and the Commission have looked into that issue. 

One of the benefits of the impact assessment, which we hope the Commission will produce in due course, is that it will give us more facts on how the descoped options might work and provide more information about the sort of issue that my hon. Friend has raised. However, as I have said already, my understanding is that just because we deliver an 18-satellite system now that does not preclude us from delivering a 30-satellite system in the future. 

One of the urgent issues here is to get something working. If we start worrying about delivering an impossible goal that is beyond the scope of this budget, we may end up throwing the whole project off course. What will be really helpful is to give the industrial users who might be manufacturing the receivers some confidence that some of these satellites will be in operation. That in itself—the confidence that arises from an 18-satellite system being delivered—would be good for the project. 

Jim Fitzpatrick:  The Minister mentioned security and I will come on to that issue in my final question, if I can catch your eye, Mr Scott. My penultimate question is about the comments on page 8 about the competent authority and the fact that the Government are deciding which authority will be the competent authority for the UK in respect of the project. It says that it is not expected that there will be any significant start-up costs in the UK but there might be in other countries. Is that because of our infrastructure and because control of the project will be placed in an existing piece of infrastructure? And why would other countries not have similar infrastructure to us? 

Mrs Villiers:  In essence, the reason why we believe that start-up costs need not be significant is because we do this kind of thing in the UK already, albeit in a different context. We have a way to manage security accreditation of companies that are dealing with secure Government assets. We also are used to managing cryptography and issuing cryptography keys, and those kind of things. So that is why we probably do not need to set up a new institution. We may be able to ensure that this work continues on the basis of similar work that is already being done. The reason why we are in a different position to other member states is that they simply do not already have the same sort of expertise in this area, partly because they will not have the same experience with cryptography and those kinds of things. So it is easier for us to do this than it is for other member states. 

We expect that the Cabinet Office will co-ordinate the arrangements for ensuring that the appropriate PRS authority is established, if we feel that that is necessary

and we probably do. If we have paid for this PRS stuff, we think that there is a case for using it. We are determined, however, to keep the costs of running any PRS authority to a minimum. 

Gavin Shuker (Luton South) (Lab/Co-op):  It was a real pleasure to travel to Brussels last month with the Transport Committee and to hear more about Galileo and EGNOS. Regarding the merits of the descoped system, the Minister has mentioned the five service streams that would be provided under such a system. Will she give us a breakdown of the effect of a descoped system on those five service streams? Which ones would be affected, and in what ways? 

Mrs Villiers:  The first four of those categories would be deliverable by an 18-satellite system working with GPS. The last of the five categories is something called safety of life. It looks as though it will not be possible—or it is unlikely to be possible—to deliver a safety of life service with an 18-satellite constellation, even one that is working with GPS. I do not see that as a problem, because I do not see a significant demand for safety of life in the UK, or indeed in the rest of the EU, and because EGNOS has just delivered a safety of life system, which started operating a few weeks ago. One also operates in the US, and other systems are under way in the rest of the world. I do not see safety of life as a necessary part of the system, and I think that there is a real case for dropping it out of the system. As I have said, I believe that the four other functions of Galileo, as they were envisaged when it was established, are deliverable with 18 satellites working with GPS. 

Kelvin Hopkins:  Is the problem really that the project is being handled through the European Union, rather than as an intergovernmental, multinational arrangement? Aviation projects such as Airbus and Eurofighter were handled on an intergovernmental basis, which seemed to work well. Would it not be better to handle this in the same way, rather than through the EU? How much has the EU contributed to the overrunning costs? 

Mrs Villiers:  The Commission has acknowledged that it is not used to dealing with this kind of project. We all know that it issues grants, but it does not, on the whole, manage projects; its procurement rules are probably designed more for buying furniture at the Commission and stationery than for managing multi-billion pound projects. That has been a concern, and it is one of the reasons why we have tried to provide support and assistance via project management. 

The reality is that Governments, notoriously, can run into problems with large public procurement projects, and the associated risks seem to be multiplied in the case of the Commission. We are really trying to get the Commission to focus on sensible ways to manage risk, including basic public procurement principles, such as setting milestones and ensuring that they are adhered to, managing risk and ensuring that people right up and down the Commission’s hierarchy can highlight a risk and have it acted on. The Commission is quite hierarchical, and at the moment it does not take enough notice of the impact that people further down the hierarchy can have

on identifying risks at an early stage and ensuring that someone acts on them and takes responsibility for them. 

Gavin Shuker:  Coming back to the safety of life service, EGNOS is built on top of GPS, and for that reason one of the arguments for rolling out this European system is in case of a GPS failure or GPS being switched off. Will the Minister briefly explain what safety of life as a service is in the simplest of terms? Why does she feel that it is not crucial to what is being built on in the rest of the system? 

Mrs Villiers:  In essence, safety of life relates to aircraft. It enables aircraft to land at smaller airfields that do not have sophisticated equipment to facilitate landing. It enables aircraft to land at a wider range of airfields than they might otherwise be able to. The reality in the UK is that most airfields have the technology that they need to accept aircraft. That is why there would not be a big take-up in the UK. The service is provided in another way by equipment on the ground. As I have said, the alternative is working via EGNOS. 

The hon. Member for Luton North highlighted the issues about Galileo being put together as an alternative to GPS. I maintain that I have never seen the strategic issue of whether the EU needs a system independent of GPS as significant. The US has supported GPS on a global basis for many years. There is no reason to think that it will pull the plug on that. We need to look at other issues to determine whether we go forward with Galileo and how we manage it. The strategic issue of independence from the US is not a significant factor. We need to focus on what Galileo could do in conjunction with GPS, rather than as a rival to it. 

Jim Fitzpatrick:  My last question relates to security, which the Minister has already referred to. The annex on page 84 lists the expected uses and impact of the system. Will she say a little bit more—particularly given the debate downstairs on United Nations Security Council resolution 1973—on whether all the security implications have been taken on board before today? Was national, as well as international, security taken into account when the costings were first worked up? Will the cost overruns have an impact on the security dimensions? As she raised these matters with the Commissioner and others, will she give us some general reassurance that security has been considered in detail, in respect of the start-up and ongoing costings? 

Mrs Villiers:  I thank the shadow Minister for his question on that crucial matter. There have been extensive negotiations with the Commission on security. It has been suggested that member states are making unreasonable demands on national security and thereby adding costs to the programme. The reality is to the contrary. When this project got backing, member states were right to assume that security came as part of the package. When delivering programmes of such sensitivity, the UK Government’s view is that some 30% to 40% of the budget should be allocated to ensure that we get security right. It is not for the Commission to turn around now and say that our demands on security might be unreasonable. 

We believe that delivering a secure service is an intrinsic part of delivering the usable and workable service that member states felt they had agreed to when the project was set up in the first place. That will be a matter of ongoing discussion with the Commission, but we think that it is vital to ensure that the Commission is aware that the issue is important for us. We must have our national security requirements met. We always believed—correctly, in my view—that they were part of the package that was being bought for £3.4 billion. They are not an added extra that we are now demanding after the event. 

Kelvin Hopkins:  We understand that Galileo is intended to work in a complementary way with GPS, not in competition, so that is positive. Given that the advantage of a 30-satellite system over an 18-satellite system is much more than proportionate, given that Britain has a significant and substantial component of the extra technology that will go into the 30 satellites rather than the 18 satellites and given that we pay in only a proportion of the additional costs, has a careful calculation been done on whether we might be net beneficiaries from the increased expenditure? I am asking an open question. I do not have a prejudiced view. 

Mrs Villiers:  I was not expecting the hon. Gentleman to take the line that he has on the project; it was the last thing I expected from him, given his long and distinguished track record of Euroscepticism. On the basis of the briefing I have had on the issue, I am not convinced that the additional services that could be delivered by a 30-satellite, as opposed to an 18-satellite, system are worth paying another €1.9 billion for. As I said, safety of life could not be delivered with 18 satellites, but a significant range of other services could. Broadly, that is the initial four categories—commercial services, open access and PRS and so on. People are concerned about the fate of front-line services and benefits, and the difficult issues about how we deploy taxpayers’ money in budget-constrained times make me believe that the additional satellites do not justify the additional expenditure that the Commission is asking for. No doubt, this will be fought out when the next financial perspective is debated, but we are urging the Commission to descope, retrench and deliver a system that works and that starts to deliver benefits based on 18 satellites. 

Kelvin Hopkins:  I see this project as something that might be beneficial to Britain and Europe, but not as anything to do with the EU, although it happens to be promoted through the EU. If we and the EU are to save money, I could suggest half a dozen ways to do so, and abolishing the common agricultural policy would be a start. We could also abolish the common fisheries policy and a whole range of other things. There are other budget areas that we could easily cut— 

The Chair:  Order. May I ask the hon. Gentleman to stay within our remit? 

Kelvin Hopkins:  I accept that point, Mr Scott. 

Cutting something that might be beneficial to Britain and that could easily be done on an intergovernmental basis, rather than through the EU, might not be sensible. That is my final question—I hope that the EU-scepticism comes through. 

Mrs Villiers:  Indeed it does. Mr Scott, you will not let me stray into matters that relate to the common agricultural policy and the common fisheries policy. 

The Chair:  The Minister is correct. 

Mrs Villiers:  I will therefore steer clear of those issues. I should make it clear that we are not pressing the Commission to reduce the €3.4 billion budget. We recognise that a qualified majority for that is unlikely, so the hon. Gentleman has slightly misrepresented the situation. We are pressing for the project to remain within its current allocated budget, because we believe that we can deliver a workable, viable and beneficial programme for the UK and other member states with a descoped system. 

Motion made, and Question proposed,  

That the Committee takes note of European Union Documents No. 14701/10, draft Decision on the detailed rules for access to the public regulated service offered by the global navigation satellite system established under the Galileo programme, and No. 5530/11, Commission Report on the mid-term review of the European satellite radio navigation programmes; supports the Government’s aim of securing practical, proportionate and enforceable legislation that balances the need for appropriate security controls of manufacturers and users against favourable conditions in which a market for the PRS and associated equipment can grow; and supports the Government’s aim of beginning Galileo services as early as possible, albeit reduced in scope if the programme cannot be delivered within the allocated budget.—(Mrs Villiers.)  

5.13 pm 

Jim Fitzpatrick:  I am a former Agriculture Minister of State, Mr Scott, so if you want me not to talk about the common agricultural policy, I could certainly avoid the subject with great pleasure. 

As I said in my initial comments, support for the project began in 1999, under the previous Labour Government, so it would be wrong of the Opposition to oppose the project’s continuation, despite the reservations that the Minister has appropriately articulated and the severe scrutiny that the Government have given the cost overrun and the ability to produce a service in keeping with the original expectations. Obviously, with austerity budgets right across Europe at the moment, everyone will be looking at the issue in the same vein, and we will continue to help to monitor the situation. 

Pages 84 and 90 deal with the uses and gains of the service. The annex on page 84 is a little vague, but it none the less clearly outlines the expected positives from the service. As my hon. Friends have said, page 90 clearly indicates that more services will be available than the GPS that we have at the moment. I am reassured by the Minister’s responses to our questions, and I hope that my hon. Friends agree. I have had no indication from my hon. Friend the Member for Penistone and Stocksbridge that the shadow Chief Whip has told us to vote against the motion. With that in mind, therefore, we are satisfied that the Committee has undertaken its work, and we will not oppose the motion. 

5.15 pm 

Kelvin Hopkins:  I shall, of course, go along with my colleagues on this matter, but the tenor of remarks has been about supporting British manufacturing, which is too small. We have a massive net balance of trade

deficit in manufactured goods. Anything that can promote high-tech industries, in particular, is a good thing for Britain. As I understand it, satellite manufacturing and space-enabled services add £6.5 billion to the UK economy and support 68,000 jobs. The space industry is growing rapidly every year, and we want to ensure that we as a country are at the forefront of that. We want those jobs to expand, and we want a real base of expertise. 

Those were my concerns, and I hope that the Government and the Minister will keep them in mind when dealing with such matters. The EU is not the organisation that should be managing this project; it would be much better to have it done on an intergovernmental basis, as other projects have been in the past. I hope that the Minister will consult the industry and her colleagues at the Department for Business, Innovation and Skills to ensure that British industrial interests are protected. 

5.16 pm 

Mrs Villiers:  I thank the Committee for the opportunity to discuss this issue. It has been a constructive debate that will enable me to go back to the Commission to emphasise how serious the scrutiny process is in this country. I should mention that Commissioner Tajani has offered to come to Parliament to respond to questions on the programme—if that is thought appropriate either by this Committee or the Transport Committee. I did ask him whether he was certain about that, and he seems to be, so that may be an offer that Parliament would choose to take up. 

We have covered the issues in some depth, so I do not need to delay the Committee. I had the opportunity to put certain concerns on the record at the start of the debate. I emphasise the issues around security and PRS. We see this as a high priority to ensure that the Galileo system meets our national security requirements. As I mentioned in response to the shadow Minister’s question, we believe that that is an intrinsic part of the package and that it should always have been part of the programme. It is not an added extra. 

On the PRS decision, we have also negotiated a commitment from the Commission that, when it is setting detailed security rules on how Galileo products will be managed, it will listen to and act on the advice of national security experts. There is a committee of them, and it is vital for the Commission to listen to their

advice, rather than to make such sensitive decisions in a vacuum. That is now being included in the revised text of the decision on PRS, and we look to the Commission to honour its commitments in the European Parliament debate that follows. We believe that that is essential to safeguard our national interests. I can assure the Committee that we will continue to work hard to hold the Commission to account, to get this project back on track and to ensure that basic principles of risk management and of public and project procurement are applied, so that we can actually see some satellites launch and start to benefit people in the European Union. 

I have a couple of points that respond to some earlier questions and that expand on my answers. I should say in response to the hon. Member for Manchester, Withington that the project can be delivered in phases. It would be possible to go from an 18-satellite system now to a 30-satellite system in the future. It would cost more—I am advised—to add on additional satellites at a later stage. The important thing is to get something delivered in the foreseeable future using the available budget. 

The hon. Member for Luton North has stressed several times the alternative of using an intergovernmental approach. That option is open in relation to how Galileo is run in future, once it is operational. The Commission will come forward soon with proposals about how it will be run, and a more intergovernmental approach might be a worthwhile option. 

Finally, the hon. Gentleman has discussed potential industrial return for manufacturing as a result of the delivery of 30 satellites. I am told that a substantial number of the contracts for those additional satellites would go on launchers—in other words, rockets—and the company that is in the best position to deliver those is French. The options for UK business in relation to the additional 30 satellites are more limited. Such options are not non-existent, but we anticipate that a significant amount of the work that will probably be contracted for those additional satellites may go to companies that are based in France. The hon. Gentleman may want to bear such practicalities in mind. 

Thank you, Mr Scott, for allowing me to conclude the debate. 

Question put and agreed to.  

5.21 pm 

Committee rose.